As the ecommerce trend continues in Southeast Asia, a wave of the new generation of moms is joining the party. These moms are relying more and more on online to help them embrace their role as a parent.

Millennial moms expressed their dependency on online for their shopping journey, especially for the Mom & Baby category, during an ecommerceIQ panel session in Jakarta earlier this month.

ecommerceIQ surveyed 1,144 Indonesian moms with results showing that 66% have attempted to purchase Mom & Baby products online. Shopee was voted as the most popular e-marketplace for this category, followed by Lazada and Tokopedia.

Mom & Baby Indonesia Online Shoppers

aCommerce Group CMO Sheji Ho on stage presenting the findings from ecommerceIQ’s report: Digital Profile Mom & Baby Shoppers in Indonesia.

Indonesian actress and Miss Universe 2007 finalist Agni Pratishta was one of the panelists at the event. She agreed with the findings and also mentioned that most women visit numerous websites to find the best deals.

“I have a group chat with other moms where we exchange information regarding which e-marketplace is having a sale right now,” admitted Agni.

Agni was joined in the panel session with the Head of Marketing Baby Care from Softex Indonesia, Wenny Damayanti, and aCommerce Group CMO Sheji Ho to shed light on the current landscape comprising Mom & Baby online shoppers in Indonesia.

What else did we discover from the event?

Panel session during ecommerceIQ event in Jakarta with Agni Pratistha (middle) and Wenny Damayanti (right).

Indonesian moms shop cautiously online

When Indonesian moms were asked about their favorite online shopping platforms, brand websites did not feature much in their answers, with only Mothercare Indonesia appearing on the radar at a score of 4%.

Digging deeper, the result is most likely related to the type of products they are more likely to buy online in this category. Following general ecommerce trends in the country, Baby Clothing (49%) ranked as the most popular product purchased online in this category, followed by Baby Gear (23%) and Toys (18%).

Mom & Baby Indonesia Online Shoppers

Top products purchased online in Mom & Baby category in Indonesia; ecommerceIQ Mom & Baby Customer Survey in Indonesia (2018)

Meanwhile, perishable goods like Baby Personal Care and Baby Food are less popular and the cause of it is rooted in the main reasons why Indonesian moms don’t shop for this category online.

Mom & Baby Indonesia Online Shoppers

Top reasons for consumers to not shop for Mom & Baby products online; ecommerceIQ Mom & Baby Customer Survey in Indonesia (2018)

More conviction is necessary for consumers to purchase perishable goods online; moms require full assurance of product quality, and one way to avoid buying counterfeit products in the e-marketplace is to purchase only from brands’ official online flagship stores.

The top three consumer-favorite platforms all benefit from their official brand-dedicated portal inside their platform.

Mom & Baby Indonesia Online Shoppers

Tokopedia’s dedicated page for brands’ official store; Tokopedia

The importance of word-of-mouth in the digital world

Brands should always take cues from its consumers to adjust and hone their retail strategy. These include instilling customer confidence to overcome the reservations mentioned above. Wenny revealed that internet habits of millennial mothers provided the driving force for Sweety’s shift to digital.

“These moms are constantly searching for information online. TV commercials alone are no longer sufficient. Modern day moms use the internet to talk to their friends, surf for product information and read customer reviews before deciding which products to buy. Sweety took these cues onboard and redefined its online strategy,” explained Wenny.

Sweety’s official flagship store is offering online exclusive offer on ShopeeMall Indonesia.

Product reviews are a key aspect for Indonesian moms to overcome the wariness of doing their shopping online, as seconded by Agni

“Reviews are the make or break point for me when I shop online. When I see a product in e-marketplace with no review, even if the price is right, I wouldn’t risk buying it most of the time.”

Unfortunately, leaving a product review is not a habit mastered by Southeast Asian consumers yet, especially compared to consumers in developed ecommerce market like the US. And most of the time, Southeast Asians are prone to leave only bad reviews as a way to express their dissatisfaction and to caution other consumers.

