Bukalapak in August became Indonesia's first ever locally listed tech unicorn. Its robust revenue growth in its first reported quarter as a public company offers a compelling alternative narrative to characterizations of destructive hyper-competition across the country's e-commerce industry. Company President Teddy Oetomo points out that tier 2-4 cities, where its "Mitra Bukalapak" service dominates by serving micro and small-sized offline merchants, is actually where a majority of Indonesia's commerce occurs.
Bukalapak in August became Indonesia's first ever locally listed tech unicorn. Its robust revenue growth in its first reported quarter as a public company offers a compelling alternative narrative to characterizations of destructive hyper-competition across the country's e-commerce industry. Company President Teddy Oetomo points out that tier 2-4 cities, where its "Mitra Bukalapak" service dominates by serving micro and small-sized offline merchants, is actually where a majority of Indonesia's commerce occurs.
ALAN 0:11
Welcome to the 37th episode of Season Two of the Indo Tekno podcast. Selamat datang semuanya. I'm Alan Hellawell, founder of tech consultancy Gizmo Advisors. Now the public markets for Southeast Asia tech firms had remained broadly inactive since the October 2017 IPO of Sea limited, that is until the early August listing on to the IDX (Indonesian Stock Exchange) of leading Indonesian e-commerce platform Bukalapak. Today, we are honoured and pleased to have join us Teddy Oetomo, President of Bukalapak, to reflect on the company's path to this most recent milestone. Pak Teddy, thanks for joining us.
TEDDY OETOMO 0:50
Thank you for having me, Alan.
ALAN 0:52
Now, Teddy, I realise that none of our conversations in the past have been, let's say, particularly serious in tone. In fact, I believe that you could have enjoyed a glorious career as a stand-up comedian.
TEDDY OETOMO 1:05
Because of you, not me.
ALAN 1:06
I blame you. I am utterly humourless. I do blame it on you. Now, to be clear, this Indo Tekno podcast is a very, very serious series. We talk about really important stuff. So today we want to hear from the serious Teddy, like Dr. Oetomo, the PhD in economics from the University of Sydney. Is that a reasonable request?
TEDDY OETOMO 1:29
I think I can pull that off for 60 minutes at most, and then I'll go to my normal evil self.
ALAN 1:36
Excellent. Well, let's kick things off. Teddy, I originally came to know of you from your past leadership roles in the banking and finance industries. Which parts of that training have proven particularly useful in your current role as President of Bukalapak?
TEDDY OETOMO 1:51
There's a lot of training through the path as a banker, and the capital markets and asset management that are very useful. Because this industry, the tech industry, is very high paced. You need a vast amount of discipline. You need to be able to focus on things and get things done and solve the problem. And being in the banking industry, as you know, as well Alan; those are obviously what you train on and went out day in day out to do. That energy and ability to solve a lot of the issues. Practically, that level of discipline has involved a tremendous amount of training, I don't think I'll be able to get this far without the training that I've had as a banker, and in capital markets and asset management.
ALAN 2:33
I would agree with that. For better or for worse, we bankers really learn to focus on the work at hand and drive to completion. So let's talk about the IPO process that I assume you helped lead over the summer, as most of us believe that Bukalapak is the first of many Southeast Asia tech IPOs to come. You I assume went through the veritable whirlwind of investor meetings that we know as part of the IPO process. Can you share some of your impressions of that process, and how your day-to-day has changed now that you have public investors to answer to?
TEDDY OETOMO 3:10
I think the key word there was "to help". And I never see myself as the one that was instrumental to lead, or whatnot. Because at the end of the day, to pull off this IPO, which arguably is probably the first in Indonesia, on the IDX, in such a short time period if I may say, it takes a vast amount of teamwork from the whole group. It's not just internal, it's including the underwriters, including a whole bunch of the consultants and whatnot. For me, I think my adjustment into company life has been a lot easier because we did spend many years in the space. So the deal roadshow to me, it almost went back to a bit of a deja vu of what we used to do on the banking side. And during that period of the IPO, it does change a lot in terms of my day-to-day because I was forced to practically have very little time to look at internal operations. That's why I was very, very proud as well that post-IPO, once everything was done, looking back the operations were very, very strong that the team was able to keep doing that while most of the leaders were having to focus on the IPO stuff. So it's a testimony of how strong the overall company team has been. And once you're public, again, for me coming from the banking life, it's something that we are very familiar with. We talk to analysts. We talk to investors. We know that now that we are public, a lot more information needs to be disseminated as required to allow for a proper understanding by the public investor and fund managers on our company. But that is stuff that we have been brought up with, particularly myself through my past career.
