Indonesian electronics e-tailer Bhinneka raises $22m from local VC Ideosource, plans IPO

Visual from the company website

Bhinneka.com, an Indonesia-based online store and market leader in electronics-related products, has secured an investment of Rp300 billion ($22.06 million) from local VC firm Ideosource.

The company will use the funds to ramp up its marketing efforts, and become a dominant player in more product categories.The round is Ideosource’s largest startup investment to date.

Also Read: Indonesia wants permit regime for online businesses

“Bhinneka has a strong and reputable brand in Indonesia as an O2O (online-to-offline) firm for 3C (Computer/IT, Communication, and Consumer Electronics) whereby they have their online as well as offline stores,” says Ideosource Managing Partner Andi S. Boediman in a press statement.

Bhinneka CEO Hendrik Tio adding, “I’ve known Andi for more than 15 years, and we think we have a lot of chemistry between us. On top of that, Ideosource brings a lot of value to the table apart from just money. They also bring a lot of technology expertise, network, capital, and talents that we can now tap into.”

Following the investment, Boediman and fellow Ideosource Managing Partner Edward Ismawan Chamdani will join Bhinneka as C level personnel in marketing and business development.

Betti Alisjahbana (former President Director at IBM Indonesia), Christian Van Schoote (former Director at Central Retail Corporation and MAP Indonesia), and Heriyadi Janwar (former Senior Product Marketing Manager at Microsoft) also joined Bhinneka as Chairman, COO, and VP respectively.

Also Read: Indonesia online commerce to touch $25b by 2016

The company said, these top talents would undoubtedly bring Bhinneka closer to its grand vision to become the first e-commerce company to go IPO in Indonesia.

Based on data by Germany-based statistics portal Statista, Indonesia’s total retail sales in 2014 was worth around $411.29 billion, of which over 99% were offline sales.

Founder of Bhineka,com from the company

Founder of Bhineka.com . Visual from the company

“Indonesia has an under-penetrated offline retail market. The lack of offline penetration means that there is a huge potential void for the online channel to fill. And the best way to introduce the shopping behavior is through O2O, or combination between offline and online experience,” says Boediman.

Currently, Bhineka has offices in Jakarta, Surabaya, Medan, Makassar, and Bandung. Bhinneka also has its own service centres.

To date, Bhinneka is one of the few Indonesian e-commerce firms to implement a profitable and sustainable business model. Despite raising funds from Ideosource, Bhinneka won’t undergo the cash burning methodology.

The e-commerce market has grown to become one of the hottest business landscapes in Indonesia, with many new players cropping up in the country, both local and foreign. According to US-based research firm eMarketer, there were an estimated $2.6 billion in online retail sales in Indonesia during 2014.

Indonesia’s e-commerce ecosystem could evolve at a pace similar to India and reach $4.49 billion by 2017.

“Currently, the market is being built based on marketing and subsidised processes, which is making the margin for error very slim. So we have to be very smart in doing marketing activities.” Hendrik said.

He added, Bhinneka will focus its development in mobile and social media. Information such as new online stores, product reviews, attractive deals will be available through its mobile and social media initiatives.