The trend of e commerce in developing country

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  • 1. The Trend of E-Commerce in Developing Country: IndonesiaPresenter : Nurfazlina Binti Haris 1
  • 2. CONTENTSIntroductionEconomy & Technology InfrastructureTrend of E-commerce in Indonesia Payment Method Indonesia Online Consumer Access trend in Internet SMEs E-commerceConclusion 2
  • 3. INTRODUCTION242.3 million of Population4th largest population in the worldLowest contributor of GDP in South East AsiaPosition as a lower middle income class (world bank 2012) 3
  • 4. INTRODUCTION Susilo Bambang YudhoyonoRecently, Indonesia government is inviting foreign investor tocreate inside competition (Chulmo&Yulia , 2010)Expanding IT infrastructure by allocating at least 10% of $12trillion in total investment in 2011 - 2030 (Shirley, 2011)Political aspect has gone wide change than previously andthis also still effect the E-commerce policy bond withIndonesia Civil Codes which affect the e-signature and legaldata protection issues. (Raman & yap, 1996 ; Della , 2011) 4
  • 5. INTRODUCTION“E-Commerce is a universal concept which covering any form of business transaction or exchange of trade by using the IT and Telecommunication” (Whitely, 1998) “The Use of the Internet and the Web to transact business or digitally enabled commercial transactions between and among organization and individuals.” (Kenneth & Jeffrey, 2007) 5
  • 6. Economic InfrastructureAs due to the success to be ranked at 44th among 139 countries in aGlobal competitiveness report 2011As the Economic pressure risingannually, both opportunity and challenge to related bodies andinstitution in Indonesia, where push improve theirbusiness, legislative, and IT infrastructure for a bright future.(Shirley, 2011) Gross Domestic Product 2011 2008 Figure: GDP of Indonesia from 2008 to 2011 (World Bank, 2012) 6
  • 7. Technology Figure: Internet User in Indonesia Infrastructure 50,000,000 43,618,615 40,000,000 30,000,000 26,193,906 18,602,209 20,000,000 16,429,083 10,000,000 0 2006 : Third generation (3G) Ownership of has deployed in personal computer 2008 2009 2010 2011 Indonesia and (World Bank, 2012) steadily increase many operators from compete to grab 2010 : WiMAX mobile user 2006 (1.4 million) to successfully attention 2008 (2.5 million). been deployed Then 2008 : Government enhancement to of Indonesia 3.6 Mbps of allocate 1.93 HSDP access million for 2.3 GHz technology WiMAX 7Chulmo & Yulia (2010); Basharat & Marayedis (2010); Donny & Mudiardjo (2009)
  • 8. Technology InfrastructureIndonesia fixed lined Internetbandwidth is also more expensivethan mobile phone services.Warnet (Internet café) has become apopular place to access the Internet.(Deloitte Access Economies, 2011) 8
  • 9. Trend of E-Commerce in IndonesiaE-commerce was still underdeveloped which isin 2010, Indonesia only spends US$230 millionper year whereby less than 0.1% of GDP.It is estimated that only 1.6% of directcontribution of the internet to the IndonesiaGDP in 2011 (Deloitte access economics, 2011) 9
  • 10. Trend of E-Commerce in IndonesiaPayment MethodA survey has been made and most online consumer Spent onlyRP. 500,000 in E-Commerce (Varitrans& Dailysocial, 2011)Telkomsel was introducing a mobile wallet service known as T-Cash, to allow and promoting their customers to use their mobilephone to buy and pay for services online through the use of SMS. Payment was made from (Varitrans& Dailysocial, 2011) 10
  • 11. Trend of E-Commerce in IndonesiaIndonesian mostly reflect to the affection of purchasing in E-commerce, especially around the workplace, was the place forpeople to get awareness about the Internet.Education level and age also are the factor for the intention ofpurchasing in E-commerce. (Rofiq, 2011) 11
  • 12. Trend of E-Commerce in IndonesiaIndonesia Online ConsumerCharacteristic of Indonesia internet user’s toward making apurchasing in online was also formed from them: Dispositional trust (Trust level of person in general)+ Interpersonal trust (Trust arises from outside influence) Rather than the issues of risk perception in privacy and securities. (Hidayanto,2012) 12
  • 13. Trend of E-Commerce in Indonesia (Varitrans& Dailysocial, 2011) 13
  • 14. Trend of E-Commerce in IndonesiaIndonesia Online ConsumerWHERE ARE THEY SHOPPING IN ONLINE?Most of the consumer refers to the “Facebook”, “Kaskus”, and “Tokobagus”, websites to shop 14
  • 15. Trend of E-Commerce in IndonesiaSMEs Internet Business in IndonesiaSMEs E-commerce in Indonesia, increase their salesrevenue with positive value from 41% - 60 %(As’ad & Ahmad ,2012)Cost of maintenance for websites is less than companytotal capital (Deloitte Access Economies, 2011) 15