Brands must concentrate on encouraging satisfied consumers to be more proactive and do the same. Some brands have utilized user-generated content platforms like ReviewIQ to help with the problem. Nivea, for example, achieved an increase in the number of positive reviews with the help of ReviewIQ from real consumers for its flagship store on Lazada Thailand.

“At this stage, brands still need to incentivize satisfied consumers to help generate good, organic reviews,” says Sheji.

How should Mom & Baby brands go about online?

Sheji stresses the importance of brands understanding the nature of their products and their primary objective to determine the optimal online strategy.

“If your products fall into the luxury category, you might as well sell it on your brand website to retain the full control of your channel. However, this strategy requires you to invest extensively in bringing in traffic,” advised Sheji.

But having a website also means owning a proprietary media channel that can be used for marketing and educational purposes. Brands like Sweety and Frisian Flag, for example, use their sites to connect offline promotion with the online audience as well as equip consumers with detailed product information.

For most brands, however, if the objective is to diversify sales channels, then opening an official flagship store on an e-marketplace like Shopee or Lazada is sufficient and also easier to maintain, while providing access to a broader online consumer base.

Drawing on her extensive experience in promoting Sweety to e-marketplaces, Wenny opined that prioritizing e-marketplace sales avenues is paramount for success. Especially in Indonesia where consumers are presented with many options, and competition between e-marketplaces is high, brands often feel the needs to have ubiquitous footprints.

Wenny summed up, “Choosing the right e-marketplace is an important step in the online expansion. Selection must consider the available audience, while also ensuring that the e-marketplace’s infrastructure is compatible with the business.”

Get the full report of Digital Mom & Baby Shoppers Profile here.

We conducted an online survey (“Mom & Baby Shopper Survey”) in February 2018 to understand the shopping behavior of Indonesian females (N=1,144), specifically mothers, when buying items in the Mom & Baby product category i.e. diapers, milk formula, toys, etc.

The results revealed whether these women preferred to buy baby products online or offline, how much they spent on average per order, what item they purchased on a frequent basis, their age, the family household income and what would convince them to increase shopping frequently.

The survey sheds light on the following topics:

  • What factors are causing consumers in the Mom & Baby category to continue to buy offline rather than online?
  • What aspects of ecommerce marketplaces are most important to Indonesian female shoppers and which marketplaces are most popular?
  • What items do Indonesian female consumers prefer to shop for online in the Mom & Baby category?
  • How do Mom & Baby category consumers start their online purchasing journey?
  • What is the shopper profile and annual spend of Mom & Baby shopper in Indonesia?

Chapter 1: The Online Potential for Mom & Baby Brands in Indonesia

The birth of a baby is a life changing event for a household in regards to its finances, hours of sleep received per night, and especially, the ongoing adjustment to becoming parents.

For every minute that passes, approximately 250 babies are born into the world.

Indonesia is a country with a population of more than 260 million and on average, 2.44 births per woman in 2015/2016 – the fourth highest among all Southeast Asian nations. It is approximated there are 1.6 million births per year in the country.

Figure 1: The average number of live births per woman in Southeast Asian nations. Source: Statista

To care for each new life, parents need to invest heavily in categories like diapers, milk formula, toys, clothing, education and especially, time. Over the next eight or ten years as the child grows older, starts school and requires different products and nutrition, certain shopping habits in the parents have already cemented.

This includes what brands they trust, what products they will recommend to friends and family and which channels to buy them from.
As the median age of new mothers in Indonesia at first birth is 22.8 years of age, younger than found in Thailand, Singapore and the Philippines, she is commonly already digitally savvy.

Indonesia is predicted to have the fourth largest middle-class consumption on a global scale by 2030.

ecommerceIQ

Figure 2: Middle class consumption around the world. Source: The Emerging Middle Class in Developing Countries, Brookings Institution

Considering the country’s middle-class household count is also expected to rise to 23.9 million in the next 12 years from 19.6 million in 2016, retailers are looking to capture common characteristics of middle class consumers – more spend on travel, holidays and family.

