Hi, Zaky. Tell us a bit about Bukalapak. What does it do and how does it work?
Bukalapak is an eCommerce platform. Our mission is to empower small businesses in Indonesia, because Indonesia is the country where we have the biggest percentage of small and micro-businesses. So the idea is how we can open up the market to hundreds, even millions of customers to Indonesia. That’s the basic idea of Bukalapak.
In Indonesia, eCommerce is growing fast, but penetration is still low at 5%. How do you reach the majority of people who do not shop online?
For the first wave of eCommerce, we used creative television advertisements to promote our brand all over Indonesia. Presently, we have 50 million active users on the platform. Now, we’re into the second wave. For that, we’re building an O2O (offline-to-online) network. In Indonesia, 95% of us make our daily transactions (like food, coffee, sundries) offline through a warung. A warung is like a mom-and-pop store, but I think it’s much smaller than what other countries may have. It’s usually independently-run, very small, and very common. When you consider that we have 5 million of these warungs - essentially small or micro-merchants in Indonesia - I think there is a lot of potential we can capture there. If this is the way 95% of the population performs their daily transactions, they can use Bukalapak as a lead-in to the world of online commerce. That’s the initiative we’re pushing for.
Can you give us some background into the significance of warungs in Indonesia?
Looking at Indonesia, it’s quite different from other developing countries. Our warungs actually capture up to 70% of offline retail. And this is the largest percentage, especially in Southeast Asia. Usually in developing markets, the percentage of warungs (that is, small family-owned mom-and-pop shops) is declining, but in Indonesia, it is not. It’s still growing. Warungs are located within the neighbourhood. Compared to modern convenience stores, prices are usually cheaper, and the shopkeeper is much nicer and friendlier. It’s an integral part of the community, and usually just walking distance from your house. People just stroll over to grab whatever they need.
How does Bukalapak then empower these small businesses like warungs? What services do you provide them?
First, we provide digital products like phone credits and electricity. Many Indonesians use prepaid credits to top up their mobile phones and get electricity, and they need to use an application (like Bukalapak) to pay for it. Secondly, we help stock inventory for essentials like water, cigarettes and other sundries. Basically, any kind of products that warung owners sell, we can provide it at a cheaper price, faster distribution and delivery, and better product quality too.
Next, we are also able to provide loans to these warung owners - loans that they might not easily get from traditional financial institutions - because we already understand the frequency and volume of their transactions through the application. This line of credit can help warung owners scale and grow their businesses.
Fourth, the warungs get to capitalize on their location and real estate. Through Bukalapak, brands get to advertise their products and services in specific warungs. Since we’ve already done the groundwork to establish the infrastructure, it’s easy to tap into the warung and connect with their target audience.
Lastly, through Bukalapak, we are effectively digitizing the warung. The data that is collected on the application is used to provide analytics to brands, they can make better predictions on which products sell better in which area, and the warungs can make more informed decisions on their inventory.
Tell us about this partnership with agents and how it in turn helps small businesses.
We partner with local distributors, and they ship the product directly to these warungs. Our model is based on empowerment - that’s why small businesses believe in us. They’re not fearful that Bukalapak is out to grab your share or disrupt your business. We connect the small business with each other and empower them with technology.
How did Bukalapak start? What were the early days of the company like?
I actually quite like talking about the early days of us starting out. Some people say this is the worst time, but to me, it’s the best time - the most efficient time.
We started with only two people back in 2010. My co-founder Fajrin Rasyid and I had just graduated from ITB (Bandung Institute of Technology) with degrees in computer science. We love to code and we wanted to make an impact by coding. We rented a very small room and we lived there together. We bought the domain of Bukalapak with $8 or $5, and hosting was about $10 a month. We worked extremely hard to start Bukalapak, and you can imagine that was the time where we had no computers and nobody believed in the Internet. We did everything we could to drive traffic - SEO hacking, so on and so forth. The first year after I started Bukalapak, the traffic actually soared - we received 10,000 hits a day, which was not bad at that time.
At that point, I started to look for funding. My first proposal was 10k USD. I started looking for investors who can fund us because I didn’t have money anymore at the time, so I started fundraising. One year after that, at the end of 2011, we got funding from a VC finally. It just kept going afterwards.
We find Bukalapak’s growth quite amazing, as you didn’t have to use a lot of money. It seems like you do a lot of offline community events to make that work, again without spending too much. How does that happen?
Since 99% of our talents are local, we’re familiar with their behavior. We are close with our customers. I, myself, sometimes go to the sellers’ community events, and they really appreciate it when we go to them, encourage them, and motivate them to sell more. We also listen to the problems they face. They appreciate it, and they become evangelists for our brand.
To our customers, it’s not just transactional, but we also have an emotional value because we are a homegrown brand. We grow together with you, and they really love it, appreciate it, and they start to promote Bukalapak. And they also invite many of their friends to sell on Bukalapak. That’s the value that we bring to the local scene.
You recently raised a round from GIC, one of the world’s most active sovereign wealth funds and also Ant Financial. After this investment, what are some of the biggest challenges that the company is facing right now?
I think the big difference is we used to be like a little child, we could try anything and just play around. Now, because we have so many people looking at us, we can’t afford that anymore. In our first year, I remember we used to have three-day down-time on the website and we didn’t have to scramble to fix it.
But right now, even one hour of downtime will be crazy. We will lose millions of GMV in USD. That’s the difference. Now we have a much bigger responsibility, not just for the investor, but also to customers.
You're considered one of the pioneers of the tech startup scene in Indonesia. How would you compare the scene now and then (back in 2010)?
I think there is a huge difference between 2010 and 2020, of course. We didn’t have so many competitors at the time. We were alone in the scene. But when you start a company, you always have to be ready for competitors that can catch up with you quickly. Now, there are so many investors in the scene. It’s a good thing. There’s more money and more support.
What is it like to build a startup in Indonesia?
Indonesia’s local culture is vastly different from other Asian or Southeast Asian countries. You must first embrace Indonesian culture, I think that’s very important. Bukalapak is very cognizant of that. Our campaigns are very local. You might not understand that if you’re not Indonesian because it’s that local. But that’s why everyone loves our brand, because it’s homegrown and very close to their hearts. The community that we have created is very hard for foreign players to replicate.
Finally, what would you say are some of the key attributes of Bukalapak’s culture that has helped it succeed so far?
One of them would be the term Gotong Royong. It is an Indonesian term popularized by the first president of Indonesia. It describes the general culture of Indonesia. Indonesia is a very social country, we are like a giant family. What that means, is that we cannot survive in isolation. We have to work with others and enable a multiplier effect. So working together, hand-in-hand, with the whole team, is very important.