ALAN 4:46
Thanks for the reflections there. Now, what advice do you have for those aspiring entrepreneurs themselves eyeing a local listing? Are there any do's and don'ts that you can offer them?
TEDDY OETOMO 4:57
Well, hopefully what Bukalapak IPO shows is that prior to that there has been a vast amount of scepticism of the IDX; whether it is doable on the IDX, whether there's enough depth in the market on the IDX, whether one can raise a sufficient amount of liquidity. So I think hopefully what we have shown, the big "do" here is that it is available. It is possible. It is doable, and we did it. And we would really encourage a lot of the other startup entrepreneurs to start thinking about IDX as a home listing for a lot of these companies.
ALAN 5:32
Well, now more of a point blank question for you, Teddy. A popular narrative has been that competition in Indonesian e-commerce seems to have been nothing short of predatory for the past few years, with billions of dollars having been spent on free shipping, cash-back promotions, and other costly exercises. What are people missing in this characterization?
TEDDY OETOMO 5:54
Well, it is very competitive. And we all know that. But I think it comes down to how can one navigate one's business. At the end of the day, if you follow the same strategy as the other company who has greater capital, bigger capacity, then you should play into that game. You should play into the game of capital and aggression essentially. But for us, we chose a different path, because we looked at where some of these bigger players are heading to. And we looked around. This is Indonesia. There is a vast amount of market. There's a lot of untapped potential. Where are the pockets that we can go into? And this is notably, where we go into more of a Shopify-type of strategy. This is where we move into the Mitra strategy, tapping into outside tier one cities through a lot of these strategies where capital is not as effective. So it requires more value-add, more innovations, rather than relying on aggression of capital. And it's just like any other business. It's not just an "attack industry". And I think in every other industry, you do the same thing. You do what the MBA courses will say: do your SWOT (strengths, weaknesses, opportunities, threats) analysis. Focus on the strength. Know your threats. Know your weaknesses, and formulate that strategy so that you capture the opportunity that's right in front of you.
ALAN 7:05
Understood. So you're suggesting that there's indeed quite a bit of variation to this broad monolithic idea of e-commerce?
TEDDY OETOMO 7:13
I do think there is a vast amount of variation. I do think that a lot of the public or the market or the capital market has been more focused on one type of strategy, which is for the right reason. Because they are large, successful companies that have followed that strategy and are today very, very prominent. But if you look around, also globally as well, there are always various strategies at hand. And I think the pitfalls would be if we don't have the strength in a particular strategy, and we force ourselves into that path of the strategy rather than knowing where our strengths are, and formulate our strategy in accordance to our strength.
ALAN 7:48
Gotcha. Well, keeping the focus on the big picture, Indonesia marketplace e-commerce specifically has several competitors. Now, how do you expect competitive structure to evolve over the next few years? Will it resemble China, where the biggest player Alibaba owns maybe 50% of the market, according to eMarketer, and the top three together hold nearly 80%? Or how do you think of market structure going forward?
TEDDY OETOMO 8:16
I think it depends on how you slice-and-dice the market. If we talked about the direct-to-customer or B2C type on that very strategy of e-commerce marketplace, I do think you're gonna have one or two dominant players, and then some of the more niche players. But then you look around where the overall potential is, and you have other spaces like the O2O (online-to-offline) spaces, some of the more virtual services, more the back end support, like the B2B side, like Shopify type of, enabler type of businesses. So at the end of the day, again, I think it depends on where you slice-and-dice it rather than looking at just the front end, or you see the whole market overall. And when you do that, I think you're probably going to have a number of very prominent players. My expectation is that some of those players will be the leaders, but in their own respective target strategies and segments.
ALAN 9:04
Understood. Now if we go back to the two extremes; one of them being growth at all costs on the one hand, and the other one maybe being profit maximisation on the other; where on this spectrum would you place Bukalapak today, and where would you expect it to be in two years?