The purchasing power of Indonesians will also rise for the next two years as the country’s gross domestic product is expected to reach US$1.7 trillion by 2020 (Figure 2).

ecommerceIQ

Figure 3: Forecasted GDP of Indonesia is expected to reach US$1.7 trillion in 2020. Source: The Economist, World Bank, Badan Pusat Statistik Indonesia.

This is why companies are allocating massive budgets to build credibility with customers early in the journey of motherhood and more importantly, influence the behavior of future generations.

Not only does Indonesia house 132.7 million internet users, 1 out of 4 of the internet users in the country is a mother (Google & Kantar WorldPanel Indonesia). The number is expected to rise over the next three to five years as the majority of the population are females aged 10 to 19 years of age (Figure 3), meaning Indonesia can also expect a rise in new mothers.

ecommerceIQ

Figure 4: Indonesia’s demographic by age and gender. Source: Central Intelligence Agency

All of this makes the Mom & Baby category a highly attractive and rampant industry in Indonesia in the coming years.

How can companies capture new mothers and help them adapt to parenthood?

Sign up here to receive the full report of Digital Mom & Baby Shoppers Profile in Indonesia.

The importance of Islamic financing

Indonesia is the world’s most populous Muslim nation – out of the 260 million people living in the country, 87 percent identify as Muslim. But the country remains a laggard when it comes to developing a robust finance industry.

One of the factors contributing to the slow growth of inclusive economic development is lack of Islamic financing.

What is Islamic finance and how does it differ from conventional practices?

The main difference between Islamic and conventional finance is the treatment of risk, and how risk is shared. In a conventional loan, the financier has a contractual right to receive interest (and capital repayment) irrespective of the condition of the borrowers’ business.

The main principles of Islamic Finance is the avoidance of all haram (harmful) activities such as charging interest. Islamic financial institutions must ensure that ambiguity (gharar) or gambling/speculation (maysair) is minimised in transactions and contracts. Complying with Shariah law also means these Institutions are not permitted to invest in alcohol, pork, pornography or gambling. – Financial Times

Promoting risk-sharing instead of debt-financing, reduces poverty and inequalities, which are the necessary objectives that need to be addressed by economic development policy makers. – Journal of Business & Financial Affairs

Indonesia has long been a contestant to become a global hub for Islamic financing, and created a road map for its development since 2017. The government believes Islamic finance will be an engine of stability and drive financial inclusion. Both Muslims and non-Muslims can benefit from Islamic Finance as it aims, by principle, to be a more transparent system of finance.

The risk-sharing features in Islamic financings also help ensure the soundness of individual financial institutions and discourage the types of lending booms and real estate bubbles commonly seen as precursors to the global financial crisis.

By focusing on asset-backed and shared-risk principles, Islamic financing has the potential to persuade more financing by small and medium sized enterprises (SMEs) to kick start their businesses. With so many beneficial qualities, it seems strange Islamic financing isn’t more widespread in the country, why is that? Without the right financial literacy, people are reluctant to shift from conventional financing.

Lack of Islamic finance in Indonesia

The establishment of Islamic banks in Indonesia 25 years ago is considered late compared to other Muslim-majority countries such as the Philippines (in 1973) and Malaysia (in 1983).

Indonesian authorities were reluctant to support it for a long time because the country was colonized by Dutch adopted Western-led financial institutions that dominated international finance since the end of World War II.
But after the global financial crisis in 1998, Indonesia was keen to find alternatives to broaden its financial base and better protect itself from global financial shock.

Indonesia’s President Joko Widodo (Jokowi) put together the National Committee for Sharia Finance (KNKS) in 2017 to boost Islamic finance and tackle the challenges surrounding Shariah banking in the country.

