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eCommerce Platforms: Challenges and Opportunities during Ramadan

Apr 2022

As we are nearing the end of Ramadan, the objectives of these sessions is to discuss what challenges and opportunities faced by eCommerce platforms during this month of fasting. 

During Ramadan and Eid Dialog 2022, we talked to Ridzki Kramadibrata, the President of Grab Indonesia. Rofi Udarojat, Head of Public Policy and Government Relations Indonesian E-Commerce Association and Faizal Kuraesin, Senior VP Fulfillment B2B from Shipper. This session was moderated by Rafiuddin Shikoh the CEO and MD DinarStandard.

So I will ask, start with Ridzki because Grab as a super app, you touch the customers as a consumer facing app. Ridzki, let's hear from you. How do you see why Ramadan is important for ecommerce and could you describe the nature of it as well? 

Ramadan is an extraordinarily important period because this month, especially in Indonesia, people are focusing on practicing worship, sharing kindness with others and an increase in public consumption. In terms of shopping on eCommerce and of course, including Grab to meet their various unique needs during Ramadan, we always understand that Ramadan is one of the most cherished moments by the Muslim community in Indonesia where people do more kindness. Again, during this Ramadan period, the general people's expenditures or consumption patterns are driven by some unique cultures.

For example, In Indonesia, it is buying new goods and then the habit also of preparing more diverse star and Sahar meals. With the rapid digitalization push as we are seeing it today, there is an increase in consumption through digital platforms including various Grab services such as Grab Food and Grab Mart. 

Grab serve people for delivering food groceries which changes as well during this Ramadan; therefore, the momentum of Ramadan is highly important because it can encourage potential public transactions in the Grab application, impacting our merchant partners, driver-partners from shopping for food for sale and Iftar at Grabbed to buying various other daily necessities at Grab Mart. Along with this, the demand to support community mobility for the worship also impacts the surging need for hailing services. 

Which increases our services. Hence, we need to serve the community, especially the Muslim community, better during the special Ramadan event. Great party. And I'll encourage other panelists to also have any follow up questions for each other. So, I think, you have various kinds of additional demands and services as people are sending gifts and sharing goodwill and charity. We’re here to facilitate all the services that Grab has.

From the B2B perspective and supply chain in general, Faizal, how do you see the pressure on the supply chain change during Ramadan? How big of an issue is it? Is it in certain categories?

Actually, the Ramadan month really starts a couple of months before that for us because we definitely need to align with our customers and make space for sales. When it comes to the reminder of Ramadan, it's only about selling. We need to make sure that what is being sold is both available and attractive.

So Mr. Faizal what do you see happening three months before Ramadan? Is it different from last year?

You can really see that a lot of our customers are ready dealing with the principals or their suppliers to obtain their goods because there's such an amount of goods that they are producing, but there is a huge demand. Hence, everyone is really finding enough stock to sell for the month of Ramadan. Our task then becomes to understand customers' needs and the amount that needs to be reserved that can last them for at least 14 days. 

We might need to have an additional warehouse to make sure that we can make all those goods that are coming in the warehouse that we can store that and even any additional activities like Paris you already mentioned, there is this huge demand of hampers and Ramadan. We have this feeling of generosity and sharing these hampers. There are certain activities that we need to align with the customer. The additional packaging that we need to provide or are there additional greeting cards that we need to put in packages or are there any additional decorations that need to be added to be given to young consumers even when we are shipping from one warehouse to the other warehouse for a particular region.

 What’s definitely different from last year and hopefully different for this year is with the period last year there were a lot of roadblocks. So even for transportation sites in one of Ramadan it is often that you have a truck bad. There's a period in Ramadan that there's actually no movement for goods outside of SMT. So, the only movement that was allowed is food, but all the other stuff that's just banned. Hence, there were a couple of weeks that there's no truck with the Reef. So that's why people are stocking up. Last year there were so many roadblocks and we needed to make sure that we had the right papers so shipment would not get stuck and that's what we faced last year. So hopefully this year is something we will not have due to getting more and more loose cases of going for the social. 

Rofi, Can you give us some insight in terms of overall how much of E Commerce penetration is there in Indonesia and how much has it been growing? So what are some of the challenges for the Ecommerce players and how do you see this month of Ramadan being important for e-commerce and with some unique challenges? 

Indonesia is one of the largest and  covers at least 40% of the total population of the South Asian market. So I think it is very important to see how the media grows as a market and in this country because when we see our ecommerce I think we are very lucky that it's not only one sector or the business model that grows. 

