Bukalapak is Chasing Profit by Targeting Tier 2 Cities to Superapp
An e-commerce company, Bukalapak focuses on targeting cities at the level or tier two to pursue profit. This Unicorn also develops various services, the concept of which is similar to a super application (superapp). The targeted second-tier cities are Yogyakarta, Manado, Solo, Palembang, and Pekanbaru.
“Our focus is always on Micro, Small and Medium Enterprises (MSMEs), as well as tier-two cities,” said Bukalapak CEO Rachmat Kaimuddin, quoted from Tech In Asia, yesterday (21/10).
This strategy has been a focus of Bukalapak from the start, because e-commerce dominates the metropolitan city. “We provide opportunities for MSMEs in tier two to compete. This is an issue that we see and continue to find solutions for,” he said. “So far, we are on the right track.”
Bukalapak President Teddy Oetomo said, the use of e-commerce has indeed increased during the corona pandemic. However, e-commerce penetration outside metropolitan cities is still low. “Only 5% penetration is in cities outside tier one. In fact, if you think about it, those who need it are outside that region,” said Teddy during a virtual press conference, September (11/9).
Therefore, the company assesses that the market potential of a tier two city is enormous. So far, nearly 70% of company business is run outside a tier-one city. “We have spent years building partners in this city (outside tier one). The majority of users are also there,” he said.
Focus on Providing Various Services
In addition, Bukalapak focuses on providing a variety of services. The company launched a business unit that operates as a provider of financial technology (fintech) and APERD, Open Joint Investment (BIB) in early October (5/10).
The company also provides a freight aggregator service named BukaSend. Then, collaborating with startup Justika to provide legal consulting services to mentoring. The homeland unicorn also launched a residential search feature called BukaRumah.
Also, hooked on HappyFresh to provide staples through the Groceries feature. Most recently, it provides a game tournament program through a partnership with Maingame.com. Hans Calvin, Head of New Customers & O2O Growth Bukalapak, said the collaboration with Maingame.com was to strengthen the company’s commitment as an innovative online platform that could continue to meet the various needs of the community.
There are at least seven new vertical services, namely investment through BIB, legal consultation, logistics aggregator, procurement of goods and services, property, lakupandai, and online game tournament. In addition, one horizontal service staples.
A concept like this is rated as a superapp. In this way, companies are optimistic that they can reap profits and no longer focus on the ‘burn money’ strategy. Teddy said the company’s business continues to grow even though it is no longer vigorously promoting.
“Reducing the massive money burning, and the market share is relatively stable,” he said. In fact, the company recorded a 60% growth in earnings before interest, tax and amortization (EBITDA) in the second quarter of this year compared to the end of 2018.
Maximizing Product Innovation to Target MSMEs
The company is not too hard to catch up on traffic levels to the platform. This company is instead focusing on maximizing product innovation targeting the MSME sector, especially stalls.
Based on the iPrice website, visits to Bukalapak’s website fell from 37.6 million per month in the first quarter to 35.2 million in the second quarter. This e-commerce also ranks third behind Shopee and Tokopedia.
Moreover, Bukalapak also plans to list its initial public offering (IPO) on the stock exchange. With an IPO, companies can also gain access to potential markets. Bukalapak will also focus on the warung segment in the next five years.
This segment is considered potential because it contributes 65-70% of national retail transactions based on CLSA research. Until now, the company has hooked up two million shop partners and three million agents called Mitra Bukalapak.