And while Shariah banking assets continued to increase in 2017, amounting to IDR 435 trillion (US$32.2 billion), or about 5.8 percent of total assets of Indonesian banks – up from 4.83 percent in 2015 – it was still small compared to Saudi Arabia’s 51.1 percent, Malaysia’s 23.8 percent, and the United Arab Emirates’ 19.6 percent.

The adoption of Islamic finance is also in line with government initiatives working to address barriers to SME growth, such as limited access to finance, which is frequently cited as a problem for smaller firms that lack sufficient collateral for loans.

In the last five years, SMEs have played a large role in Indonesia’s economic structure. Last year, SMEs accounted for 60.3 percent of the total GDP from 57.84 percent in 2012.The Governor of Bank Indonesia Agus Martowardojo hopes the role of SMEs to GDP can increase to 70 percent by this year.

A new early stage fintech startup hopes to help the government achieve their ambitious goal. Ex-bankers and friends Bembi Juniar, Dima Djani, and Harza Sandityo created Alami to boost Shariah financing and focus on educating SMEs about its benefits.

“Alami is a technology company that aims to facilitate small businesses to obtain Islamic financing from banks. It will accommodate Shariah financing, filter and provide accurate ratings for prospective borrowers and facilitate communication between banks and prospective borrowers,” explains Dima.

“I hope through the technological advancement that we offer, we will speed up Shariah banking processes and increase efficiently by at least 50 percent.”

Popularising Islamic-based finance in an unbanked country

Alami was founded in December 2017 and was the runner-up start up in the INSEAD Venture Competition held in Singapore and Paris. The company has raised at least US$100,000 in pre-seed funding round from undisclosed angel investors.

Bembi Juniar, Dima Djani, and Harza Sandityo the founders of Alami Shariah

Dima Djani, one of the founders of Alami, shares with ecommerceIQ that the lack of infrastructure, lack of support from key opinion leaders, and lack of education on Shariah finance are main roadblocks to the country’s slow adoption of Islamic financing.

“People don’t learn about this at school, and we believe technology is needed to spread the benefits of Shariah finance,” says Dima.

“Me and two other founders are young professionals with banking backgrounds. We create technology to simplify the loan process for SMEs to get financing and for bankers to easily focus on SMEs,” says Dima.

“Fintech is a strategic opportunity for Shariah finances to expand their market segment,” Financial Service Authority chief Wimboh Santoso said as quoted on CNN Indonesia.

The startup positions itself as a strategic partner to the few existing Islamic banks, not as a direct competitor and has already partnered with three prominent Islamic financial institutions: BNI Syariah, Bank Mega Syariah and Jamkrindo Syariah, with a total transaction value of IDR 9 billion and IDR 50 billion.

“The most common deals SMEs need money for is working capital to expand, either through trade finance or plain working capital financing and they are coming from the chemical and construction industries,” shares Dima.

How does Alami services work?

There are two simple steps SMEs need to follow to use Alami’s service:

  1. .SMEs register and fill out a form on Alami’s website – data to be shared includes corporate and some historical financial information
  2. The system assigns a rating indicating the SMEs risk and matches the business to Alami’s bank partners

According to Dima, Alami is an abbreviation of Alif-Laam-Meem, the first sentence of the second Surah or chapter of the Al-Quran (the meaning which only God knows according to Muslims).

But philosophically for Dima and his two other founders, Alami means to motor Islamic finance 2.0 in Indonesia.

“We see Alami as the second chapter trying to improve the Islamic finance sector in Indonesia through technology, creating value for our partners and being a unique Islamic-based fintech startup,” Dima elaborates.

“It is thought that wealth should be created through legitimate trade in assets,” – Dima, co-founder of Alamai

In Indonesia, there are other Shariah-based financing platform such as Cermati and CekAja, but these platforms focus on individual loans, not on SME financing.

What’s next for Islamic financing in Indonesia?

