Indonesia's Tokopedia kicks off global strategy, enables local players to export goods

Indonesia's Tokopedia kicks off global strategy, enables local players to export goods

Tokopedia's Patrick Cao at DealStreetAsia's Asia PE-VC Summit 2019 in Singapore. Photo: DealStreetAsia

Indonesian e-commerce unicorn Tokopedia says it has started to implement its own “globalization strategy” by helping Indonesian merchants on its platform to export their products abroad.

“Right now it’s still at an embryonic stage, you will see more of that activity scale as we focus more of our resources and attention on that,” Tokopedia president Patrick Cao told DealStreetAsia on the sidelines of the Asia PE-VC Summit 2019 in Singapore.

The idea of the initiative, Cao explained, was to give Tokopedia merchants the benefit of the company’s resource, network, and connectivity to be able to sell to a broader market.

The move follows a similar strategy carried out by fellow Indonesia e-commerce company Bukalapak, which earlier this year launched BukaGlobal, a feature that aims to connect the global market with sellers on the Bukalapak platform.

However, differently to Bukalapak, Tokopedia does not offer the feature on its platform, preferring to keep the services offline. While Tokopedia has carried out some promotion of local brands to foreign markets on its platform, no cross-border transaction is facilitated on it. The Tokopedia platform, the company said, remains focused on serving the Indonesian market only.

Cao said that helping merchants sell their products abroad will be the full extent of Tokopedia’s globalization strategy for now, as the company is solely focused on going “deeper and deeper into the Indonesian market, not go regional or global.”

Its strong focus on the Indonesian market, Cao believes, is what sets Tokopedia apart from well-funded regional competitors like Singapore-based Lazada and Shopee, despite them investing heavily to build out strong local teams in the country.

“We are the beneficiaries of the fourth largest market in the world. So we don’t need to go elsewhere. They run centralized technology product leadership teams in Singapore. Everything is built in one place and translated. So if you take a Singaporean app and then translate it into Bahasa, you as an Indonesian would know very well that the customer journey is not as good. So that I think is also a key advantage,” Cao said.

At this point in time, Cao claims Tokopedia has “by far the highest quality unit economics business among e-commerce companies” in Indonesia. However, the company is not in any rush to chase breakeven point – a milestone currently pursued by Bukalapak which has seen it take bold efficiency measures over the last few weeks.

Cao said, in regards to revenue management, the company prefers to look at global peers for inspiration.

“You should look at our global peers, like Amazon, as an example. The cash flow that they generate, they reinvest into their business, so at times they show profitability. I think we always have the option to be profitable, it’s just that we choose to invest in growth and we will continue to do that in a sustainable manner,” he said.

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