Indonesian e-commerce startups are in a consolidation phase as market observers and players had predicted.
For Blibli, the buyout was a strategic move to maximize revenues. For Tiket, which had never raised VC money since its inception, it was an opportunity to secure funding and long term commitment from a large corporation. Blibli is backed by GDP Venture, the venture capital arm of Djarum Group headed by Martin Hartono.
DEALSTREETASIA sat down with Blibli CEO Kusumo Martanto and Tiket CEO George Hendrata to talk about the acquisition, branding, and expansion strategy.
Could you tell us the early process of Tiket acquisition? Was there any encouragement from GDP Venture at the beginning?
Kusumo: We were approached by the Tiket team at first, around early last year when they announced that they were looking to fundraise. They must have already been in touch with several other parties other than us. The initial discussion was actually for us to participate in an investment in Tiket, but then both parties decided to settle on acquisition instead. We have the same mission and vision. We feel that Tiket and the team have great potential. There’s a lot of synergies that could be done from both platforms. We agreed that, therefore, acquisition would be better suited for this kind of synergizing that we want to do.
Question for Tiket: why did you choose to take the acquisition route instead of raising funding from the VC/PE market?
George: Like Kusumo has said, the two companies have the same culture and growth vision. We see that Blibli has excellent growth, high transaction, and efficient capital expenditure. Our target market is similar. It’s much easier for us to integrate into Blibli because the platform itself already has a travel division (Blibli Travel). Tiket saw this acquisition to be very strategic because we need huge funds for marketing and promotion in order to compete.
How much was the acquisition value?
George: I cannot disclose. But I can tell you that not only it was a fair value for previous founders and investors, there is also still plenty of room for value add in the future.
How did you finance the acquisition — was it from Blibli’s internal cash or from the parent? And what’s the ownership structure like?
Kusumo: The financing was a combination of Blibli’s internal cash and GDP’s support, maybe about 60:40 ratio. But Blibli maintains 100 per cent ownership of Tiket.
You have decided to keep both Blibli Travel and Tiket.com brands after the acquisition. Any specific reason why? And what are you planning to do with the brands in the future?
Kusumo: We had started Blibli Travel before any discussion with Tiket. We already had several products on the platform, including train tickets, and were in talks with several other potential partners. We also had signed contracts with some of them. The whole thing was already underway and we cannot change everything just like that.
So after the deal with Tiket we decided that for the time being, both brands will remain on their own. We will see which one works better. It doesn’t rule out the possibility that one day in the future we will merge the brands as well, we don’t know yet. Having said that, there’s still a lot of things that we can synergize, like sourcing contents and so on.
For Blibli, do you have any fundraising plan anytime soon? If yes, do you have any plans to go to the public market?
Kusumo: We have never fund raised outside of our parent, but like I always say, “never say never”. If we were to go to the public market to fundraise, I’d say that it would have to be for other reasons than just funding. For example, getting partners that can help bring Blibli to the next stage. Currently, we already have a very strong commitment from our shareholders in GDP when it comes to cash funding.
We will keep our eyes open to opportunities out there, waiting for the right momentum for us to take that route. What we are focusing on right now is how to develop a product that can satisfy our customers in addition to improving our warehousing, delivery system, and so on.
What’s the revenue target like for Tiket?
George: So far we have 100 per cent income growth. With this acquisition we are confident we can maintain this trend. The thing is, internet penetration here is still growing, and people have yet to become aware of booking their travel online, so there’s definitely a lot of potential. We’re barely scratching the surface.
We are targeting up to 2.5 times of top line growth and transaction volume.
Are there any partnership deals in the pipeline with other OTA companies, let’s say, Airbnb? What is your plan for the next product development?
George: There are no specifics yet, but yes, we are open to opportunities to collaborate with other OTA companies. There’s a lot of things going on in the B2B sector as well. We know that customers need more options for accommodation as well as places of interest. Now, we don’t have hotel bookings in the platform yet. But that’s definitely something that we want to do soon, providing that option for our customers.
What’s important here is obviously customer service; we are committed to improve it every day. We want the options broad, the pricing fair, and the customers happy.
How many users does Tiket have now?
George: I can’t give you the exact figure but it’s already in millions now, and continues to grow. In Indonesia, most brands rely on word-of-mouth still for promotion, so we want to make sure that users are happy.
What is Blibli’s go-to-market strategy to fight the heightened competition between marketplace startups within the country? Do you have any plan to go overseas?
Kusumo: First, of course, is product category development. We now have 15 product categories ranging from ticket and vouchers, gadgets, electronics, fashion, health, and beauty, to sports gears and home decors. Now that we have travel division and Tiket, our range of products has widened again but with very minimal cost. Travel is very strategic because people can transact on your platform but you don’t have to do physical delivery, it’s all electronic documents.
Second, is the expansion of our warehouse network. We already have several warehouses in Jakarta, Surabaya, and Medan, and are planning to add at least 12 more across the country. Construction has started and completion is targeted for next year. From our total investment, we focus mainly on technology and warehousing.
Since 2012 our customer base has been spread across Indonesia. Now what we do is to continue to improve both within Java and beyond. We don’t see the need to open a representative office overseas yet, but we will expand our delivery reach there.