Indonesia is known for its millions of traditional family-owned street stalls, or “warungs”. But behind the scenes of many of them is a billion dollar business.
And as it helps small businesses modernize, retail startup Bukalapak is hoping to revitalize an iconic segment of the country’s economy.
“Every 50 or 100 houses there will be one of those people who will open a business in their house and sell basic groceries: water, soap, coffee or whatever. They were like that from the start and as the economy grew, they became in the.” Basically left behind, “said Rachmat Kaimuddin, CEO of Bukalapak CNBC do it.
Bukalapak is an Indonesian e-commerce marketplace designed to help the country’s millions of mom and pop kiosks get online.
Today the company has millions of customers in the vast archipelago. When it was founded by Akhmad Zaky in 2010, it was simply a way to help its neighbors.
“My predecessor Zaky returned to his hometown one day,” said Kaimuddin. “He’s seen all of these small businesses, his neighbors, and he was surprised to find that these guys have looked the same for decades.”
“Now I know about technology, I’ve learned about the internet and everything, and wonder how I can … help people improve, do better,” he said.
Zaky, who was then 23 years old, teamed up with friends Fajrin Rasyid and Nugroho Herucahyono of the Bandung Institute of Technology to create a website that will help small businesses sell online.
“The capital he used to start this company is just the registration fee for registering the website. It’s equivalent to 80,000 rupiah, or about $ 5. That is Bukalapak’s seed capital,” Kaimuddin said.
It didn’t take long for Bukalapak to act as a third-party intermediary to facilitate purchases between consumers and retailers. However, the company’s real breakthrough came a few years later.
In 2017, Mitra launched Bukalapak to help these stores compete with modern day retailers by offering additional online services such as bill payments and phone top-ups.
Mitra Bukalapak also connects Warungs with consumer goods retailers, narrowing their supply chain, lowering the cost price of their goods and increasing profit margins for these micro-businesses.
In the same year, the company, which earns a commission on every transaction, achieved a Billion dollar valuation.
In January 2020, after a decade at the top, Zaky resigned as CEO. Kaimuddin, a 41-year-old former banker, has been selected to succeed him. Zaky, who now heads an entrepreneurship foundation, continues to have an advisory role in the company Co-founder Rasyid and Herucahyono both left the company.
“Zaky (said) basically, look, I ran this company from scratch and it is probably time for me to extract myself. We probably need someone who can make this (company) more professional and bigger, and we see that you can help us. I thought, okay. Really? “said Kaimuddin.
However, a pandemic broke out within the first 100 days of Kaimuddin. The lockdowns that followed have hit millions of warungs and small and medium-sized businesses hard. Bukalapak had to rise.
“We need to make sure that SMBs can continue to transact. The only way we could do it now or now was online. So our job is to create a much more efficient onboarding process,” he said. “Failure is not an option: we can’t just give up and say: Okay, Covid, let’s take a year off. People actually need us.”
E-commerce has now been one of the big winners from the pandemic. In 2020 Indonesia Digital consumers grew 37% Because lockdowns led more people to try new services online. In the same year, online spending increased 11% to $ 44 billion. This number is expected by 2025 almost tripled to $ 124 billion.
Bukalapak has mastered this wave, seeing a 130% increase in transactions in 2020. The company now serves 13.5 million micro, small and medium-sized enterprises and 100 million customers.
This rapid introduction should help Kaimuddin with his main task – to achieve profitability.
“This is a big organization and we want to be there a long time,” he said. “Of course growth is good and we all want more growth, more transactions, more customers. But we have to see if we can create an organization that is self-sustaining in the future.”
That hasn’t stopped investors from getting into the deal.
In January 2021 Standard Chartered The bank was the youngest company to join one $ 200 million financing round to drive the expansion of the company. The partnership will help build Bukalapak’s digital banking service a separate deal with Microsoft The company will adopt the tech giant’s Azure cloud computing platform.
Other investors are the Indonesian media conglomerate Emtek, Alibaba-affiliate Ant Group and Singapore’s sovereign wealth fund GIC, which increases the company’s valued valuation between $ 2.5 billion and $ 3 billion.
This makes the 11-year-old company one of Indonesia’s growing number of unicorns, which include e-commerce colleague Tokopedia, hail giant Gojek and travel website Traveloka. Of the world fourth largest country has the largest number of internet users in Southeast Asia, and analysts say it has potential for more growth.
“A lot of people believe the demographic dividends will pay off: 270 million people, most of them now with smartphones,” said Khailee Ng, managing partner of 500 startups and one of Bukalapak’s first investors. “What intrigues me a lot is how much of this investment is going into world-class, city-centered business models versus Indonesian business models.”
Still, some analysts are skeptical that Bukalapak’s hyperlocal roots allow it to expand beyond Indonesia. But Kaimuddin is confident that the company has plenty of room to grow.
“I’m not going to say we just want to stay in Indonesia,” he said. “But Indonesia today is a market big enough to keep us very busy and we still feel like we have a lot of homework to do. I don’t think we’ve scratched the surface if you’ve got over underserved markets in speaking Indonesia. “