The startup announced its collaboration with Kapital Boost, the Singapore-based Shariah-compliant crowdfunding platform for SMEs to address the lack of financing available to SMEs in Indonesia earlier this year.

Under the partnership, Alami will leverage its SME network in Indonesia to direct businesses to Kapital Boost, who will facilitate fundraising and financing from global investors.

“We believe SMEs are a huge economic contributor for Indonesia and by helping them to grow, we are impacting positively on Indonesia’s economy,” shares Dima. “That’s our aim.”

“Our plan is to be one stop solution for Shariah finance in Indonesia, we are committed to popularizing Islamic finance in Indonesia and work hard to create easy to use technology for both SMEs and our bank partners,” says Dima.

The big deal about Ramadan in Retail

Once a year, approximately 2 billion Muslims worldwide observe a month of fasting to commemorate their Islamic beliefs. This year, Ramadan will start on May 16 and end June 14, 2018.

In Southeast Asia, more specifically the pre-dominantly Muslim countries Malaysia and Indonesia, family members scattered across the region travel home to celebrate the holy month together. In addition to fasting every day from dawn to sunset, there are other consumer behaviors that have awoken retailers and ecommerce players alike.

Eid al-Fitr, the three-day celebration of breaking fast at the end of Ramadan is similar to Christmas in the West. And what is commonly associated with these holidays? Gift giving, new clothes, and feasts.

While the month is a joyous celebration among loved ones, it’s also one of the largest shopping events in the retail calendar – think of Black Friday and Cyber Monday in North America. It pays to pay attention to the Muslim buying power.

ecommerceIQ was invited to speak at Facebook Indonesia’s event a few weeks ago to share its findings about Indonesian shopping behavior during Ramadan based on its new segment Consumer Pulse. This is what we learned.

The average Ramadan shopper profile

Regardless of online or offline shopping preference, majority of Indonesians will buy more during Ramadan.

Based on our survey results, the average Ramadan shopper in Indonesia is a female, between 31 – 40 years of age and spends the most on items in the fashion and groceries categories.

Ramadan 2018

The more indulgent spending may be explained by the fact that prior to the start of Ramadan, working Indonesians have a major influx of disposable income as they receive their bonus for the year.

Unsurprisingly, the more income made, the more they will spend during Ramadan as shown by our survey.

Ramadan 2018

What is important to note is the middle-class household count in Indonesia is expected to rise to 23.9 million in the next 12 years from 19.6 million in 2016.

The country already holds the fourth largest middle-class count on a global scale.

A growing middle-class means emergence of middle class characteristics – more spend on travel, holidays and gifts for family. This is why companies are spending to build credibility early on as reliable brands and influence the behavior of future generations.

This is also what makes the archipelago such an attractive and exciting market.

Shopping peaks during Ramadan

Given the growing popularity of ecommerce across the mobile first region, what trends can we identify in online buying behavior during Ramadan such as what device are they shopping with and at what times?

As soon as the sun goes down, the spending spree begins. Data from aCommerce Ramadan in 2017 show that mobile browsing on ecommerce sites peak at 4-5am and 5–8 pm when people are sitting in traffic.

Ramadan 2018

While the average web session length is longer on desktops, there is more traffic coming from mobile during Ramadan making a great mobile UX important to encourage conversions.

The data also shows that males tend to browse more than females, but females have a higher conversion rate. While marketers should tailor campaigns appealing to both, converting males can be a bit trickier.

Ramadan 2018

Males tend to appreciate a straightforward and simple online shopping versus social and comprehensive experiences. They also buy based on logical steps (versus emotional) and like to research before buying, which can account for the increase in browsing activity.

Capturing the Ramadan shopper

Based on our survey, the most popular online channels for shopping during Ramadan are Shopee and Lazada Indonesia.

While the top players have moved past the question of whether they should have an official online presence, having a shop-in-shop isn’t enough given the number of sellers available.

