Mobile phone operators venture into e-commerce – Jakarta Post

Mobile network operators are delving into e-commerce to step up their non-telecommunication income, which they want to see surge to counterbalance the gradual decline in voice and text messages.

“Many telecommunication operators have launched units like this because their core businesses have been slowing and as such, they are looking for new areas to invest in,” PT Indosat group head of digital services, Tauseef Riaz, said.

Indosat, the country’s third-largest mobile network operator, has established a unit called Dunia Digital, or Digital World, to play the role of tech incubator and accelerator. Established at the end of last year, the unit consolidates Indosat’s previously disjointed mobile payment and mobile advertising businesses.

Riaz added that the unit would soon be overlooking a new business: e-commerce.

 “We are going to launch a new e-commerce business and we plan to launch our first e-commerce product within two months,” he told The Jakarta Post.

He added that Indosat had eyed three e-commerce models, the two being investing in an e-commerce start-up and collaborating with foreign players. “However, the one we will be launching soon is largely an in-house project. This e-commerce model is more retail-oriented but we will focus on a few products,” he said.

Besides Indosat, state-owned telecommunication operator PT Telekomunikasi Indonesia (Telkom), has collaborated with US-based eBay to establish PT MetraPlasa, which operates e-commerce site, Plasa.com.

However, strictly e-commerce sites falling in the top 25 most-visited sites in Indonesia according to web information company Alexa are tokobagus.com and berniaga.com.

While Indosat is still working to get their in-house e-commerce business launched, PT XL Axiata has introduced Elevenia, a virtual marketplace overseen by PT XL Planet.

XL Planet was formed as a joint venture between XL Axiata and SK Planet, the online and mobile firm under South Korean telecommunication operator SK Telecom.

XL Axiata chief digital services officer Dian Siswarini said that XL Axiata and SK Planet evenly split the almost US$40 million, two-year investment in Elevenia.

“We have sourced our share of the funding from our parent company Axiata Group Berhad. And to date, we have invested approximately $1-2 million,” she pointed out.

Meanwhile, Indosat is earmarking $2-3 million this year to run Dunia Digital.

Dian added that XL Axiata had chosen to collaborate with SK Planet as Korea had become “the most advanced market for e-commerce”.

“Although Elevenia has been operating for only two weeks, we have amassed nearly 7,000 sellers showcasing at least 65,000 products,” she pointed out.

“Our daily visitor count is around 30,000, with an additional 1,000 new visitors every day. However, the amount actually shopping is still a low 3 percent,” she added.

Yet, she expected the number of sellers to reach 50,000 and products to hit 1.5 million by the end of November as the site caught on, she added.

“We have been scouting vendors willing to open shop at Elevenia from those already running shops in wholesale retail centers such as Tanah Abang and Mangga Dua,” she said.

She added that XL Axiata aimed to break even and earn profits from its e-commerce business within five years.

“We expect our digital services business, including value-added services [VAS], to contribute 8 percent to our revenues by 2016, up from the current 3.5 percent in gross,” she said.

Similar to Indosat, XL Axiata also operates a digital mobile payment and advertising business. XL Axiata earned revenues of Rp 7.6 trillion in 2013, of which 57.2 percent came from mobile data and VAS.

Riaz pointed out that having an e-commerce business would eventually leverage that of mobile payments and advertising.

People could pay using their mobile wallets while brands could advertise on the sites, he noted. In addition, mobile network operators could leverage the massive amount of subscriber data to tailor these services.

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