Fireside chat with Indonesia’s Startup Unicorn, Bukalapak’s CEO

Bukalapak's CEO, Rachmat Kaimuddin had a fireside chat with eTail.

1. What is the story behind Bukalapak?

Bukalapak started because we saw lots of Micro, Small and Medium Enterprises (MSME) in Indonesia not advancing from the technological advancements, especially those in 3rd-tier cities who are mostly under-served. This is where we came in to provide technology that is accessible to everyone, hence the name; Bukalapak, which means “open a stall” in Indonesian.

We found out that people in 3rd- tier cities handled their transctions via Mom-and-Pop shops (Warungs) near their homes. Hence, we created Mitra Bukalapak, which now has more than 7 million partners across Indonesia, to bring the marketplaces closer to the people.

However, the challenge was that initially the digital literacy in Indonesia was low where most people had to be reached offline. We believe that in order to change and improve people’s lives, we had to be able to create a fair and fully functioning marketplace that is accessible to everyone regardless of their background, economic statuses, reach or did not have the infrastructure to transact digitally.

Therefore, our approach for the business is to circle around our metrics of the Indonesian people within the country, as we have the market, human resource, and creative industry potential, which fundamentally will enhance the country’s economy. Our online marketplace also covers the whole country through merchants and logistic partners through Warungs. With such an ecosystem and opportunities available, we can create a situation where each person, whether it’s online or offline, could enjoy the benefit of doing transactions without hassle.

2. What are the challenges in supporting small and medium enterprises (SME) but also small traditional family-owned businesses?

Most of the Indonesian SMEs are facing some form of disconnect compared to the bigger businesses. I believe the 3 major problems are namely capital, infrastructure and geography.

As an online marketplace, we enable SMEs to start-up and operate shops that look and feel similar to the big businesses, online. Our marketplace is supported by our logistics and payment ecosystem that covers the whole archipelago, so anyone can buy and sell online.

Our second product, Mitra Bukalapak, goes a step further. We partner with Mom-and-Pop shops across the country, extending our network. Now these Mom-and-Pop kiosks can sell more goods and services, which we supply, to their customers who may not have digital currency or are not comfortable transacting online to be connected to e-commerce indirectly.

3. How do you see the sector evolving in the next 5 years?

Covid-19 has forced people to adapt digitally to meet their daily needs. The digital economy landscape in Indonesia is also quite promising - with around 197 million or ¾ of Indonesians connected by the internet. This made the digital economy grow by 40% overall and 10% during the pandemic. Apart from eCommerce, we are also involved in the Offline to Online (O2O) space in order to reach a wider market. With that being said, Bukalapak has experienced growth of 20+ million in Users, and 4+ million in sellers, within a year.

4. Who are your main customers?

In terms of demography, we have a strong base at the grassroot level and MSME clients that spreads through our community network over 142 cities in Indonesia. We also grew a very strong user base in non-tier 1 cities in Indonesia that are mainly MSMEs players. Other than that, Mitra Bukalapak that collaborates up with Mom-and-Pop shops. We already have 6 million partners in 477 cities and regencies across Indonesia that have already been with us in the past 4 years. I can safely say that we have the platform to disrupt, while accelerating the digital economy of Indonesia.

5. What type of trends do you see in your data?

During turbulent times, people were actively shopping through the digital marketplace because it was the safest way of doing business. We saw an increase in the number of people opening up shops with us and starting a business on our platform.

According to Bukalapak's internal data: at the beginning of the Covid-19 pandemic (mid to late March), search for health products such as hand sanitizers, masks, vitamins, cold and cough medicine experienced a very sharp increase and became the most sought-after product. Meanwhile, in April, people were looking for productivity-supporting products at recreational activities, such as game consoles, auto parts, baking tools, etc. It seemed that the community began to adapt and to look for things to keep them occupied and happy even though they are currently in quarantine at home.

Our O2O division has also increased especially from Mom-and-Pop shops located near the suburbs. People still do their offline shopping but they pick the ones that are the closest to home.

6. How do you use them to work on your assortment?

Throughout the pandemic, we have improved the end-to-end infrastructure of our platform, especially for our O2O engagement. We believe that businesses of such nature is about empowering people anywhere in the country and is highly resilient. This reflects the number of people who joined our Mitra Bukalapak Platform which increased 100% during the pandemic.

We created a tailored program specifically for supporting our sellers by giving them the cheapest fee for our Super Seller program (a monthly subscription for prioritized sellers), which fundamentally benefits our buyers as well. From our observation, since the beginning of the pandemic, we have seen a drastic change in the things that people buy, and as a platform, we are consistently trying to give them a campaign that supports their needs. For example, creating a fair price for health-related products and gives pre-constructed campaign based on people’s needs.

7. Did COVID-19 have any impact on your business?

(Positive or negative). We are very grateful that despite COVID-19, Bukalapak managed to come out strong and fortunately, with this new normal, the acceleration on the digital platform is getting better and the comfort level of the Indonesian people with eCommerce is improving.

When we talk about the achievements of our business during this pandemic, it is increasing as a whole, albeit with some challenges. We created many engagements throughout the year, not just with the internal team, but also with our external partners. We also held an event with our Mitra Bukalapak’s users and collaborated with many communities across the country in order to support the people. However, we are approaching this pandemic carefully by adopting a WFH model since March 2020 but allowing our employees to work from the office if it is urgently.

8. Where do you see the Indonesian market in the next 5 years?

As mentioned above, the adoption of technologies is a new business model for a new market reality, especially after the pandemic. The way we, in Bukalapak, see it, is Covid-19 brings challenges and also opportunities. We need to make sure that the products that we create and develop could address those challenges and opportunities. Entrepreneurs need to utilize this in order to become a sustainable business during the new era of the market.