Indonesia's Newest Unicorn Eyes Top Slot With Help From Kiosks

(Bloomberg) -- The newest entrant into Indonesia’s unicorn family has a mantra to narrow the gap with the e-commerce market leader -- sign up hundreds of neighborhood stores daily as partners.

PT has enlisted more than 300,000 kiosk owners in little over a year to offer its range of services, according to Muhamad Fajrin Rasyid, co-founder and president. The kiosks, known as warungs, will help the company tap into 90 percent of the retail market that’s still outside the e-commerce platform in Indonesia, he said.

And the new move to put “a face” to the online market place is already paying off for Bukalapak which became a billion-dollar startup last year by focusing on Indonesian farmers and small-time merchants. About 20 percent of Bukalapak’s 4 trillion rupiah ($270 million) monthly gross merchandise value is now accounted by these physical mom-and-pop shops, Rasyid said.

Bukalapak, which counts Singapore’s sovereign wealth fund GIC Pte and China’s Ant Financial among its investors, trails only Alibaba Group Holding Ltd. backed PT Tokopedia, according to iPrice Group. In the eight years since its founding, Bukalapak has become something of a bazaar for shoppers seeking bargains and used items in quantities not often found on other platforms.

Building Future

“The warungs allow a majority of Indonesian customers to transact on the online market place through people that they know,” Rasyid said in an interview in Jakarta on Tuesday. “Hopefully, after they receive their goods, they will feel comfortable to do the online transactions on their own and Bukalapak will be the platform that they will use for future transactions.”

The agents, known as “Mitra Bukalapak,” place orders on behalf of customers not familiar or comfortable with trading online and accept cash for deals. With no additional investments required to sign up as a partner, they earn a commission on each transaction using the online application. The company’s agents include school drop-outs to housewives and traditional mom-and-pop shop owners, Rasyid said.

Indonesia’s e-commerce market is seen expanding to as much as $65 billion by 2022 from about $8 billion last year as more people shop online, according to McKinsey & Co.

The startup was was founded in a rented room in Bandung, a city about 150 kilometers southeast of Jakarta, by Rasyid, Chief Executive Officer Achmad Zaky and Nugroho Herucahyono. The company is well capitalized currently and may tap investors for another round of funds as early as next year, Rasyid said. The company wants to retain its majority Indonesian ownership and an initial public offering of shares may be considered in the next one or two years, he said.

“We are in no rush to raise more money,” Rasyid said. “We want to consolidate our position and close the gap with the market leader and adding warungs as our partners will helps us in a big way.”

Bukalapak’s sales through the kiosks nearly equals the annual revenue of PT Matahari Department Store, Indonesia’s largest departmental store by market value, and almost 50 percent more than PT Ace Hardware Indonesia, according to Bloomberg calculation based on company filings.

Bukalapak, which hit a $1 billion valuation last year to become Indonesia’s fourth unicorn, has recently closed a couple of acquisitions and is working on a pipeline to takeover more e-commerce players which will have synergies with it, Rasyid said.

©2018 Bloomberg L.P.

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