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Despite its reputation as the next biggest ecommerce market after China and India, Indonesia’s playground has caused many players drop out.

Alfacart, an e-marketplace offering products from various categories, is the latest name in retail that has shifted strategy in order to remain in the game.

After more than a year operating as a horizontal marketplace, Alfacart has reverted back into an ecommerce channel selling products solely from its parent company, Alfamart – Indonesia’s second biggest convenience store chain.

The pivot has not only caused the downsized in the team and C-level management to resign but as well, all third party sellers.

What happened?

Alfacart’s beginning

Alfacart was first introduced to the country as AlfaOnline and built in 2013 when Alfamart realised the importance of having an online channel to expand its reach. The platform at that time focused on selling groceries and various daily necessities.

After three years and a lack of significant growth, the company decided to open its platform to third party vendors and increase their product categories to include items under Fashion, Gadget, and Lifestyle.

“Our digital presence needed to be transformed into full-fledged ecommerce to be able to win the market and contribute significantly to the group’s revenue,” said CEO Catherine Sutjahjo at the time of the transformation.

This pivot came along with a new name, and Alfacart was born.

Alfacart pivot

Alfacart portal before the pivot

To distinguish themselves from the other many horizontal marketplaces – Lazada ID, elevenia, Mataharimall, blibli, etc. – they introduced O2O (online-to-offline) by leveraging Alfamart’s offline network of over 7,000 stores nationwide.

Customers ideally could pickup and return their order at any Alfamart counter, which also widened their payments options to cash.

However, despite its efforts, Alfacart struggled to compete with the already established marketplaces. A quick look at web traffic ranks in Indonesia show that Alfacart hasn’t managed to come in the top five.

Alfacart pivot

Alfacart (purple line) traffic is seen declining in the last three months

Say yes to the horizontal marketplace?

Alfacart is not a lone case in Indonesia’s saturating retail space. Only a month earlier, Cipika, a  marketplace backed by Indosat Ooredoo – one of the largest telco providers in Indonesia – announced that it was shutting down its business.

Similarly to Alfacart, Cipika also evolved into a multi-category marketplace model by offering snacks and electronics in an attempt to reach more potential customers but called it quits after almost 3 years.

Alfacart pivot

Cipika’s shut down announcement on their website

The company’s reason for closing down?

“B2C ecommerce will take a long time to reach profitability,” admitted Prashant Gokarn, Chief Strategy and Digital Services Officer at Indosat Ooredoo.

Say no to the marketplace.

The landscape for B2C ecommerce in Indonesia is indeed crowded and becoming more so as big corporations and conglomerates scramble to back new ventures by pumping in millions of dollars.

Alfacart pivot

Indonesia’s crowded B2C space

The problem though is a lack of any distinguishing factors between these marketplaces as they all offer similar product categories, operate on the same models, and target the same people.

With the same people vying for the same slice of pie, one way to win the consumer is by offering heavy discounts — a strategy that hasn’t changed since the birth of ecommerce in the country 4-5 years ago and still yields the same little return. Another way would be to diversify.

Blibli is a good example of a B2C site offering new categories such as local Indonesian goods and travel through the acquisition of Tiket.com.

What’s important to note is that the playing field is about to get even more rough as notable C2C players like Bukalapak, Tokopedia and Shopee have also branched out to B2C by onboarding big brands like Unilever to their platforms.

Who will be standing at the end of the year?

Alfacart pivot

Alfacart’s C-levels: CCO Ernest Tjahjana, CEO Catherine Hindra Sutjahyo, CMO Haryo Suryo Saputro with Alfamart’s IT Director, Bambang Djojo (in red)

Here’s what you should know today.

1. Indonesia’s second largest telco shuts down its ecommerce site

Indosat Ooredoo, Indonesia’s second largest telco by revenue, says it’s shutting down its ecommerce site Cipika.

It’s part of the telco’s shift in strategy away from launching new business units in-house. Instead, it’s collaborating with experienced partners and focusing on core strengths.

“B2C ecommerce will take a long time to reach profitability,” said Prashant Gokarn, chief strategy and digital services officer at Indosat Ooredoo.

The telco’s support of the SB Isat fund and startup accelerator Ideabox, which launched late 2013, is part of the shift to turn outward for innovation. Moving forward, Indosat Ooredoo is re-focusing on its core strengths, which lies in its consumer base and distribution network.

Read the rest of the story here.

 

2. Warby Parker’s new app lets you skip the eye doctor

Warby Parker wants to get you the right prescription glasses without forcing you to get an in-person eye test. It’s now testing its new Prescription Check app that uses your phone and computer in tandem to administer a 20-minute series of eye tests, which are then reviewed by a doctor who makes the final call on your prescription.

This could let Warby Parker sell people prescription glasses on impulse rather than hoping customers come back once they get their prescription the old-fashioned way.

For now, Warby Parker says only people between the ages of 18 and 40 in California, Florida, New York and Virginia who already have Warby Parker glasses are eligible for the test.

Without Prescription Check, Warby Parker users had to either find a doctor on their own to get a prescription, or come in to one of the startup’s roughly 50 retail locations that are mostly just in big cities.

Read the rest of the story here.

 

3. Facebook signs BuzzFeed, Vox, others for original video shows

Facebook Inc has signed deals with millennial-focused news and entertainment creators Vox Media, BuzzFeed, ATTN, Group Nine Media and others to make shows for its upcoming video service.

Facebook is planning two tiers of video entertainment: scripted shows with episodes lasting 20 to 30 minutes, which it will own; and shorter scripted and unscripted shows with episodes lasting about 5 to 10 minutes, which Facebook will not own.

Facebook’s move to acquire and license original content is the latest in its push to attract more advertising dollars, putting the company in head-to-head competition with Alphabet Inc’s YouTube Red, Snapchat’s Discover feature, and traditional television networks.

For the second tier of shorter shows, Facebook will pay $10,000 to $35,000 for each show and give creators 55 percent of revenue from ads, the sources said.

Read the rest of the story here,