Bukalapak wants to champion Indonesia’s Tier 2 cities as it pursues profitability

At last year’s Tech in Asia Conference in Jakarta, Bukalapak’s co-founder and then CEO Achmad Zaky shared that sometimes, being in second place can have its upsides.

“To be honest, we are very lucky, because it makes us hungrier every day,” he said. “We look around to see what [our competitors] are doing better. We have to fill their gaps. We have to be better than them in terms of execution.”

One year and a new chief executive after, this hunger has brought Bukalapak closer to Indonesia’s Tier 2 cities.

Bukalapak CEO Rachmat Kaimuddin / Photo credit: Bukalapak

Right on track

“Bukalapak’s focus has always been on the small and medium businesses as well as the Tier 2 cities,” Rachmat Kaimuddin said onstage at this year’s Tech in Asia Conference. “So far, we’ve been on the right track”

Zaky stepped down as Bukalapak’s CEO in December 2019 after serving in the position for nearly a decade. Kaimuddin took on the role shortly after. He previously served as the director of finance and planning at Indonesian financial services provider Bank Bukopin.

Around the time of Zaky’s departure, Bukalapak was looking to establish a stronger presence in Indonesia’s offline retail market. A big factor in this push was the company’s Mitra Bukalapak program, which aims to bring the country’s roadside stores or warungs into Bukalapak’s ecosystem.

The partnership allows smaller stores to offer Bukalapak-powered digital goods such as phone credits, train tickets, and purchase inventory through the Mitra Bukalapak app.

In an online press conference in September, Bukalapak president Teddy Oetomo said that the company had onboarded more than 3 million Mitra Bukalapak partners during the first seven months of 2020. As of July this year, Mitra Bukalapak claimed to have 5 million partner warungs in its ecosystem.

Meanwhile, its archrival Tokopedia has been doubling down on becoming Indonesia’s low-cost leader as it prepares for its potential dual listing within the next three years.

With this strategy, Tokopedia remains the second-largest ecommerce platform in Indonesia by monthly traffic, getting 86.1 million visits as of the second quarter of this year, according to a Statista report. It falls slightly behind Singapore’s Shopee (93.4 million visits) and but is ahead of Bukalapak (35.2 million visits).

Kaimuddin says that he’s comfortable with these numbers, pointing out that his goal for Bukalapak is to become a “phoenix” – a company that can last a hundred years or more by reinventing itself. In order to do this, the company has taken a more unconventional approach compared to its ecommerce peers.

“What we were discussing at the time [of our press conference] is related to the thinking that if you were to survive [Indonesia’s ecommerce landscape], you will first have to dominate the market. And to dominate, you have to get as many transactions. In order to do that, you have to burn a lot of money,” explained Kaimuddin.

But he says this isn’t the case for Bukalapak. With its announcement, the company tried to show that it was possible to improve their bottom line while keeping a reasonable growth rate, Kaimuddin added.