Questions brand managers need to ask themselves include: how well do my products rank in search? What’s my pricing strategy? How are my product reviews? How attractive is my brand presence? How quick is delivery?

Consumers in Indonesia shared the top three reasons that would convince them to shop online more often.

  1. Special Ramadan promotions on products they need i.e. food and fashion
  2. Payments option cash on delivery
  3. Same day delivery with no additional fees

Sites that did not feature lower priced items suffered a hit in conversions. Indonesians are price conscious and even with disposable income from their bonus, thriftiness is a major factor in consumption behavior.

While it is okay to mix normal priced items on the homepage, lower priced items should be brought to the forefront. This is a great time of year to flush out inventory.

Ramadan 2018

Logistics and payments remain the toughest challenges in Indonesia ecommerce due to infrastructural immaturity and lack of financial knowledge. Most companies have been smart to outsource the two pain points to improve their shopping experience efficiently.

Ideally, fulfillment partners should have a strong local footprint across Indonesia through hubs/sorting facilities and offer multiple payment options to shorten delivery times and give customers flexibility.

Ramadan retail takeaways

During this period, retailers, brands, companies, social merchants are all vying for the same consumers making competition fierce. Everyone is spending more in hopes to catch more customers.

Because not every company has million dollar budgets to burn, marketers have to be smart with their spend and the first step is understanding consumer habits and preferences.

Indonesia is arguably the most important internet market in Southeast Asia as a result of its sheer size, emerging middle class, and digitally savvy population.

The annual global digital ecosystem report by We Are Social says Indonesia has 132.7 million internet users, which points to a penetration rate of 50% of the population. 130 million of these use some form of social media, showing how plugged in Indonesians are when it comes to documenting their lives online or using platforms like YouTube to consume content.

Source: We Are Social

With half of the Indonesian population still offline, there’s massive potential for ecommerce ventures, smartphone manufacturers, as well as brands building products to appeal to millennials in the country.

Other countries in Southeast Asia – Malaysia, Singapore, Thailand, and the Philippines for example – may have higher internet penetration rates but their smaller populations can’t compete with Indonesia in terms of volume.

It’s these numbers that have forced investors to take notice.

study by Google and AT Kearney indicated that venture capital activity in Indonesia has grown 68X in the past five years, driven mainly by growing interest in ecommerce and ridesharing.

Total VC activity in the first eight months of 2017 was recorded at US$3 billion – more than double the number for the entirety of 2016, which was US$1.4 billion.

The same study predicted the volume of investments in Indonesia will continue to grow in the foreseeable future because VC investment as a percentage of GDP in Indonesia is actually lower than its Southeast Asian counterparts.

Source: Google / AT Kearney

What are Indonesians doing on the web?

Indonesian residents love the internet. 79% of survey respondents in the We Are Social report said they logged on to the web at least once a day. The average daily time spent online was almost 9 hours with approximately 5 hours dedicated to social media and streaming music.

Source: We Are Social

The majority of web traffic in Indonesia comes from mobile phones, facilitated by the availability of cheap smartphones to the Indonesian population coming online for the first time; sidestepping desktops and PCs directly.

Access to mobile has also caused excitement around fintech as only 36% of Indonesians possess bank accounts and only 3% have credit cards. If e-wallet platforms get it right, there are 125 million mobile internet users waiting for easy banking.

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Indonesians are also increasingly using the internet to embark on their product buying journeys. 45% of Indonesian netizens search online for a product or service to buy with a similar number landing on an online store and 40% make ecommerce transactions at least once a month.

Source: We Are Social

Fashion & beauty categories attract the highest amount of spend online, almost double that of electronics despite having a lower basket size than consumer appliances like mobile phones, cameras, and wearable gizmos.

It was estimated that Indonesians spent close to US$10.3 billion online in 2017.

Source: We Are Social

Dizzying statistics aside, the Indonesian market still has plenty of space to grow.

