Three Lessons from Closing Cipika E-Commerce Services

Indosat Ooredoo's e-commerce service, Cipika, announced service closure June 1 next. Some think of this as yellow light and as a signal of caution, some consider this to be part of the dynamics of healthy competition in the e-commerce industry in the country.

Regardless, we identified three important lessons we can learn from the service closures that have been around since 2014. They are:

Unsupported structure

Unlike Blanja and elevenia, the two subsidiaries Telkomsel and XL Axiata targeting the same sector, Cipika is not a separate company. Cipika was built as a business unit under Indosat Ooredoo Digital.

Such a structure makes it difficult for Cipika to move, make decisions, acquire partners, manage budgets, and other things that are easier to do as a separate entity. A Division Head is not easy to manage alone, when compared to a CEO who has a C-level and VP ranks below him.

Indosat Ooredoo do spin-off towards payment services (PayPro) and services mobile advertising (IMX), but it's too late for Cipika.

Branding that's not right

Even though it's been almost 3 years since it was founded, not many people in general know Cipika as a company brand e-commerce services. Cipika's name almost never appears in various survey questions top of mind e-commerce services in Indonesia or ranking is always way below compared to similar services.

For circles early adopting, Cipika has a constantly changing direction. Initially Cipika wanted to target the traditional culinary and craft market, then switched to selling gadgets and travel products, the latter targeting digital content, including games and digital books.

This year they are still trying to pivot towards wholesale sales, but the plan has not been fully implemented.

It's important to be unique, but it's best not to lose those characteristics as the service evolves.

To survive it costs (and trust)

Forget Lazada, Tokopedia, or Bukalapak, which have received funding from investors several times. Even though they are both supported by big telecommunication companies, compared to Blanja or Elevenia, Cipika does not seem to have received sufficient financial support to compete and remain relevant.

Although we don't know exactly how much money the company injected for Cipika, Blanja and elevenia gained confidence when announcefundraising hundreds of billions of Rupiah from its parent company to ensure its business in this sector is a priority. Cipika, on the other hand, unfortunately does not imply this.

Once again this is not just about money, but proof of confidence that the business will survive and become a priority. If investors or the parent company lack confidence in the continuity of their business, this will have an impact on consumer confidence.