Can Indonesia’s ecommerce association bridge the digital divide?

Andy Sjarif is the founder of the Nurbaya initiative. Nurbaya’s goal is to make it easier for small and medium-sized enterprises (SMEs) to open online stores and use digital sales channels. Sjarif firmly believes that SMEs constitute the backbone of Indonesia’s economic development, providing stability and growth.

Speaking at a gathering of the Indonesian ecommerce association (iDEA) today, Sjarif cited data from a McKinsey Global Institute report, saying that SMEs can double their growth once they commit to using digital tools. He further explained that SMEs account for 56 percent of Indonesia’s GDP and in his estimate, there are about 55 million of such enterprises in Indonesia. If all those businesses were to double their growth, the Indonesian economy would thrive, he argued. The problem, according to Sjarif, lies in the fact that only a small fraction of these businesses understand how to make the internet work for them.

See: Indonesia’s ecommerce giants put rivalries aside to shape the future of the industry

“There’s no need to teach SMEs how to produce things,” says Sjarif. “I am against that kind of training. They are already productive, but what they lack is the skill to make their business digital, so their products can be discovered and effectively distributed.”

Narrowing the digital divide

Sjarif and iDEA are now setting out on a concentrated effort to narrow the digital divide in Indonesian ecommerce. They are planning a large-scale event to be held in Jakarta at the end of this month that will introduce SMEs to digital tools and to the pros and cons of various models, such as opening their own web store versus selling via an established platform.

“We notice SMEs discover ecommerce in phases,” says Daniel Tumiwa, chairman of iDEA. “In the beginning, they may just use Whatsapp or Facebook to sell, but they will soon hit a wall. At the event, we want to show them what options they have to scale.”

The event will take the form of an open fair, and with public seminars on the side. “We expect people to be able to inform themselves by walking from booth to booth, for example about existing marketplaces, or the payment methods they can use, and they can decide which fits their business best,” says Tumiwa.

Mutual dependency

iDEA is an ecommerce industry network with 155 members to date, according to Tumiwa. It includes ecommerce companies from various verticals, and ventures in ecommerce-related industries such as online payment and logistics.

The event, which aims to introduce SMEs to the world of ecommerce, is supported by some of iDEA’s most established members, like Tokobagus, Bukalapak, DOKU and JNE.

What transpires from efforts such as this one led by Sjarif and iDEA is that not only do SMEs need the internet to grow, but the ecommerce industry needs SMEs – whose owners and customers constitute the often-cited “rising middle class” of Indonesia – for their own success.

There’s a mutual dependency between those on different sides of the digital divide, yet bridges are few and far between. iDEA’s event attempts to build one of those bridges, but it’s questionable whether SMEs most in need of a “digital upgrade” would even be able to make sense of all the opportunities presented to them.

About half of Indonesia’s SMEs operate in the primary industry such as agriculture, forestry, and fisheries, according to a 2013 study by the Asia Development Bank. Can a small-scale farmer gain from learning the differences between a classified listings site and an online marketplace? Also, less than 30 percent of Indonesians own a bank account. How can cash-dependant entrepreneurs benefit from various online payment systems?