Expect heightened competition in the years to come as incumbents jostle for space and keep raising large war chests to outmuscle opponents. VCs, especially with an entrenched position in the market, can’t afford to back down now – there’s too much skin in the game for them to consider any hasty exits.

Recent developments already demonstrate how investors are taking a long-term view of the market. Alibaba injected over a billion dollars in local ecommerce marketplace Tokopedia last year. JD.com, Alibaba’s direct rival in China, has opened fulfillment ccenters across Indonesia with a view to keep expanding. And homegrown unicorn Go-Jek is rapidly transforming into a Wechat-esque ‘super app’ with users able to do everything from hail motorbikes to get their plumbing fixed, and pay for it via e-wallet.

250 million Indonesians have rapidly embraced the rise of ride-hailing apps to add convenience to their lives.

The three largest players in Indonesia – Go-Jek, Grab, and Uber – not only lower congestion on the roads by connecting drivers to multiple riders, they also offer food delivery, payments via e-wallet features, and almost any service you can think of on-demand.  

These value-added features are possible thanks to each player’s treasure chest topped up with billions of dollars from venture capital funds and massive corporates like Alibaba, Honda, and SoftBank.

But which app do users in the archipelago actually prefer and why?

Indonesians judge their favourite ride-hailing apps

Consumer Pulse by ecommerceIQ is a new series that dives into the minds of consumers to translate their trends and habits into actionable business strategies.

The team conducted an online survey answered by 515 people (46 percent men, 54 percent women) in major cities in Indonesia – Sumatra, Java, Kalimantan, Sulawesi, Bali, West Nusa Tenggara, to Papua – to find out which ride hailing application (Uber, Go-Jek and Grab) they use the most on a daily basis.

A general consensus is that price and number of promo codes are the two key factors that impact adoption in Indonesia, but, our results indicate otherwise.

The majority of respondents pointed to safety as the primary factor when choosing which ride-hailing application to use. It’s not hard to decipher when you consider Jakarta traffic and the thought of weaving through the streets on a high-speed motorcycle.

Indonesians choose safety as the primary factor when choosing which ride-hailing application to use. Image source: ecommerceIQ team.

According to the Head of Indonesia’s Traffic Police Unit, traffic related deaths in the country have hit worrisome levels at roughly 30,000 per year – higher than crime related and terrorism caused deaths combined.

He also added that the number of traffic incidents in Indonesia is the highest among ASEAN countries.  

“Think of the approximately 28,000 to 30,000 people who die on the road per year because of accidents. Compared to terrorism and crime (the difference) is huge,” — National Traffic Police Chief Royke Lumowa

Providers should focus on improving the quality of their riders and vehicles, protective gear and insurance policies to capture more users. Both online and offline elements should be considered during product development as they are equally crucial when it comes to consumer purchase decisions.

For added assurance to both passengers and drivers, the three major ride-hailing apps in the country offer insurance:

  • Go-Jek offers up to 10 million IDR ($751 USD) for death and 5 million IDR ($375,50 USD) for an injury.
  • Grab provides up to 50 million IDR ($3,755 USD) for deaths, and 25 million IDR ($1,877.50 USD) is given to users with severe injuries.
  • Uber provides the most; up to 100 million IDR ($7.510 USD) for deaths, and 10 million IDR ($751 USD) for the treatment.

In 2016, Grab Indonesia promoted a controversial ad campaign to highlight the importance of road safety and how standards in Indonesia can improve. Unfortunately, the images were too graphic and the video was removed but it succeeded in bringing awareness to safe driving practices.

Grab’s ad campaign in Indonesia received a less-than-positive reaction from netizens, with many calling it too gory and disrespectful but it did its job in increasing awareness. Image source: Brandingasia.com

The second most popular reason why people used one ride-hailing app over the others was (unsurprisingly) the ease of finding a driver (23 percent). The rest of the reasons are as follows:

  • Frequent promotions and discounts (22 percent)
  • Easy navigation within the app (16 percent)
  • Many payment options (5 percent)
  • Wide food delivery options (3 percent)
  • Helpful customer service (3 percent)
  • Loyalty rewards (2 percent)

Consumers also indicated that they’re not excited about e-wallet features. Unsurprising as there’s no widespread use apart from the apps own services.

