‘Buka’ means opening, open, and a ‘lapak’ is a stall.
So Bukalapak is basically ‘open your stall.’
They might look like your typical street stalls, but behind Indonesia’s family-owned kiosks is a multibillion-dollar business.
The population is like 270 million, so are you saying that 20 to 25% of people
set up one of these shops? I’m like exactly!
And as it helps small businesses modernize, Bukalapak hopes to revive an iconic segment
of the country’s economy.
Every, maybe 50 or 100 houses, there will be one of these guys who opens a shop in their house and they like sell basic goods.
Water, soap, coffee or whatever, right. They have been like that since the beginning and,
as the economy grew, they are like basically left behind.
Bukalapak is an Indonesian e-commerce marketplace designed to help the country’s
millions of mom-and-pop kiosks, known as warungs, to come online.
Today, the company boasts tens of millions of customers across the sprawling archipelago.
But when Bukalapak was founded in 2010 by Achmad Zaky,
it was simply as a way to help his neighbors.
CEO Rachmat Kaimuddin told me more.
My predecessor, Zaky, one day went back to his hometown and was looking around, and he saw all
these small businesses, his neighbors, and he was like taken aback and realized like, okay,
these guys have looked the same for decades.
And now I know technology, I’ve learned about the internet and everything,
and I wonder how could I use technology to help people improve, do better.
So, Achmad, who was then a 23-year-old student,
teamed up with his friends Fajrin Rasyid and Nugroho Herucahyono from the
Bandung Institute of Technology to create a site to help small businesses sell online.
The capital he used to start this company is just the registration fee to register the website,
and it’s like 80,000 rupiah or maybe about like $5 or so. That is the seed capital of Bukalapak.
Soon, Bukalapak was live, acting as a third-party intermediary to
support purchases between consumers and merchants.
But the company’s real breakthrough came some years later.
In 2017, the company launched Mitra Bukalapak to help these shops compete with modern retailers
by offering additional online services such as bill payments and phone top-ups.
Mitra Bukalapak also connects these warungs to consumer goods distributors,
narrowing their supply chain, lowering the cost price of their wares
and increasing the profit margins for these micro businesses.
In the same year, the company, which earns a commission for each transaction,
reached a billion-dollar valuation.
Khailee Ng, managing partner at 500 Startups, was one of Bukalapak’s early backers.
When I first met the Bukalapak founders, like I was very,
very impressed by how not only competent they were but how local they were.
They so deeply understand life outside of tier-one cities.
So I think that their kind of local DNA,
it really translated through what the business eventually became.
In January 2020, after a decade at the helm,
Achmad stepped down as CEO, 41-year-old Rachmat, a former banker, was selected as his successor.
Achmad, who now runs an entrepreneurship foundation, still holds an advisory role
with the company, while co-founders Fajrin and Nugroho have both left the firm.
I think Zaky basically saying like, look, I’ve led this company from
zero and it’s probably time for me to extract myself.
We probably need someone who can make this, the company that I built, more professional,
bigger, and we see that you could help us do that. And I was like, okay. Really?
For Rachmat, it was an opportunity he couldn’t refuse.
There’s a lot of discussion on the values and the mission. That is my cross, right, to bear, right.
The mission is we need to serve the underserved. We are e-commerce, we need to improve lives
not only for profit but also for the betterment of society.
Within Rachmat’s first 100 days in the job, the pandemic struck. The resultant lockdowns hit the
millions of warungs and small and medium-sized enterprises hard. Bukalapak was at a crossroads.
We need to ensure that the SMEs can still transact. The only way to do that now, or
at the time, was online, right. So, our task is to create a much more efficient onboarding process.
Failure is not an option. We cannot just give up and say like, okay,
Covid, maybe let’s take a break for a year. People actually need us.
E-commerce, meanwhile, has been one of the pandemic’s big winners.
In 2020, Indonesia’s digital consumers surged 37% as lockdowns led more people
to try new services online.
In the same year, online spending rose 11% to hit $44 billion.
By 2025, that figure is expected to almost triple to $124 billion.
Bukalapak has ridden that wave, recording a 130% surge in transactions in 2020.
The company now serves 13.5 million micro, small and medium enterprises and 100 million customers.
That rapid adoption should help Rachmat with his primary task: reaching profitability.
This is a big organization and we want to be there for a long time.
Of course, growth is nice and we all want to have more growth, more transactions, more customers,
but we need to see whether we can create an organization that can be self-sustaining moving forward.
That hasn’t stopped investors from piling onto the business.
In January 2021, Standard Chartered bank became the latest corporation to
join a $200 million funding round to fuel the company’s expansion.
The partnership will help build Bukalapak’s digital banking service, while a separate deal
with Microsoft will see the company adopt the tech giant’s Azure cloud computing platform.
Other investors include Indonesian media conglomerate Emtek,
Alibaba-affiliate Ant Financial and Singapore’s sovereign wealth fund GIC,
pushing the company’s estimated valuation to between $2.5 billion and $3 billion.
That ranks the 11-year-old company among Indonesia’s growing number of unicorns,
whose names include fellow e-commerce player Tokopedia,
ride-hailing giant Gojek and travel site Traveloka.
The world’s fourth most-populous country has the largest number of internet users
in Southeast Asia, and analysts say it has potential for more growth.
A lot of folks feel the demographic dividends are going to pay off. 270 million people,
most of them with smartphones now.
What is super fascinating to me is that how much of that investment
goes into tier-one city-targeted business models versus Indonesia business models.
While some analysts are skeptical about Bukalapak’s ability to expand beyond Indonesia,
given its hyperlocal roots,
Rachmat says he is confident that the company’s importance transcends borders.
I’m not going to say that we just want to stay in Indonesia but Indonesia today is a big enough
market to keep us very busy, and we still feel like we have a lot of homework to do.
I don’t think we’ve even scratched the surface if you talk about underserved markets in Indonesia.
Today, 70% of Bukalapak’s business is non-tier-one. I don’t think a lot
of people think about that too much as well, that,
you know, you can actually make a lot of money by serving a population which doesn’t have that
much money, so I look forward to seeing more entrepreneurs actually build more companies
that can serve the broader populations, not just in Indonesia but broader populations in the world.
After experiencing tremendous growth in 2020, and with potential for more on the horizon,
the company may have plans for an initial public offering later in 2021.
Having access to capital markets is good to have for a growing company, and I think that
is one of the options that we are considering. We are not to say anything until we have proof.
But, of course, this is something that we understand to be important.
And we are preparing ourselves to be IPO-ready.