Ramadan is exactly pushing the growth of the ecommerce even more because in Indonesia, especially before Callback, we see that Ramadan is already saying that there's an inflated consumption, also inflated prices of course because the people are really interested in consumption and also people earning even more holiday bonus, twice the salary that they get every month. So they want to spend. I think it is also the opportunity for the ecommerce platform to utilize those kinds of opportunities to increase the promo to reach the audience even for the SMEs. I think it is very important for them to gain the momentum of the Ramadan and I think it is also what we're concerned about the regulatory affair of this kind of activity because as we know the last two years are quite restricted in Indonesia in terms of the Ramadan activities especially probably it is not really related with other countries because Indonesia one week before idol city or even two weeks before most of the people in urban area will travel home back to the city where they born.

What difference have you seen between last year and this year in Ramadan for the e-commerce platform in the government? 

In the last two years nothing has happened because the government restricted the mobilization because they're afraid that the effect of the carpet could impact the rural area where the people travel from the city. So I think it is also that we really monitor how the government would actually regulate Ramadan this year because in the last few years we know we have a very quiet restriction. However, in this particular year I think the government wants to push the economic growth better than last year because the public cases have already decreased, but we will see how the government would actually regulate at this particular moment. 

So Rofi, just quickly, what are some of the other issues that you as an Association face? Are there points of friction there that the government still needs to facilitate on this point, or are there other issues?

In terms of Ramadan, I think we have a very good collaboration with the government. I think last year we also had some kind of collaborative action during Ramadan for people to reduce their mobility, because last year we were very quiet and we asked the public to use e-commerce instead of coming home to their rural city. Hence, the collaboration between digital platforms and government is important. For regulation, the government probably needs to acknowledge the difficulties for the people, for example, for some kind of mobility and delivery.

Any thoughts Fiazal on what would be priorities for an association to represent on behalf of ecommerce players?

Let me touch upon that bit on our side, because from a logistics standpoint, we still keep seeing all these cash on deliveries transactions, and I hope to see that definitely for this year. The last thing we want to do is just keep accommodating as much as possible on cash and delivery, but we do see that there's more need of having a faster transaction. Even the merchants or the ones that are selling, they would like to have their money instantly.

Ridzki, How can we truly nationwide Indonesia encourage all these digital payment platforms? From your perspective, what are the initiatives that could work and trigger this to be more accepted also in the rural area?

I think from our side, at least from the grab site, the government has been not only a commodity, but I think very much cooperative and supportive to the building of the ecosystem, especially on the payment gateways and payments. We are one of the enablers to ensure that E-payments are quite inclusive across Indonesia. This has been very crucial, especially for adoptions of digital products, making sure that our surface distributions are not only well distributed, but easy and seamless to be adopted by people not only especially in the Metropolitan cities, but also across many areas across Indonesia.

Rofi, perhaps you can talk about what are the exciting opportunities going forward. How do you see Power feed some of the newer tech interests?

As I said before it applies. I know it may be a bit generic but it applies to Ramadan as well, such as the growth of or potential of blockchain or cryptocurrency. Shariah compliance wise, it's not completely clear as to where we stand on it. As you saw Ridzki, talked about using AI and analytics in anticipating understanding consumers. 

The statistics in Indonesia is quite a staggering number. If we see the Indonesian population is 270,000,000 people more or less and urbanization is more than 55%. I think half of our people are being able to access the proper broadband connection and I think it's able to access the Internet properly because I think most of the fast broadband connections are accessible in the urban area.

 I think that's very effective to advertise your product in Indonesia which is still growing. From our numbers we see that during the Pandemic I think we see 15 million MSMEs. Indonesia is actively trying to widen the sectors of the utilization, as I said, not only about the physical goods but also now the digital goods and services. I think the government is quite cooperative as already mentioned.

If I can get your concluding remarks that we're almost out of time on the outlook and the opportunities in some of the new areas, not tactically in the next year or so, but how do you see Ecommerce developing in the next five years and some of the future aspects? Ridzki?

I'm very positive that Ecommerce digital platform as a whole will keep on growing and it's not only growing in terms of volume, but growing in importance as well. This Ramadan definitely and has been the previous Ramadan as well, has been teaching us how important technology is to provide solutions. It's actually an investment for us as well to expand our surface to the level that people haven't seen before.

With the help of innovations, technology and features like this, people will be more engaged. People will see the relevance and how technology could benefit their daily lives.

What about you Faizal? Any comments on this?

Yes. With all this new technology, everything is becoming so connected and with that connection, everything moves fast. So in the past it could be the case that you fill in a catalog something that you like to order and that it could receive by a buck selling party just a couple of days later and then it's being sent. But now it could happen that with this new technology, whenever we purchase now, it could be delivered on the same day and it is still a challenge in other countries. Also, the high collaboration with all these logistical partners that we can actually make it happen to deliver things just within a particular hour. I would love to see that continuously developed in Asia.

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