The recent move by Indonesia’s online commerce giants Tokopedia and Bukalapak to tap into the offline market has gravitated interest into the country’s online-to-offline (O2O) space, which is already occupied by some notable startups.
Given the sheer size of Indonesia’s offline market, the O2O commerce industry is big enough for multiple players. However, the arrival of giants into the space is bound to spell consolidation between companies, according to Agung Nugroho, Co-Founder and CEO of Kudo, one of Indonesia’s earliest O2O players.
“I think some (consolidations in O2O) are on-going. There will be some along the way, here and there. Bigger players will acquire smaller ones, or similar ones merging together. It will definitely happen along the way,” he said.
Apart from Tokopedia, Bukalapak and Kudo, existing players in Indonesia’s O2O space are Kioson and DIVA, the first and latest tech startups to list on the Indonesian Stock Exchange (IDX), respectively.
Kudo, which enables Indonesia’s unbanked consumers to shop online by connecting them with online merchants and service providers, is an independent subsidiary of Southeast Asian giant Grab, after it was acquired by the Singapore-headquartered company in 2017.
At the time, the deal marked the biggest exit for an Indonesian startup, at a reported value of around $100 million.
Nugroho said he hopes that Grab’s acquisition of Kudo, which now claims 2 million agents in over 500 cities and towns across Indonesia, will be a positive reference for startups and investors as far as consolidation is concerned.
The deal, he said, created a “Silicon Valley dream” in Indonesia and could hopefully open the door for more acquisitions in the market.
“Within three years, we managed to sell this company to the bigger player. Hopefully this has become some kind of light at the end of the tunnel for some VCs and entrepreneurs,” Nugroho said.