Unveiling the Power of Offline Channels
In a groundbreaking collaboration, Katadata Insight Center and Evermos, Indonesia’s premier social commerce platform, have unveiled a report that delves deep into consumer patterns and behaviours. The objective? To offer invaluable insights that can fuel the growth of local brands in the archipelago.
The E-commerce Paradox
While the last decade has witnessed an e-commerce explosion in Indonesia, especially accentuated by the pandemic, the report titled “Beyond the Digital Frontier: How Offline Channels Propel Local Brands to New Heights” reveals a surprising trend. Despite the digital wave, offline channels still enjoy a more favourable perception among consumers.
Ghufron Mustaqim, Co-Founder and CEO of Evermos, remarked, “The e-commerce sector in Indonesia has seen a decade of growth accentuated by the pandemic, but as this report shows, e-commerce has not yet outpaced traditional retail, with just one in three Indonesians actively using e-commerce.” He further emphasized the collaboration with Katadata Insight Centre to unearth strategies that have enabled local brands to transition into national icons.
The MSME Challenge
Micro, Small, and Medium Enterprises (MSMEs), which constitute a staggering 99% of Indonesian businesses and contribute 61.9% to the nation’s GDP, face a myriad of challenges. Despite their digital transformation efforts, many grapple with issues like limited innovation, market access constraints, and scaling up challenges, especially in the lower-tier cities where a significant 87% of the population resides.
Gundy Cahyadi, Research Director of Katadata Insight Centre, pointed out, “The report shows a consistent pattern among national champion brands: the bigger a brand grows, the larger the contribution from offline channels. While online channels are important for growth in the digital era, industry leaders are brands that have strong roots in offline channels. Nationally recognised leading brands realise the importance of having a connected commerce strategy, making it easier for consumers to move between online and offline channels in an integrated manner.”
Also read: Tinder Teams Up With ‘Mean Girls’ Star Jonathan Bennett for World Romance Scam Prevention Day
Key Takeaways from the Report
The report offers a plethora of insights for emerging businesses:
- E-commerce, while impactful, still remains a smaller segment of the Indonesian economy.
- Trust issues deter many from online shopping, despite potentially better pricing.
- Leading brands with substantial annual sales have a dominant offline presence, especially in lower-tier cities.
- Offline channels aren’t just distribution avenues; they significantly boost brand awareness and loyalty.
- Innovation, both in product and marketing strategy, is paramount for brand growth and differentiation.
Government’s Stance on MSMEs
Teten Masduki, Minister of Cooperatives and Small and Medium Enterprises, Republic of Indonesia, emphasized the government’s commitment to MSMEs, stating, “Indonesia’s MSMEs have long been the backbone of our economy, contributing significantly to GDP and employment, and it is our top priority to realize the full potential of MSMEs and ensure their sustainability.”
For those eager to delve deeper, the whitepaper, “Beyond the Digital Frontier: How Offline Channels Propel Local Brands to New Heights,” is available for download here.
