Measuring SMEs’ Chances to Reap Profit in Year-End Shopping Festival

Penulis: Desy Setyowati

Editor: Safrezi Fitra

Senin 12/11/2018, 18.48 WIB

Previous online shopping festival was able to bring in around 75 percent of e-commerce monthly revenue in one day.

Telaah - E-commerce
Stanisic Vladimir/123rf

The end of the year is a moment for e-commerce to double its trade transactions by holding an online shopping festival. Previous festival was able to bring in around 75 percent of e-commerce monthly revenue in one day. Micro, Small and Medium Enterprises (MSMEs), as the partner of e-commerce application providers, can use this momentum to their increase sales.

E-commerce, such as Shopee and Lazada, held the online shopping festival 11.11 yesterday (11/11). Lazada managed to record sales of more than 6.5 million from this festival in 2017. It is optimistic that the sales from this year’s festival will exceed previous achievement.

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From last year’s festival, Shopee sold 7 million products in one day. Based on information obtained by katadata.co.id, it managed to sell 9.9 million products yesterday. About 70 percent of products sold are locally made, including those produced by MSMEs.

Although transactions have increased, MSMEs must be able to compete with thousands of other sellers who participated in the festival. “Many people are honouring online [channels] as powerful drugs, even though they are not like that,” Ignatius Untung, Indonesian E-Commerce Association (IDEA) Chairman, told katadata.co.id on Thursday (11/8). This is because in addition to expanding the market for MSMEs, e-commerce also adds choices for consumers.

According to him, MSMEs must take the initiative to collect data about consumers from their e-commerce partners. The data can be used to develop their businesses and products, so that they can be more attractive to consumers. Thus, the MSMEs will be ready to compete in online e-commerce marketplace, especially during online shopping festival. “The challenge is big [to enter e-commerce]. But if they do not enter, the risk is even greater for them,” he said.

The Industry Ministry’s Director General for Small and Medium Enterprises Gati Wibawaningsih also agreed with the statement, saying MSMEs must pay attention to the quality and appearance of their products if they want to compete in online e-commerce marketplace. However, this does not mean that MSMEs do not need to join the e-commerce. He gave an example of the turnover of an entrepreneur who sells batik-designed wallets in Yogyakarta. The turnover has increased seven-fold after selling it in online e-commerce marketplace.

Based on research from Deloitte Access Economics, the revenue of MSMEs in Indonesia that market its business online rose by 80 percent. As a result, Indonesia’s economic growth can increase by 2 percent per year, considering the number of MSMEs in Indonesia is almost 60 million. “Transaction increases during online shopping festival. This means orders for MSME-made products [which are sold through e-commerce platforms] will also increase,” he said.

In fact, the Special Staff of the Communications and Information Ministry Lis Lestari Sutjiati previously said that MSMEs’ revenue could grow double by selling online. Only 7.2 million MSMEs have used the internet to market their products, about 36 percent of which sell their products via social media such as Instagram. The government targets the number of MSMEs selling on online e-commerce marketplace to reach 8 million by 2019.

According to Dini Ariyani, owner of a MSME called Tanamera Coffee, the sales of her coffee products grew drastically through Shopee, even though she joined two months ago. “Mostly [sales] through Shopee,” she said. There are at least 42 Tanamera coffee products sold through the Singapore-based marketplace for Rp 67,000-Rp 416,000 per bag.

A shoe-producing MSME from Bandung, Brodo Footwear, also saw an increase in its sales after joining Shopee. Brodo Footwear CEO Yukka Harlanda said digital marketing expanded the market share that could be worked on. “What is interesting in Shopee is that women shop for their partners. We take the target market that we do not seek,” he said recently.

As a result, around 65 percent of his shoe sales occur through online channels. Besides Shopee, Brodo also has its own site to market its products. “Digital marketing plays a 100 percent role in our sales. Whatever it is, our latest digital platform will definitely experiment with it. Not to mention, there are promotions [in marketplace],” he said.

Shopee will hold four online shopping festivals at the end of the year: festival 9.9 on 9 September, festival 10.10 on 10 October, festival 11.11 on 11 November, and festival 12.12 on 12 December. These are held to support the national online shopping day (Harbolnas) on 12 December. Shopee posted 5.8 million transactions from festival 9.9. About 72.6 percent of the products offered during the festival 9.9 are local products. “We hope that the increase in transactions will affect the sales of our partners, especially MSMEs,” Shopee Country Brand Manager Rezki Yanuar said.

Lazada also held four online shopping festivals at the end of the year. Lazada targets transactions during the festival 11.11 to exceed Rp 1.6 trillion. Tokopedia, which is also under Alibaba Group like Lazada, does not participate in Harbolnas. Tokopedia will carry out its own online shopping festival in November 2018. “There are many programs that can create opportunities for sellers,” Tokopedia Corporate Communications Head Priscilla Anais said.

Meanwhile, Bukalapak will participate in Harbolnas. It does not want to miss the opportunity to reap more transactions. Bukalapak has recorded a five-fold increase in transactions during Harbolnas 2016. “We encourage and foster all sellers to increase their sales by [maintaining] the quality of products and services provided to buyers,” Bukalapak Corporate Communication Manager Evi Andarini said.

Shopback, a lifestyle support platform, estimates 25-30 percent increase in the average public spending in the fourth quarter of 2018 compared to the same period last year. It is higher than in 2017, which was only 17 percent. Shopback Indonesia Co-Founder and Country Head Indra Yonathan said the increase in spending was supported by the number of e-commerce campaign programs.

According to him, the fourth quarter is like an Asian Games for e-commerce players. They compete to win the hearts of the public to shop on their respective platforms. “The revenue generated in one day shopping festival is equivalent to three-quarters of revenue [on average] in one month in 2017,” he said.

Criteo, a commercial marketing technology company, generally recorded sale growth of 258 percent during the online shopping festival 12.12 in Southeast Asia compared to regular days. During festival 11.11, the sales grew 238 percent. “Although retail has invested in 11.11 and set a new [sale] record, the festival 12.12 began to mobilize buyers and provided equal opportunities,” Criteo General Manager for Southeast Asia, Hong Kong, and Taiwan Alban Villani said.

Interestingly, the sales during festival 12.12 in Vietnam and Indonesia were higher than 11.11. On 12 December 2017, retail sales rose 387 percent in Vietnam and 340 percent in Indonesia, while the increase in sales reached 530 percent in Singapore and 193 percent in Taiwan. “Inclusion of data-based solutions and machine learning in their digital strategy throughout the season will ensure their products are seen and purchased in these regions,” he said.