How Tokopedia is Building Indonesia’s Taobao

william leon

This picture was taken on William (left) and Leon’s (right) first year building

Tokopedia has grown over the years to become one of the favorite C2C marketplace destinations for Indonesians to buy and sell.

Founded in 2009 by William Tanuwijaya and Leontinus Alpha Edison, the company is one of the top 50 most visited sites in Indonesia according to Alexa and claims to be the number one online marketplace site in Indonesia. It has over 770,000 active listings and its gross merchandise value (GMV) in 2012 grew by 686 percent compared to the year before. Tokopedia also claims to have at least 53 percent repeat buyers each month.

Some might see Tokopedia as the eBay of Indonesia but co-founder William would like to think that Tokopedia is more like China’s Taobao. William looks up to Taobao’s creator, Alibaba founder Jack Ma, as a role model, often researching into Taobao history and Ma’s speeches for inspiration. In many ways, Tokopedia and William do resemble Taobao and Ma. For example, Tokopedia insists in not charging merchants for utilizing its marketplace which is what Taobao did in its early days – that’s one key way that Taobao beat eBay in China. William told me more:

We learned from Jack Ma that small is beautiful and we also believe in the power of individuals and small medium enterprises (SMEs) in Indonesia. We learned that Taobao really focuses on solving problems – which are trust and efficiency in the Chinese market.

When we started our company, the e-commerce ecosystem was non-existent [in Indonesia], and we thought if no one starts to build a proper e-commerce ecosystem, then it will never improve.

Jack Ma isn’t William’s only idol. “When we started our company, we admire the Google founders so much,” he said. William insists that Tokopedia isn’t only an e-commerce company but it is more of an internet company which wants to make an impact and change people’s lives. Both Google and Alibaba, he says, have such vision. It turns out to be Tokopedia’s vision too but on a more local level. “Our company vision is to better shape Indonesia through the internet,” he told me.

Facing the big boys

Tokopedia’s journey hasn’t been easy as it faces multiple giants along its way. In its first year, Tokopedia faced Telkom-eBay’s which looks to be hanging on by a thread. In the second year, it faced Rakuten Belanja Online, a joint venture online marketplace between Rakuten and MNC which looks to be doing well. In Tokopedia’s third year, Multiply came onto the scene, transforming itself from a social/blogging platform into an online marketplace which we now know is sadly in the deadpool.

“With very limited resources, we have no choice other than work harder than everyone else to survive the competition,” said William. Of course, there are other giant competitors like Facebook with the ‘f-commerce’ phenomenon, discussion forum site Kaskus where a lot of C2C selling happens, and online classifieds site Tokobagus where consumers can also buy goods online. But William argues that forums and classifieds sites works perfectly if people only plan to sell just one item like renting out an apartment, or selling one old motorbike or some used mobile phones – but that’s not the right kind of platform for small businesses.

On Tokopedia, William explains that merchants that come on board usually have many different models and units. He highlights several pain points as to why social networks, forums, and classifieds sites aren’t suitable for serious online merchants to do business. For example, most forums and classified sites do not have a shopping cart, inventory management system, and payment processing services. For logistics, Tokopedia helps buyers to track the products by partnering with several shipping partners. William shared more:

In many ways, the Taobao model works very well in Indonesia. Taobao has the escrow function. If you don’t receive the product, Taobao will not release the payment. Tokopedia works the same.

Tokopedia has proven to work well for some of its merchants. In the process of building Tokopedia, William has witnessed several of its merchants, some of whom are housewives, generating over billions of rupiah (more than $100,000) in sales each month. “The beauty of an entrepreneur is that we can help people. As an internet company we want to build a platform to help others do e-commerce,” he said.

Despite speaking highly of Jack Ma and Taobao, William does not plan to give face if the Chinese e-commerce giant decides to enter Indonesia. If that happens, William says confidently that Alibaba will be the shark in the ocean while Tokopedia will be the crocodile in the river.

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