Bukalapak Tactics to Push Transactions of 5 Million Stalls
The number of stall partners and Bukalapak agents has tripled in a year to five million today. This e-commerce startup is also implementing three strategies to boost partner transactions. First, expanding wholesale stock distribution services to 50 cities in Indonesia.
“We are working with national and regional scale distributors,” said VP Merchant Bukalapak Howard Gani during a virtual press conference, Friday (11/9). Second, diversify the products of stall partners and agents. Bukalapak partners can offer digital products such as credit, electricity payments, taxes to booking train tickets, in addition to daily necessities.
Bukalapak is working with GrabKios to provide and distribute digital products to shop partners and agents. Third, the company hooked up with Bank Mandiri to empower warungs and agents to become lakupandai.
In February, 1.5 million Bukalapak Partners became financial service agents without Bank Mandiri offices. Bukalapak wants warung partners and agents to be a means for the surrounding community to access financial services. “For example, if you have cash, you can come to the nearest shop to buy gold,” said Bukalapak CEO Rachmat Kaimuddin.
Helping the Community that Does Not Have a Bank Account
Quoted from Reuters, Bukalapak and Bank Mandiri are targeting people who do not have an account. Based on World Bank data, the number is more than half of Indonesia’s population. Later, service users can deposit and withdraw cash at the shop.
Also, it can send money or pay bills. Meanwhile, shop owners, banks and Bukalapak will each get a discount. However, Rachmat did not reveal the revenue target from the partnership.
Warung is indeed the focus of Bukalapak’s business in the next five years, because of its huge potential. Based on research by securities company CLSA in September 2019, warungs contributed 65-70% of national retail transactions.
Based on Euromonitor International’s research, the majority of Indonesians, Indians and Filipinos also shop at grocery stores. The transactions reached US$ 479.3 billion or 92 percent of the total retail market value of US$ 521 billion last year.
Meanwhile, transactions for five million stalls and Bukalapak partner agents are more than US$ 70 billion a year. The value is about one-fifth of the retail market in Indonesia which reaches IDR 380 billion. Rachmat also said that his partner’s income increased 10 times after joining.
Revenue Grows 60%, Bukalapak Leaves ‘Burning Money’ Strategy
Bukalapak recorded a 60% growth in income before interest, tax and amortization (EBITDA) in the second quarter compared to the end of 2018. One of the country’s unicorns admitted that he no longer relies on promotional strategies or ‘burn money’ to encourage transactions.
Bukalapak President Teddy Oetomo assessed; startups that have just opened services need a promotion strategy more. Big discounts or what is known as “burn money” to attract users, is not a business solution.
Therefore, the company is focused on sustainable business growth. “We are looking for solutions and innovations that are needed by society,” said Teddy during a virtual press conference, Friday (11/9). However, a promotion strategy is still needed by startups. “That’s not wrong, but if it goes too far, that’s a problem. It will not work,” he said.
He said the company’s business continued to grow even though it was no longer vigorously promoting. “We are reducing massive money burning, and the market share is relatively stable,” he said.
Nor are companies “lagging” in catching up on traffic levels to the platform. Bukalapak is instead focusing on maximizing product innovation targeting the Micro, Small and Medium Enterprises (MSMEs) sector, especially food stalls.
Bukalapak CEO Rachmat Kaimuddin confirmed that the company was no longer focused on catching up to levels of visits in the last two years. “We cannot always focus on growth alone, while the solution does not produce sustainable added value,” he said.