TEDDY OETOMO 9:23
I would hope that people would also understand that we are more in the middle ground. One side of the argument has been that there's so much potential out there, that it should be "growth at all costs". Growth is important, you need to invest in growth, but we also need to make sure that it is properly invested. The worst thing that can happen is to only focus on just growth alone, up to a point of no return, that you cannot eventually in the future turn the company profitable. So obviously in this market, we are not focusing solely on profitability for the sake of profitability alone as well. Because if you do that you will miss out on the market. So the key is to make sure that you have mapped out the potential that you have in front of you. Target that growth, but make sure that that growth is done with a proper quality, not just the magnitude of growth. You need to ensure the quality of the growth and do things with a proper cost of growth. And therefore, the company while it's growing and increasing its penetration and market share, at the same time it is also tracking into the path of profitability. Now, you're probably not going to get it within three months, six months, but you do need to plan that out in a very balanced and very sustainable manner.
ALAN 10:31
That makes eminent sense. Now, Teddy, I noticed in the company's first half results, which were released at the end of August, ATV or "average transaction value" grew by an incredible 34%. That basically means that the average basket size at checkout grew by more than 1/3. What exactly drove that?
TEDDY OETOMO 10:52
That is a function of increasing number of offerings. So one thing I want to highlight is: please don't see that as an increase in purchasing power alone, because this is not comparable to same-store sales growth. Because you are selling more stuff. You're selling more features. You're selling more capabilities. You're selling more additional lines of revenues for a lot of these guys. So the increase in terms of the ATV has also captured the fact that they are more categories of the offering, and it becomes part of the basket of transactions. That's the first driver. The second driver is owing to the capability of our Mitra business. What has been happening now is somewhat similar to what you see in China with group-buying purchases. But in Indonesia, we find that a lot of these mom-and-pop stores don't follow the strict group purchase methodology that you see in China. They don't just group the order and send us the one order. What they do is they bulk purchase and take that as inventory. The reason being: by doing so because they are stores, they are able to create a lower amount of transparency to the end user and generate more margin. So what we have seen here is that a lot of those mom-and-pop stores outside tier-one cities purchase in bulk as an intermediary to subsequently resell that also to the general population outside tier one cities.
ALAN 12:11
So if we use today's acronyms, are we saying that the B2B part, or the "business-to-business larger volume part of our e-commerce, is growing faster than what you might call the B2C which is the business to the individual consumer?
TEDDY OETOMO 12:29
If you look at it as a B2B part in this sense, i.e. our Mitra, that's growing over 200% year-over-year. So it is in a much faster growth phase. Of course, this is not going to go in perpetuity. There will be phases. The current phase is a time where the infrastructure of the Mitra that we have built for the past three or four years, is now reaching the optimal economies-of-scale, essentially. And you are seeing that result of them driving that massive magnitude of growth going ahead. This would last I think, for the next few phases.
ALAN 13:05
Thanks for that, Teddy. Now, let's move on to something else. How would you describe the culture of Bukalapak?
TEDDY OETOMO 13:12
It's very flat. That's one thing. I think, when you are in such a fast growing, innovative company, you need to make sure that it is a generally very, very flat organisation. With the four of us at the C-level, practically anybody in the whole company is able to come up with the innovations. I think one of the worst things that could happen in an innovative company like ourselves is if everything relies upon one layer of employees. Because you need the vast amount of that highly capable talent to voice their innovation, to voice their ideas. It should be that anyone who comes up with great ideas should be able to voice that up. And in order to do that, you need to make sure that the relationships within all layers of the employees are very, very strong. You shouldn't decide that: "Oh, that's my supervisor. If I have an idea, I shouldn't voice it out to the level ahead of that. I need to make sure that there's a proper bureaucratic path". That would slow a lot of things up. And I think to create that environment has been the key in terms of the success for Bukalapak to be where it is today.
ALAN 14:11
Would you phrase it as a "democracy of ideas" that you're trying to create there?
TEDDY OETOMO 14:15
Of course. Yeah, essentially a democracy of ideas. Democracy of ideas is one of the most important elements. And then you need to leverage that with teamwork, because the last thing you want is, in a democracy of ideas, some people will feel that: "This is my idea and I will not work with the others." I think you need to create a culture where people can voice the idea. Those that accept that innovation or idea will jump into it as well, to do it together, to throw in their effort, to throw in their time.
ALAN 14:46
Understood. Now Teddy, where do you tend to find the best talent for the company as Bukalapak continues to grow?
