Battling Against Rocket Internet’s Lazada, Bhinneka Wants to be Indonesia’s Amazon

Indonesian homegrown B2C e-commerce site Bhinneka recently celebrated its 14th anniversary. The company has consistently made its presence felt among the country’s top online shop players and it is natural for us to wonder what lies ahead. To that end, we spoke with Bhinneka CEO Hendrik Tio about the company’s progress and vision.

Interestingly, the vision Hendrik lays out for us involves the company fighting hard against Rocket Internet’s Lazada Indonesia.

Diversifying products

Bhinneka is arguably Indonesia’s biggest online store for computers. It is 100 percent locally owned and has been profitable since the first year of its inception back in 1999. While Bhinneka has established its spot as the number one online store for computers in Indonesia for quite some time, the company recently rolled out 13 new product categories including home appliances, musical instruments, and even toys.

Those new product roll-outs could potentially shake Bhinneka’s branding as an electronics company. Hendrik says that they have actually been trying to rebrand themselves from “the number one computer store” to “the number one web store” in Indonesia for a few years now.

Will this move confuse customers? Hendrik doesn’t believe so. He says that the broader image Bhinneka has is as a “trusted online shop.” In fact, a lot of those new product categories were chosen based on the demands of its users, and the new line-up has so far been received positively. What is Bhinneka’s vision? “To be Indonesia’s Amazon,” says Hendrik.

Bhinneka earns close to $60 million in revenue per year

Bhinneka’s vision is definitely a big one. Hendrik told me that currently Bhinneka oversees 148,000 daily visitors, a 40 percent traffic growth since December last year. He notes that 85 percent of his users have come to it organically as the company isn’t spending that much on marketing. Bhinneka records close to IDR 600 billion ($60 million) in revenue per year, but most of that figure still comes from Bhinneka’s offline retail stores.

Unsurprisingly, Bhinneka’s best-selling product category is computers and notebooks; second-place goes to mobile devices. But when it comes to sales and revenues, the former category outsells the latter by a factor of three. Hendrik has high hopes for Bhinneka’s photography section as well.

The race against Lazada to be top

Rocket Internet’s Lazada recently nabbed another $100 million in funding and stated its intention to be Southeast Asia’s Amazon; this makes it a natural rival to Bhinneka’s ambitions. And in just over one year, the former company has become a major e-commerce player in Indonesia and has now overcome Bhinneka in terms of Alexa ranking. Lazada Indonesia had 250,000 daily visitors a couple of months ago, and is now aiming at profitability in 2015. How does Bhinneka plan to beat them?

Hendrik first told me that he is happy to have a competitor like Lazada Indonesia as it helps grow and educate the market about the e-commerce industry. If Lazada Indonesia grows, then Bhinneka will inevitably get some of that, and vise versa. Having competitors also helps drive the team to perform better.

He then said that this battle is not a sprint, but more like a marathon. He believes that there will be a place for two or three big B2C stores in Indonesia in the next decade. When speaking about his strategy to beat his competition, Hendrik points out four things as core strengths: Most of Bhinneka’s user-base is organic, the company has physical stores which complement its online store, Bhinneka knows the Indonesian market very well as it has been in the industry for over a decade, and lastly, Bhinneka has been profitable for 14 years already.

Kaskus and TokoBagus could be rivals too

A lot of people may not realize this, but Bhinneka has opened a C2C product listing feature called “Bursa Bhinneka” as early as 2003, but it hasn’t taken off. Now, Bhinneka is also going to integrate its product listing feature inside its main B2C store pages.

Is Bhinneka being too ambitious?