1. Startups

Exploring the Potential of Social Commerce Business in the Region

Summary of discussion session with Co-Founder & CEO of Trade Ryan Manafe on #TuesdayStartup

While stretching companies E-commerce in Indonesia is increasing, the penetration of this service to traders is still not maximized. There are many merchants who are still reluctant to enter the realm E-commerce because of various limitations or for reasons of convenience and preference. Social commerce one of them is present as a strategy to be able to convert traders offline menjadi online (O2O).

During the pandemic, there was a significant growth in the number of transactions online in Indonesia. This has an impact on the growth rate of traders online in Indonesia. As of August this year, there were more than 14 million MSMEs or 22% of the total MSMEs that had joined the electronic commerce application.

However, in reality, this growth rate is still not evenly distributed throughout Indonesia. Most, who use E-commerce are people in big cities with various conveniences. Meanwhile, people living in more remote villages or rural, still struggling with technological limitations.

In relation to the digital industry, basically all initiatives E-commerce have a purpose to lift barriers in the community to meet their daily needs. Merchant, one of the players involved in the pool social commerce wants to try to bridge these remote areas with the digital ecosystem that is growing in big cities.

Rural area potential

Before becoming a founderplatform social commerce Trade, Ryan Manafe had dreams of becoming a soldier. However, now he has the opportunity to serve the country through another way, namely the development of the digital economy. One concrete way is to bridge the community in the area with digital solutions to meet their needs.

In fact, Indonesia's economy is also largely supported by its rich natural resources and most of it is located in remote areas. Money revolves in the regions, while society is still very conventional. Trade sees this as an opportunity where they can enter and hopes to benefit and multiply the regional economy.

Ryan also revealed a quite tragic fact, Indonesia as a printer unicorn and decacorn, still has a lot of people who have not been touched by digital. He hopes, by playing the role of social commerce, Trade is not considered as a competitor but can be enablers or support system for older players.

Contextual approach

Out there, concept social commerce already very popular. Indonesia is currently following global trends, but it cannot use one approach to penetrate the entire market, there must be a specific approach for certain segments. One word that Ryan thinks can represent this is "contextual".

When implemented in the field, not all communities can fully adopt this concept. Therefore, a contextualization approach is needed to minimize miscommunication or information deviation. Everyone has their own way and approach that fits. For example, including local leaders in the business model or working with certain institutions. 

Merchant starting a business from Magelang is not without reason. Ryan has a deep understanding of the culture and customs of the local community. In addition, as a resident of Magelang, he is also familiar with the community that plays an important role in business sustainability social commerce. Challenge is coming when it will decide to expand. However, this can be conditioned as long as you continue to carry out the contextualization process in the business model before starting to penetrate for specific areas. 

"I used my background to start this, because it is very important for us to have a deep understanding of the culture of the local community. However, when we are allowed to expand later, I also don't know what it will be like. operated there for a long time," said Ryan.

Make a real impact

View many companies E-commerce who has become unicorn, it's not that Commerce doesn't have ambition for it. It's just that, Ryan revealed, that's not their focus right now. "There are a lot of regional/rural contexts that are not sexy from an investment perspective, but we have to be able to deal with that. It's all about finding a balance between the two," added Ryan.

Regarding competition, Indonesia has a market potential of $131 billion. Ryan believes this cannot be met by just one or two startups. As long as the company has a clear vision regarding the market segment, the problem to be solved, and has a contextual approach. It will be difficult to be able to compete with E-commerce who are already big, precisely how to support them to enter the region. That's what has the potential to become a market share.

He believes that there are 3 keys to social commerce can be the next big thing. First, how to accommodate local wisdom. Second, product validation that is influenced by the community. Finally, it must be able to face challenges from a geographical perspective. Then, now we are in the era of collaboration, not competition. "Everyone has limitations, there is no divine startup. "Let's position ourselves to complement each other rather than compete," said Ryan.

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