TEDDY OETOMO 14:53
Talent has been challenging. It is always one of our key focuses. All of the C-level has been very, very focused in terms of finding talent. And as you know with every tech company, talent is the biggest asset of the company. So a majority, if not 90-plus percent of our employee, has been homegrown in Indonesia. We do have talent that we import from overseas. Generally, most of those are also Indonesians that have been studying or have been working overseas. And they come back to help us and share that experience and know-how with the younger demographic of our talent pool.
ALAN 15:26
Understood. Now, Teddy, you've mentioned a few times now, one of the most unique and defining aspects of the company's business model has indeed been Mitra Bukalapak, or "Bukalapak Partner" in English. First of all, can you spend a minute or two explaining the model for the newbies of us in the audience?
TEDDY OETOMO 15:44
Sure. So let me spend a bit more time on the reason why we do this. Now everybody who has looked at Indonesia has always been captivated with this 270 million population, this young demographic, this emerging middle segment. But I think a lot of people forgot that only about 30 million to 40 million of Indonesian population actually live in Tier One cities. They live in Jakarta, Surabaya, Bandung, Medan, Semarang; your top cities. A majority, like 200-plus million actually reside outside tier one cities. Now when you go to outside tier-one cities, then there's a number of challenges; from financial inclusion, to logistics and a whole bunch of these issues that everybody often discusses. Now, what we have done is to realise that 60% of Indonesia's GDP is actually contributed by the country's MSME's (micro, small and medium-sized enterprises). And what we do is we tap into that existing industry, the existing infrastructure that is already there. We help them to sell more product, help them with their SKU's. We help them to be able to generate or purchase the SKU's that they need to resell faster. We help them to expand their business from traditional convenience stores to offer additional services through our platform on top of the FMCG (fast moving consumer goods) that these traditional convenience stores can sell. Now, they actually have the capability to expand their business to be travel agents by selling bus tickets, train tickets. They can be logistic partners, i.e. they work with the 3PL's (third party logistics companies) and they can become a drop off point for a lot of the logistic agents. They become remittance agents. They become practically a basic bank branch, and that significantly enhanced their revenue streams. So on average, a lot of these mom-and-pop kiosks that are connected to us, their revenue went up by 3X. Because they started off from selling instant noodles and mineral water. Now they sell a whole bunch of other services on top of what they did in the past. Now having that infrastructure has been key because we are now connected to over 8 million of them across Indonesia. And that means we have 8 million offline touch points. And those offline touch-points are crucial to allow us to tap into the outside tier one cities of Indonesia. For example, people can shop online, but they don't have credit cards. Where are they going to pay? They need to pay by cash. The number of ATMs in Indonesia of the whole banking system is well short of 500,000. But now they can walk up to any one of those 8 million-plus of the offline touch-points that we have, and settle their purchases with cash. That's just one example. There are many other additional services by the Mitra or these mom-and-pop kiosks. They become intermediaries for the company to tap into the outside tier one cities; the 200 million-plus population of Indonesia. And as a result of that, 70% of Bukalapak business today is generated from outside tier one cities. In contrast, in the case of the industry of e-commerce in Indonesia, 70% is generated from tier one cities. So we do have a very, very different type of segment and very different type of target audience compared to even the industry of e-commerce in Indonesia.
ALAN 18:41
Yeah, it sounds like you really are outfitting the mom-and-pop with expanded opportunities. And Mitra Bukalapak in many ways has indeed set off quite a mega-trend around enabling warungs and small shopkeepers. But how does the company view the advent of models from marketplace competitor Tokopedia to pure-play startups ranging from Warung Pintar, to Ula?
TEDDY OETOMO 19:04
I think it is a very, very vast market. Our sense is that we do not also want to be the only player despite everything that's been probably known and talked about on Mitra Bukalapak. The reality is where we are today, we have only tapped into one vertical well, ie the traditional convenience store. Now the MSME of Indonesia, the mom-and-pop store of Indonesia, has many, many other verticals. You go from eatery to building materials stores, to phone shops...there are many other verticals that are still untapped. And we actually think that in order to help empower this MSME, and there are 64 million of them across Indonesia, we are not going to be able to do it alone. So I think this has to be a joint effort. And when we get there, when we are able to empower these MSME's, given that they are 60% of Indonesia's GDP, it only means one thing: it helps the whole nation's economy to move to the next level.
