A little over half of Indonesia’s 240 million people are connected. And about 45% of them own a smartphone.
Yet even with connectivity and a lack of mobiles, Indonesia’s e-commerce industry is booming.
One company cashing in on these Southeast Asian consumers is Bukalapak. You could say they’re the offline e-commerce bet in Indonesia.
They work with around 300,000 warungs, which are small, family-owned kiosks. These warungs sell daily necessities to locals.
And if they don’t have something customers want, they order it online from Bukalapak.
I think it’s an ingenious idea.
Instead of building out physical stores, Bukalapak recruits tens of thousands of outlets (warungs) over night. Plus it gets the locals comfortable with ordering goods online.
But the strategy won’t work forever.
Before long, Indonesia will be drowning in smartphones. With which the locals will do everything else along with shopping online.
So…is it time to double down on smartphone providers?
But Apple, Inc. [NASDAQ:AAPL] is likely off the list.
Apple loses its trillion-dollar status
The trillion-dollar company is no more…for now. Apple’s stock fell more than 8% recently.
On Friday, the company revealed their fourth quarter results for 2018.
Net sales were up more than 15% for the year. Earnings before interest and taxes rose a similar amount. And net profits were up more than 23%.
Sounds like a pretty good result to me.
But analysts didn’t like hearing that Apple would remove the number of iPhones sold each quarter.
For a long time, analysts have focused on the number of iPhones sold. The more iPhones among the public, the more value Apple’s ecosystem (iTunes, the App Store and Apple Pay) has.
That’s just how Apple’s products are designed to work.
In the fourth quarter, Apple shipped out 46.89 million iPhones. It’s a massive number, but still fewer than analysts were expecting.
Some speculate that Apple is now trying to hide something by concealing the number of iPhones sold.
Apple’s new strategy
Yet I think it’s more plausible that Apple is merely showing investors how to value the company going forward.
They don’t want analysts to focus on the number of iPhones they sell. They want investors to look at sales. And that’s because, from now on, growth will likely be in price, not quantity sold.
From about 46 million iPhones, Apple’s average selling price in the fourth quarter was US$793. A year ago, that price was more than $100 lower (US$617).
If you’re an Apple fan you’ve probably noticed the recent ratcheting of prices. In all four quarters of 2018, the average selling price of an iPhone remained above US$700.
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And surely this makes sense…
If you’re in Apple management, why wouldn’t you raise prices? You’ve got an incredible brand that you’ve been building for decades. Why not extract some value by testing how much prices can rise before demand tapers off?
Of course, that means poorer Indonesia won’t buy your product. But does that really matter? Tiffany & Co. [NYSE:TIF] doesn’t market to the masses and they seem to do fine.
In fact, Tiffany’s makes sure to have high prices. They don’t put their most desired jewellery on sale. They want to maintain a brand of quality and status. It’s why diamonds from Tiffany’s are more expensive than a diamond of similar quality from most other jewellers.
It would seem to me that Apple wants to do the same.
The iPhone won’t be a phone everyone has. It will be a status symbol, available to only those that can afford it.
So will their strategy work?
Apple losing ground is a good thing
Apple is currently losing ground in places like China and Japan.
Source: Tech Spot
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And I’d expect them to lose even more if the price of iPhones continues to climb. But does that really matter? Will it affect the bottom line?
As you’ve seen, the average selling price of an iPhone has risen from US$600 to US$800. And with that 33% rise, demand is yet to taper off.
However, if hundreds of millions of Asians grow up on android phones, what will make them switch to Apple’s OS once they have the money?
Why wouldn’t they be attached to the phone they’ve grown up on? While it looks like a good idea on paper, I think Apple will have to wait before realising their Tiffany’s strategy is a success.
Sent from iPhone,
Editor, Money Morning
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