Bright Prospects for the Transformation of Physical Retail to the Digital Realm

For the second time, the annual Internet Retailing Expo (IRX) Indonesia 2017 is being held, starting today (18/1) until tomorrow in Jakarta. This event is a meeting place for sellers, multi-channel retailers, and online retailers with key providers and learn by sharing experiences and implementing case studies.

Aprindo Chairman Roy N. Mandey said the e-commerce business is a transformation effort that offline retailers must carry out. This is because people's lifestyles are starting to shift towards digital, while at the same time serving the younger generation as new consumers.

"The e-commerce business complements retail distribution channels, we know that the younger generation today wants a faster and more effective fit through internet empowerment. Don't forget that gen y has only started to exist in the last 2-3 years, there are still gen x who still tend to shop at offline stores. That's why we have to try to transform offline stores to keep up with the times by adopting technology," said Roy during the 2017 IRX Indonesia event, Wednesday (18/1).

His party assessed that the existence of offline stores would still be needed in the future. The reason is, there are several types of goods that require comfort when used, for example, such as cosmetics, clothes, pants, shoes, and others.

There is a need for new innovations through the use of digital technology that is applied in offline stores to be added value that consumers can get compared to when shopping online.

One of the technologies that retailers can adopt is RFID technology (Radio Frequency Identification) planted in supermarkets. All groceries will be counted immediately and will automatically reduce the credit card balance. This technology already exists in developed countries and one of the e-commerce players who are already using it is Amazon.

"We are constantly trying to Update and business transformation, because digital is a necessity. Moreover, people's lifestyles have changed. Retailers with technology must go hand in hand and complement each other."

The contribution of e-commerce businesses to retail is predicted to double

Aprindo predicts that the transaction value contributed by the e-commerce business to the total retail business this year can double by 1,2%-1,5%. The value is estimated at IDR 2,64 trillion to IDR 3,3 trillion.

Last year's position, the contribution of the e-commerce business only reached the range of 0,7% with a transaction value of around Rp. 1,4 trillion. In terms of the retail industry, Aprindo predicts this year it will grow by 10-12 percent with a value range of Rp220 trillion to Rp224 trillion.

This figure is expected to increase compared to the achievements of the previous two years. Where the value of retail industry transactions in 2015 was Rp. 181 trillion with a growth of 8% year-on-year. Then, in 2016 it grew by 10% with a transaction value of IDR 200 trillion.

"Since last year, the retail industry has not been in the recovery stage (restore). Now we expect growth this year in the 10%-12% range because it really depends on the political situation, where there are 110 municipalities that will conduct local elections this year."

For the record, the transaction value recorded by Aprindo is a combination of modern retailers consisting of five types of businesses, namely minimarkets, supermarkets, hypermarkets, convenience stores, and wholesale. Meanwhile, traditional retailers and people's markets are not included as members of Aprindo.

Several members of Aprindo include Matahari, MAP, Alfamart, and Indomaret. The total members of Aprindo currently reach 35 thousand stores with 600 companies. Of all members, 25% of them have not yet transformed to digital.

"Those who have not entered the online business, on average, are local retailers in areas. They have not entered [into the online business] because they are very dependent on aspects of capital and knowledge. However, remote retail network players have all penetrated into the e-commerce business. commerce."

Roy hopes that the transformed retailer is expected to continue to educate and provide convenience for consumers. The reason is, not all Indonesian consumers want to shop online because they don't feel comfortable.

The Ministry of Trade will soon issue a Government Regulation

As a follow-up to The roadmap e-commerce, the Ministry of Trade will soon issue a Government Regulation (PP) on Trading Transactions Through Electronic Systems. It is now almost final and is considering whether it is necessary to include taxation for electronic-based commerce.

The Director General of Domestic Trade at the Ministry of Trade, Oke Nurwan, explained that this regulation is targeted to be issued before the first quarter of 2017. Later this PP will regulate the implementation of the marketplace business, how to do it, and who is the organizer. In addition, it requires business actors to provide correct company information and data, as well as provide reporting permits to prevent illegal actions in cyberspace.

"In principle, this PP will regulate two aspects, light touch regulation and light touch regulation safe harbor. This rule will not regulate strictly, but it can still control several aspects of supporting the e-commerce ecosystem," explained Oke.

According to Oke, with close cooperation from business actors and support from all levels of society, the government is very optimistic about the future of Indonesia's e-commerce business which can become an important motor in driving national economic growth.

- Disclosure: DailySocial is the media partner of Internet Retailing Expo Indonesia 2017