ALAN 19:59
These are all points well taken. Just one last question about the viability of the model. I've mentioned in past episodes of the Indo Tekno podcast, that in my 15 years covering China e-commerce as an investment banking equity research analyst, I saw the rise-and-fall of similar models such as Alibaba LingShouTong, Tom Online and China Postal Savings Bank's joint venture, which was called "Ule" to similar initiatives from JD.com, Best Logistics and others. What are we doing differently as it relates to commonly cited challenges from those guys, such as lack of digital literacy, with the warung owner such that we're more successful?
TEDDY OETOMO 20:41
I'm not in a position to comment what the others have done. But let me just probably share a bit on how we think and how we do it, and how we have gotten here. We don't see them as buyers. We don't see them as users. We see them as our clients, helping them to grow the business. So every single approach that we take, every single thing that we roll out, it has one key thing in mind: how can we help them make more money? How can we grow their business? How can we help them to expand their business so that they generate more revenue? And when the approach is about helping people to make more money, what we find is that digital literacy is becoming less of an issue. Because they put in the efforts, the spend the time to learn to know how to use the product, simply because they just saw their neighbour, who is two shops down the road, practically make three times more money. And they said: "I want to have that too. What did they do? How can I do exactly what he did so that I can benefit from that approach and make more money?" And by doing so we find that a lot of those mom-and-pop kiosks are investing a lot of their time without having us to go out there and force them to learn because they learn it themselves. And money is a very, very strong incentive to most people essentially.
ALAN 21:59
Understood. Now from the Bukalapak perspective, what about the need for substantial capex (capital expenditure) to outfit the Mitra storeowner with hardware, and the opex (operating expenditure) to for instance, get product to that endpoint?
TEDDY OETOMO 22:12
As a matter of fact, we don't actually spend much capex in terms of the mom-and-pop store. Because one of the easier approaches obviously, the first more obvious approach has always been: just up there and get some POS system or something for them. But the technology today enables us to build a lot of this functionality on the smartphones, for example. So the approach we have always taken has always been: "Yes, the fastest approach is to roll out some capex." But once you spend time on that, you find that there are the other approaches where you don't need to spend as much capex. Another example is in terms of the fulfilment of the FMCG. We have seen that a lot of the other players went out there and when hard into building their own warehouses or whatnot, in order to get the FMCG goods to the mom-and-pop store. But we took a step back and we realised: Hang on. There are vast amounts of wholesalers in Indonesia, what we call IDC's. We can leverage them. We can use them. We can empower them, so that the brand will then practically use them sort of like a depot before it can be distributed out to the mom-and-pop store. And that structure allows for a very minimal capex. It allows us to tap into outside tier one cities, beyond the main cities. Because if you build your own warehouse, you need to only cater to the main cities. Now that approach allows us to tap into tier two, tier three, tier four cities. It allows us, because the goods are now in inventory, they are in a much closer proximity to the mom-and-pop kiosk. When the mom-and-pop kioks orders, the goods will arrive literally the next day. So there are a lot of solutions. And I think it's just a matter of taking a step back, knowing the industry, knowing the market, and also understanding what in this case our client needs. And we shape our structure and strategy to fit into that need.
ALAN 23:54
Understood. So clearly, you've innovated quite a bit in your relationship with the Mitra. Now, Teddy, you mentioned this briefly earlier in our conversation: first half Mitra TPV, or "total process value", increased by 227%. What drove such meteoric growth?
TEDDY OETOMO 24:12
There are a couple of factors. First is obviously the increase in terms of the features that we have been rolling out. This includes some of the stuff that I spoke about before allowing them to be a logistic agent, allowing them to become a remittance agent and tap a whole bunch of additional revenue streams. So that growth is not driven by selling the same product with higher volume, but essentially there is more optionality with the products and services that are being offered. And on top of that, in the last quarter or two, we have started to see the economies of scale of our IDC now that we are tapping into over 300 of them. So that has reached, given the demand today, an optimal density. And that we saw very quickly that the impact took off. And a lot of the FMCG and physical goods have been growing very, very fast. And that relates back to what we were talking about: plan it well and execute it well. And when we are able to deliver this, you'll see in our second quarter numbers. Our Mitra business, for example, the gross profit after-sales and marketing has improved dramatically from a few years ago. It was on mid single digit negative. Now it is hovering at about -0.4%, -0.5% in terms of percentage to our TPV. So that has improved dramatically in terms of the unit economics, and that also gives a benefit to our marketplace. Obviously, Mitra and marketplace are highly connected together. Second quarter this year, our marketplace gross profit after sales and marketing was in positive territory. It's still small, but it has positive unit economics. And that means that it allows us to enhance our volume growth, to subsequently cover for the G&A in the near future, hopefully.
