[vcex_spacing size=”15px”][vcex_heading text=”TRADITIONAL TRADE” tag=”h1″ text_align=”center” color=”#ffffff” font_size=”d:48px|pp:22px”][vcex_divider width=”60px” margin_top=”15px” icon_color=”#000000″ icon_size=”14px” margin_bottom=”20px”]


Traditional Trade is vast but fragmented and spread out across Indonesia. To effectively supply these outlets require infrastructure in form of a branch office or a third party distributor in place to handle sales, warehousing, accounting and distribution.


A recent study shows that traditional trade will remain the primary force in the retail landscape and will do so for the next decade and a half. Traditional trade, encompassing wet markets and warung [small stall], drove 85.2 percent of the US$95 billion grocery retail value. In 2017, traditional markets are still estimated to contribute 82.3 percent to the $147 billion retail. The compound annual growth (CAGR) for traditional trade would be at 8 percent between 2007 and 2017.

Traditional trade is still very important today because a lot of Indonesia is rural or semi-rural. Moreover, Indonesian consumers exhibited a small purchase size, such as shampoo sachets, behavior as it enabled them to buy premium goods at affordable prices.

Currently 12 million people rely directly on traditional markets for their income and up to 50 million rely on it indirectly. The sector is the second largest employment sector in Indonesia after the agricultural sector.


Traditional Trade Profiles in Indonesia


Whole Seller (Grosir)

Essentially a trader who supplies goods by the carton box to smaller outlets and trades with wholesaler in other cities. These stores buy in bulk and can supply hundreds of smaller outlets. Typically their customers come to them to buy their goods but there are some cases where a wholesaler employ sales people to go out and sell to smaller stores for cash. Some wholesaler often give extended credit terms bases on a long time relationships. Something that is beyond the capability of a principal or a distributor.


Semi-Wholeseler (Semi-Grosir)

Same as wholesaler but does not exclusively sell goods in carton boxes. They also sell per piece and they have a store front facilitating display of products per piece.


Big Retailer

A traditional retail store (or provision store) which sells goods per piece. Often they mix consumer goods with daily necessities like eggs, rice, etc. but there is a variety exclusively selling FMCG or daily necessities.


Small Retailer (R1, R2, R3)

These are smaller classes of retailers with R3 class (Warung) being a very small store located in housing areas. These outlets are usually not covered by salesman from the principal or distributor, especially in rural areas, but buy their goods from a wholesaler or semi-wholesaler in the area.


Traditional Trade outlets are covered by both Canvas and Taking Order salesmen. The smaller outlets usually are covered (if at all) by a Canvas salesmen on a motorcycle as they are usually located in remote areas.

Not every outlet suited for every products. There are specialized outlets for traditional cooking necessities (warung sembako) and although they can sell other items as well, the condition of the store are very different from dry goods stores. Bad stock claims frequently happens if the product packaging is fragile due to rodent bites or other types of damages resulting from poor product handling.

Even though a wholesaler sounds like a great one stop channel, they only applies on fast moving items. A wholesaler will not touch slow moving items as they only buy based on demand from the smaller stores which in turn buys from them. Their primary interest is fast moving items with highest possible margin. Some principals play heavily with discounts and trade promotions to ensure the wholesalers push out their products.