Expanding Your Store into New Countries (Personal Observations)

So you want to expand into to new geographies. Sort out the local currency, get a good shipping solution to calculate shipping rates correctly, understand what customers a country is after – good to go, right?

I just got back from visiting relatives in Indonesia living in the #2 city, Surabaya. Each time I go back, I am amazed by the rapid rate of progress. More ads on TV about online marketplaces. Better network infrastructure (even some of the cheap roadside stalls now offer free wifi!). The local shops had robotics classes for children. Things really seem to be moving along.

Oh, and in case you did not realize, Indonesia has the fifth highest population in the world, behind USA. Surabaya has ~3 million people. The capital Jakarta has ~10 million people, ~30 million if you include the surrounding suburbs.

While there I tried to catch up with some local development shops, including Picodio whom I tweeted about. I also asked anyone I could just to get their views on ecommerce in Indonesia. This is by no means an exhaustive survey, but it was interesting. Here are my personal observations.

  • paket-siang-free-wifiThings are developing rapidly. I could not believe seeing little roadside food stalls with free wifi signs. I initially thought it was a joke. (Nasi = rice, Ayam = chicken, Es Teh = Iced tea, 20,000Rp = less than $2USD – with free wifi included.) Every larger restaurant I was in had free wifi. That certainly was not the case even just a year ago.
  • When I asked about PayPal, people sort of laughed – I was told PayPal does not support the native Indonesian currency, so you effectively have pay in USD or similar. Other services were preferred.
  • Most of the company head offices are in Jakarta. As a result, most of the bigger ecommerce players are also located in Jakarta. Surabaya in comparison seemed to have a greater number of smaller businesses and smaller IT developer companies.
  • In Jakarta, the traffic is really bad, which may be driving more people towards online purchases. The result was customers typically want quality – they were making purchases to save them time.
  • In Surabaya, the traffic is not so bad. More people looked online for special offers. It’s quite nice to go the huge air conditioned super-malls, so shopping in person was almost like entertainment.
  • Outside the biggest cities, there is demand for product diversity. There are local stores, but they often don’t have as much selection, so people often look online.
  • Friday and Saturday nights where I was staying, I could connect to Indonesian sites but not USA web sites – they simply did not respond. (Okay, retrying one page 10 times I did manage to get part of the page up before it timed out.) Worked fine other times of the week.

Some simple observations:

  • If you want to maximize sales, it is worth understanding the market you are getting into. Even the #1 and #2 cities in Indonesia have quite different purchasing patterns. Saying “Indonesia is a target” won’t necessarily maximize your profits.
  • Make sure your checkout payment options line up with what people trust and use in your target geography.
  • While things are progressive rapidly in many parts of the world, you do need to understand the quality of the network infrastructure in your target market. Serving Indonesia from a US hosted site might be a bad idea if my personal experience was commonplace. Many believed hosting from Singapore was fine if you wanted to reach multiple locations in Asia.

Anyway, back on deck now. I just have to get through a small mountain of backlogged emails…

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