  • 16. Trend of E-Commerce in IndonesiaSMEs Internet Business in Indonesia C o n st ra i nt fa c to rs PoorInternet Connectivity Infrastructure PoorBank Administration StrategicGoods distribution to buyer Poor Skills (As’ad & Ahmad ,2012) 16
  • 17. Trend of E-Commerce in IndonesiaAccess trend among Indonesia Internet User The Indonesia mobile phone user which uses to access the Internet (Deloitte Access Economies, 2011)Based on the study, Indonesia has a huge opportunity for grown in M-business, moreover Indonesia was overpopulated with the Smartphone andmobile phone internet application (Carrie et al. 2012) 17
  • 18. ConclusionThe E-Commerce in Indonesia was relatively increased from timeto time. SMEs and Internet user are aware of the onlinecommerce advantages. The government of Indonesia also awareof the advantage of utilizing the Internet’s capabilities, toincrease the country GDP, societys welfare, and country’sinfrastructure especially in, technology and health. RecommendationsImproving the countrys technology infrastructure,Establish better procedures and policy especially in paymentmethod,Provide better product competitive and customer support in theonline commerce.Transform the business and government administration to usethe internet as a strategic tool. 18
  • 19. References• [1] The World Bank: working for a World free of Poverty. Accessed in October 12, 2012. At http://data.worldbank.org/country/indonesia.• [2] Chulmo Koo & Yulia Wati, (2010). “Toward an Understanding of the Mediating role of “Trust” in Mobile Banking Services: An Empirical Test of Indonesia Case” Journal of Universal Computer Science”Vol 16. No.13. pp. 1801-1824. [online]• *3+ Shirley Christie. (June 2011) “IT Sector Vital to Indonesia Growth: Official” Access in October 12, 2012. At http://www.thejakartaglobe.com/business/it-sector-vital-to-indonesia-growth-official/446953.• *4+ Raman, K. and Yap, C. (1996) “From a Resource Rich Country to an Information Rich Society: An Evaluation of Information Technology Policies in Malaysia”, Information Technology for Development, (7), pp.109-131.• [5] Della Utami Rahmany. (January 2011). “Toward Community Framework on Electronic Signatures And Indonesia Legal Framework” Thesis. [online]• [6] Toto, S., Euphrasia, S.S., Budi, H., (2010) “Information Technology and Business Performance: A Case Study on Small Food Processing Firms” Journal of Global Business Administration. Vol.2, no.1, pp.84-95 [online]• [7] Basharat Ashai & Maravedis. (January 2010) “Country Focus: 4G in Indonesia”. Telecomasia.net. Access in October 12, 2012. At http://www.telecomasia.net/content/country-focus-4g-indonesia.• *8+ Deloitte Access Economies, (December 2011) “The Connected Archipelago: The role of the Internet in Indonesia’s Economic Development” Access in October 12, 2012. At http://www.deloitte.com/assets/Dcom- Australia/Local%20Assets/Documents/Services/Corporate%20Finance/Access%20Economics/Deloitte_The_Connected_Archiplelago_Eng_Dec_201 1.pdf.• [9] Whitely, D. E-Commerce: Strategy, Technologies and Applications, 1998, McGraw Hill• [10] Susanto, A.; Hwansoo Lee; Hangjung Zo; , "Factors influencing initial trust formation in adopting internet banking in Indonesia," Advanced Computer Science and Information System (ICACSIS), 2011 International Conference on , vol., no., pp.305-310, 17-18 Dec. 2011• [11] Veritrans & Dailysocial, (2011) Independent research of E-commerce in Indonesia. Access in October 13, 2012. At http://en.dailysocial.net/post/indonesia-ecommerce-report-2012.• [12] Donny,B.U & Mudiardjo, R. “Digital Review of Asia Pacific 2009 – 2010: id. Indonesia”. 2009 ,International Development Research Centre.• [13] Rofiq, A.; Mula, J.M.; Scott, A. (2011) "Purchase Intention to Undertake e-Commerce Transactions in Developing Countries: Application of Theory of Planned Behavior in Indonesia,"Management and Service Science (MASS), 2011 International Conference on , vol., no., pp.1-4, 12-14. doi: 10.1109/ICMSS.2011.5999076.• [14] Hidayanto, A.N.; Saifulhaq, H.; Handayani, P.W. (June 2012) "Do consumers really care on risks in online shopping? An analysis from Indonesian online consumers," Management of Innovation and Technology (ICMIT), 2012 IEEE International Conference on , vol., no., pp.331- 336, 11-13 doi:10.1109/ICMIT.2012.6225827• [15] As’ad, I. & Ahmad, F. (2012) “ An Empirical Study of E-Commerce Implementation Among SME in Indonesia.International Journal of Independent Research and Studies. Vol. 1, No.1, pp.13-22. 19• *16+ Carrie Y., McMillan, J. et al. “2012 Outlook for The Retail and Consumer Products Sector in Asia; Indonesia” p. 34. PriceaterhouseCooper (PWC)
  • 20. Thank You ! 20