Indonesia's Newest Unicorn Now Wants to Take on the Big Boys

(Bloomberg) -- PT Bukalapak.com became a billion-dollar startup by focusing on the Indonesian farmers and small-time merchants that bigger rivals such as PT Tokopedia neglected. Now it wants to buy its way onto their turf.

Bukalapak, which earned unicorn status with funding from 500 Startups among others, has set up a mergers and acquisition team to identify startups that will help it achieve an ambition of serving 10 million people by 2025. That’s triple its current 3 million members drawn from across the archipelago, Chief Executive Officer Achmad Zaky said.

Indonesia and its 260 million people have emerged as a coveted market for the world’s top e-commerce players, including Alibaba Group Holding Ltd. and JD.com Inc. Bukalapak, which means “open stall,” is one of just a handful of unicorns which’ve sprung up in Southeast Asia’s largest economy alongside booming smartphone penetration. In the eight years since its founding, it’s become something of a bazaar for shoppers seeking bargains and used items in quantities not often found on Tokopedia, the online mall that’s backed by Alibaba.

That’s not to say Bukalapak is entirely a discount store: it offers everything from plastic soldiers worth 100 rupiah (1 U.S. cent) to gemstones worth 6 billion rupiah. The platform, whose backers also include Batavia Incubator, is close to breaking even, said Zaky, who co-founded the start-up with Nugroho Herucahyono and Muhamad Fajrin Rasyid in a rented room in Bandung.

“We have started generating big revenue and the potential growth of the market is still big,” the 31-year-old entrepreneur said in an interview at his office in South Jakarta. “That’s why we’re still running aggressively to maintain the growth.”

Indonesia has an e-commerce market that McKinsey & Co. says can be one of the fastest-growing in the world, part of a digital economy adding $150 billion a year to gross domestic product by 2025. The country is also home to ride-hailing app PT Go-Jek Indonesia and online booking platform PT Traveloka.

Internet businesses present an attractive alternative to consumers struggling with inflation and worsening traffic congestion. Bukalapak’s aim is to profit by bridging between buyers and sellers scattered across more than 700 islands.

“Even though 2025 is a long way off, our dream remains the same since day one that we want to empower SME entrepreneurs,” said Zaky, an engineer from the Bandung Institute of Technology. “We’re dreaming to have, perhaps, tens of millions of users by then.”

Bukalapak has enough cash to fund its expansion for now, Zaky said. While it’s discussed a listing with the Indonesia Stock Exchange, the company isn’t considering an initial public offering immediately and its founders continued to own a majority, he said.

“Every player, eventually, should go public because we’re not going to be a baby forever and being listed means we have turned into an adult,” Zaky said.

To contact the reporter on this story: Rieka Rahadiana in Jakarta at rrahadiana@bloomberg.net.

To contact the editors responsible for this story: Thomas Kutty Abraham at tabraham4@bloomberg.net, Edwin Chan

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