Bukalapak seizes ‘great opportunity’ in Mitra as rivals like GoTo exit

Since its 2021 listing, Bukalapak’s top-line growth has been driven by its Mitra business.

However, the unit’s growth has been slowing in recent quarters as the Indonesia-based ecommerce platform cuts back on some of Mitra Bukalapak’s services to focus on profitability.

In recent months, the departure of competitors like GoTo from the mitra space has put Bukalapak in a unique position to fortify its lead.

How far will Bukalapak go to seize this opportunity – and what are the implications?

Mitra growth is slowing

Mitra means “partner” in Bahasa Indonesia. For Bukalapak, its Mitra business started as an online-to-offline solution in 2017 that helps small mom and pop shops in the country (called warungs) to procure goods, which they can in turn sell to consumers.

Its offerings later evolved beyond physical goods to include virtual products such as remittances and other financial services, as well as prepaid phone credits and data.

As of March this year, Bukalapak says it serves 5 million active partners, over 90% of which are still warungs.

See also: Mitra has flattered Bukalapak’s financials, but new challenges await

In recent quarters, however, growth at the unit has slowed, in terms of both total processing value (TPV) and revenue. In the first quarter of 2023, Mitra Bukalapak’s TPV was smaller than in the previous two quarters, although it was still up year on year.

Similarly, while revenue for its Mitra business was up from the same period a year ago, it suffered a 1% quarter-on-quarter decline.

Indeed, the slowdown has meant that Mitra is lagging Bukalapak’s marketplace business, which is enjoying stronger growth as the company moves into specialty verticals such as secondhand gadgets and in-game digital products.

Mitra Bukalapak’s revenue and TPV as a share of the overall figures in Q1 2023 was also down compared to a year ago.

During the briefing accompanying the release of its most recent results, Bukalapak attributed the decline to a deliberate effort to reduce volumes from services such as remittances to bring its Mitra unit into a contribution margin-positive position.

“Great opportunity” from rivals leaving

Despite that, Bukalapak remains bullish on Mitra, putting it in a good position as some of its rivals downsize or leave the space.

During its 2022 Q4 earnings call, GoTo said that it had “wound down certain parts” of Mitra Tokopedia, which – like Mitra Bukalapak – served offline retailers. GoTo described Mitra Tokopedia as “non-core” and one that “did not represent the most efficient use of capital and personnel.”

International expansion on the cards?

No walk in the park