Some founders looking to localize in Indonesia think it’s as easy as getting your PR manager to translate your website. This couldn’t be further from the truth.
Anyone who has ever tried to bring a business concept or franchise from overseas to Indonesia will tell you that at the end of the day it’s easier said than done. The market will prove difficult to cope with if you do not understand a few key fundamentals related to language, culture, religions, incumbent players and the country’s overall business environment.
Additionally, things that are popular in the West are not certain to be slam dunk business opportunities in the world’s largest archipelago. One famous example of this was when a Subway sandwich restaurant opened up in Plaza Senayan several years ago. Bring America’s beloved sandwich brand to a land seemingly deprived of foot-long subs and make a killing. Sounds smart, right? Wrong.
It turned out, culturally speaking, that Indonesians just weren’t that keen on sandwiches. The truth is that locals would rather eat rice- or noodle-based meals for lunch and dinner, likely viewing anything else involving bread as more of a novelty snack. The Subway location closed down in Jakarta and the brand hasn’t been seen around since.
The dynamic exists around the world. Baidu beats Google in China because it looks and feels fully native to the Chinese-speaking audience, according to a non-profit group by the name of the Globalization and Localization Association. Urdu speakers in Pakistan and India can’t get many games in their own language, so instead they show a preference for racing games, which are easy to understand and don’t involve language. CNN knows that there are more than 55 million Latinos in the US who want to see shows in their own language. The list goes on.
According to Globalization Partners International, in order to attract Indonesian customers and clients, you’re first going to have to familiarize yourself with the idea of localization.
The firm says Indonesian localization is the process of adapting the language, appearance and functionality of a product, site or service for the people of the country.
While localizing your business in Indonesia can be considered an ‘all in’ endeavour – one with a steep learning curve and many possible pitfalls – here are some things to keep in mind to help you hack the process.
If your business is the kind that typically relies on credit card transactions in your home market, you’re going to have to rethink your strategy in Indonesia.
The country is the third biggest in terms of unbanked adults in Asia. According to Asian business advisory portal Demystify Asia, Indonesia is home to 6 percent of the global unbanked population. The nation has one of the lowest bank account ownership rates in the world at roughly 36 percent. Similarly, debit card ownership is poor at 26 percent. Only 1 percent and 8.50 percent of the country’s bank accounts are engaged in credit card and debit card transactions respectively. Additionally, only 3 percent of these accounts are used to pay utility bills while only 5 percent are involved in online transactions.
Because of this dynamic – and especially if you run a business-to-consumer model online – enabling a variety of payment methods such as ATM transfers and cash-on-delivery is an absolute must in Indonesia. Trusted payments gateways in the country also include names like Doku and Midtrans.
If you make it cheap enough, they will come
One interesting phenomenon in Indonesia is the fact that locals are abundantly willing to sacrifice things like time and sanity just to save a few thousand rupiah. It’s no secret that locals have an affinity for discounts. But there are very few countries where you will see lines in the mall that stretch around the corner just so people can wait four hours on a Tuesday to get a discount on the latest Samsung gadget.
According to data released by Boston Consulting Group (BCG), Indonesian shoppers actively seek out promotions and hunt for deals. At the lower half of the income pyramid, this is a function of family dynamics. Men typically give their wives a monthly budget for the family. The more money that these women can save on groceries, the more they have to splurge on small indulgences for themselves.
However, the bargain-hunting drive spans the wealth spectrum, says BCG, and more than 60 percent of the overall population says they enjoy searching for discounts and promotions. More than 70 percent of the country’s affluent population says they actually enjoy it. Smart companies entering the country would do well to kick off their market entry with deep discounts to attract early business.
Mobile is a must
If you have ever been in an Uber on Jalan Gatot Subroto in Jakarta at 5:30 pm on a work day, you will understand why smartphones are so important to Indonesians. But apart from the gruelling traffic conditions in the nation’s big cities leading to an increased dependency on mobile internet, smartphones are playing an increasingly important role in how locals engage in commerce at large.
Indonesia has become one of Asia’s foremost mobile-first nations, with a StatCounter report estimating that in recent years, more than 70 percent of the local internet traffic originated from mobile devices.
When it comes to shopping, often it comes down to a choice between buying a certain product online or not getting it at all in Indonesia. Further, in most of the country’s rural areas, there is no broadband internet option, which often leaves accessing the web limited to one’s mobile smartphone. This creates somewhat of a perfect storm which requires consumer-facing businesses to go straight to mobile in Indonesia.
Cater to the conservatives
Indonesians are open to trying foreign brands and products, which makes the market a unique testing ground for incoming companies. However, overseas businesses won’t be able to rely on their foreign novelty and charm for long unless they are also able to deliver within the local consumer’s comfort zone. Some brands – like Subway – make the mistake of thinking their Western market offerings will translate to quick and easy success in Indonesia. This often turns out to be an incorrect assumption
McDonald’s is a prime example of localization done right in Indonesia. While the burger and fries mega brand offers Big Macs and McChicken sandwiches for locals who want the American fast food experience, the chain also realized early on that it needed to add rice, fried chicken and chili sauce to the menu. While this would be unthinkable and blasphemous in markets like the US or Canada, in Indonesia, it’s a win-win for locals who otherwise would not join their friends under the golden arches at lunch time.