Bukalapak gains 3 million new merchants, mostly in smaller cities

Bukalapak has seen 3 million new merchants join its e-commerce platform in the first seven months of the year, with the strongest growth rate recorded in rural areas and smaller cities.

Bukalapak president Teddy Oetomo said on Friday that a big portion of the company’s growth had come from outside of Indonesia’s five biggest cities, also known as tier-one cities.

“Almost 70 percent of our TPV comes from the outside of the tier-one cities due to our previous infrastructure penetration through our [offline] partners,” he added, referring to the total processing value (TPV).

“This also become an advantage for us as our market rarely overlaps with other e-commerce platforms,” he said during an online press conference.

According to the company’s data, Bukalapak has partnered with 5.4 million warung (food stalls) and individual agents through its Mitra Bukalapak program, with 4.5 million partners located on Java island. Revenue generated from Mitra Bukalapak’s offline partners makes up 30 percent of the platform’s total revenue.

E-commerce platforms in Indonesia, including Bukalapak, have seen strong growth of transactions and user activity as the COVID-19 pandemic has pushed consumers away from brick-and-mortar stores and toward online marketplaces.

According to a survey conducted by management consulting company Redseer in May, Indonesia’s e-commerce sector is projected to grow 50 percent to reach US$35 billion this year from $23 billion in 2019 due to the pandemic.

The survey found that around 30 percent of the respondents said they were new to online marketplaces, and 40 percent of those respondents said they would continue to use e-commerce after the pandemic.

Furthermore, Bank Indonesia (BI) recorded a 26 percent increase of e-commerce transactions during the pandemic.

Besides significant business-to-consumer merchant growth, Bukalapak also saw a 32 percent increase in merchants for its business-to-business and business-to-government procurement platform between January and August compared to December last year.

The significant growth in activity on its procurement platform, dubbed Buka Pengadaan, has been supported by rising demand from companies for health equipment, such as masks, disinfectant and rapid test kits.

“As of August, we recorded a 48 percent increase in demand for procurement from corporations through Buka Pengadaan. During the pandemic we’ve seen an increase for maintenance and service operations (MRO), health and pharmaceuticals and also electronics,” Buka Pengadaan’s director Hita Supranjaya said.

As the number of merchants and transactions continues to grow, Teddy said, Bukalapak planned to increase its monetization and improve its revenue to reach profitability in the future.

According to the company’s data, Bukalapak has increased its earnings before interest depreciation and amortization (EBITDA) by 60 percent between the fourth quarter of 2018 and the second quarter of 2020.

“We all know that increasing growth through ‘burning cash’ isn’t sustainable. Therefore, over the last 18 months, we have adopted initiatives to increase our monetization to create a more robust financial situation,” Teddy said.