One of the OGs of Indonesia’s e-commerce landscape is pulling the plug on its marketplace.
Bukalapak will focus on virtual products like mobile credit, internet packages, and bill payments, the company said on Tuesday.
While earnings from its physical goods marketplace form less than 3% of the company’s revenue, Bukalapak’s exit is a signal that it lacks the firepower to eke out market share in a turf war with the likes of Shopee (Sea Group), Shop Tokopedia (formed from the merger of Bytedance’s TikTok and GoTo’s Tokopedia), Lazada (Alibaba), and Blibli (Djarum).
The move is necessary for the company’s sustainability and future relevance, a Bukalapak spokesperson tells MONIIFY.
Read more: Indonesia’s cool with Apple’s $1 billion investment (sort of)
Ruthless competition
Indonesia is an important market for e-commerce giants.
As of February 2024, Bukalapak ranked fifth in monthly web traffic, with 4.2 million visits, according to Statista. Shopee had 227.6 million visits and Tokopedia, 95.6 million, in comparison.
It also lags in market share based on sales volume. In 2023, Shopee had a commanding lead of 40%, while Tokopedia was trailing at 30%. Bukalapak had a mere 11%, according to insights research firm Momentum Works.
In an interview with MONIIFY last year, Bukalapak co-founder and former CEO Achmad Zaky, now the founder of VC firm Init6, highlighted the capital-driven nature of Indonesia’s e-commerce race.
Read more: Indonesia business owners get sucker punched
With major players pouring resources into promotions and discounts to lure and keep customers, “those with deep pockets can win the game,” Zaky said, without specifically addressing Bukalapak’s woes.
“Bukalapak’s retreat is a sign of the consolidation and formalization we have seen in Indonesia’s — and Southeast Asia’s — physical goods e-commerce market over the past few years,” says Simon Torring, co-founder of e-commerce market insights Cube Asia.
The trend has been challenging for platforms that are “big but not the biggest,” forcing players like Bukalapak to exit unviable verticals, Torring tells MONIIFY.
In November, Singapore-based e-commerce platform Qoo10, which is backed by private-equity firm KKR, was ordered to liquidate after it ran out of cash to pay merchants.
One of the OGs
Bukalapak was founded in 2010, during the rise of Indonesia’s first wave of tech companies like Gojek and Tokopedia.
The company attracted global investors including Singapore’s GIC and Microsoft, drawn by the growing potential of Indonesia’s digital economy. It was one of the first startups to achieve a $1 billion valuation in the country.
All its co-founders then exited between 2019 and 2020, ahead of the company’s August 2021 debut on the Indonesian stock exchange.
Following its announcement on Tuesday, Bukalapak shares dropped nearly 5%.
Read more: How Gojek co-founder Kevin Aluwi would do it today
The stock has been struggling for months, declining by over 40% in the past year. As of January 9, Bukalapak’s market cap stood at $770 million, a far cry from its $7.5 billion IPO debut.
For now, Bukalapak will double down on virtual products, gaming, retail, investment, and its main revenue driver, Mitra Bukalapak, which made up nearly half of the company’s revenue in the first nine months of 2024. Mitra Bukalapak is an online-to-offline service helping neighborhood mom-and-pop shops source goods and sell virtual products.
For Bukalapak, restoring investors’ confidence won’t happen overnight, says Niko Margaronis, a research analyst at BRI Danareksa Sekuritas. It will require a fresh narrative and a solid business model.
Its recent woes do not project confidence, which makes its path forward more challenging, he says.
Edited by Victor Loh and Azar Zaidi. If you have any tips, ideas or feedback, please get in touch: talk-to-us@moniify.com