Nevertheless, payments remain a priority area for senior management looking to build a super app like WeChat in China.

CEO and co-founder of Go-Jek, Nadiem Makarim, mentioned he wanted to separate Go-Pay from the Go-Jek ecosystem during an interview with CNBC,

“Payments will be our core focus in 2018, and it will become the year of Go-Pay leaves the Go-Jek app ecosystem and it goes online and offline and to start fulfilling its mission to be the number one financial inclusion tool for Indonesians to gain access to these digital goods and variety of financial services, that frankly they have been deprived of this thought.” — Nadiem Makarim

So which ride-hailing player wins Indonesia?

What’s the app used on a daily basis among our respondents?

First position goes to homegrown unicorn Go-Jek.

Working under the slogan, “Karya Anak Bangsa” (Made by Indonesians), the company has become a favorite among the survey respondents (56 percent) and Indonesians since its establishment in 2010.

The country’s first tech unicorn scaled from a call centre and fleet of 20 riders to more than 654,000 drivers in 50 cities.

Later entrants in the space benefitted from Go-Jek’s investments in marketing and awareness. Consumers, now educated about ride hailing and startups didn’t need to be persuaded too much to try a new option.

  • Grab placed second at 33 percent
  • Uber place last at 8 percent
  • 3 percent of the respondents reported they don’t use ride-hailing apps at all

When considering these results, there are a few factors that impact the ranking:

  • First mover advantage (Go-Jek)
  • Largest reach in the country (Grab)
  • Time of entry into the country (Go-Jek October 2010, Grab June 2014, Uber August 2014)
  • Location of the respondents

A couple of months ago, Grab announced its expansion to 100 cities in Indonesia, making it the dominant player in the country. Meanwhile, Go-Jek and Uber can be accessed in only 50 cities and 34 Indonesian cities, respectively.

Price and promos also carry more weight after the Indonesian Ministry of Transportation announced basic rates for all online car-hailing services; 3,000 – 6,000 IDR ($0.23 – $0.45 USD) per kilometer in the areas of Java, Bali, and Sumatra. For Kalimantan, Sulawesi, Nusa Tenggara, Maluku, and Papua, the rate is more at 3,700 – 6,500 IDR ($0.28 – $0.49 USD) per kilometer.

Meanwhile, the Indonesian government hasn’t announced any regulations for online motorcycle taxis. Based on eIQ research, rates vary between each app.

*The rates are based on a 15 kilometer trip that eIQ personally hailed on each app during rush hour.

46 percent of respondents admitted they have two ride-hailing applications installed on their smartphones. 23 percent of respondents had three applications installed, 29 percent owned one application and 2 percent didn’t use any apps.

Final takeaway

It’s not difficult to understand why residents in each city prioritize certain features over others. Respondents from Semarang, Surabaya and Greater Jakarta value discounts and promotions more than any other option, probably because they have more access to transportation choices.

The KRL Jabodetabek (Jakarta Commuter Line) and TransJakarta in Jakarta; TransJateng and BRT in Semarang; and TransSuroboyo in Surabaya.

Based on the data collected, providing a helmet, hairnet, and insurance is a safety standard all ride-hailing apps should meet.  

The other takeaway from this piece is that being first mover in an industry may not always guarantee an advantage. Go-Jek was the first company to introduce ride-hailing in Indonesia, seizing a head start on later entrants but Grab has been quick to develop and expand its operations in Indonesia and become the dominant player in the country.  

Growing your business without understanding your market and competitors is risky. Consumer Pulse by ecommerceIQ helps collect and analyze information about consumer behavior to help you to hone your marketing strategy.