ALAN 25:44
Understood. Okay. That all makes sense. Now, Teddy, what forms of monetization do we realise from the Mitra business today? And how might that evolve going forward?
TEDDY OETOMO 25:56
So the monetization comes from a number of aspects. And they are all generally commission-type of base. So essentially, when the Mitras order goods like physical goods and FMCG, we clip some margin out of that. We clip commissions out of that. When they sell virtual products and financial services, we also generate comissions from the financial services and virtual product providers. Now, where does that trend forward? It would largely be trending upwards owing to the product mix. When I say "product mix", it is because at this stage of the growth, you tend to roll out (or in this case we did) a lot of initiatives that has a very high volume in order to generate high engagement. But as we all know, "God is fair". Products that have high volume typically have lower margin. Now that he have achieved domination of scale, and are starting to have all this engagement already there, what we do is roll out additional product, additional services that have higher margin. For example, on the FMCG side, we start adding in producers that are more local producers, like provincial level producers, smaller producers. Those ones typically generate higher margins. Virtual products and financial services. Things like logistic agents. It does offer high margin obviously, as we share the logistics rebate which are on a double digit level. The fresh food, for example, that we are offering, also has a higher single digit margin. So as a lot of this higher margin business increases in terms of its contribution, that can improve in terms of your blended take rate going ahead.
ALAN 27:23
Understood very clear drivers there. Now, Teddy, what is Bukalapak's real "Northstar" KPI, or key performance indicator? Is it average user time spent on the app? Is it product diversification in the average basket? Is it frequency of purchase per month? Is it basket size? What is it?
TEDDY OETOMO 27:44
I think the key of where we are today is because we do not have a single Northstar. We are actually very careful about that. We worked out that once you adopt one Northstar, the team or even the company runs a risk of "gaming" their initiative to just achieve the Northstar and then missing on the other metrics. And I think the key success that we have been able to deliver today has been because we are looking at things from multiple metrics. In terms of growth, we are looking at what are the growth metrics that we need to track? It's not just the TPV growth. You need to make sure that the transactions per user per month are also increasing, the number of baskets are increasing. But at the same time, we also overlay these metrics with what is the cost associated with generating that growth? What is the monetization that will be generated from the new businesses that we acquire? If it's not a business that generates revenue, where does it lead? Is that leading into engagement with the user and cross-selling into the other product and subsequently therefore allowing us to generate some revenues? So there is no one single Northstar. And that is something that we consciously have been very strict on: that every initiative, every product, every feature needs to have multiple metrics in order to avoid us rolling out strategy in a biased way.
ALAN 29:01
Now Teddy, can you talk about how COVID impacted our business, from its onset at the beginning of 2020 to current day?
TEDDY OETOMO 29:09
I think when COVID first hit it was something that I personally was quite worried about. This is March, 2020. We were quite aware about how that could have benefited some of the marketplace e-commerce as we have seen globally. Having said that, we do have a lot of offline stores. So I was a bit more concerned, I must say. But I was quite glad that I was proven wrong in most of the cases because it turns out to be that the COVID pandemic resulted into a tendency to not want to travel too far from their residents. And that's where it becomes interesting because then they're starting to shop at their local stores, i.e. the mom-and-pop store across their home or across from their house. And they start to realise that these mom-and-pop stores, they are not just selling mineral water and snacks anymore. They can actually do a whole bunch of stuff there, from sending money to their mom in the village to sending goods, to buying electricity tokens, even by game vouchers, and a whole bunch of other stuff. And they became a lot more engaged with their local store, in this case, their mom-and-pop store. And you saw that from the numbers: that resulted in a massive surge in terms of the Mitra business, which is practically offline MSME, throughout even the COVID pandemic period.
ALAN 30:21
Wow, that sounds quite unique, I would have thought that almost anything offline would have really felt the full brunt of COVID. But you make some very good points about how the enablement of the common warung, or mom-and-pop, with Mitra Bukalapak solutions probably expanded their relevance in the pandemic era. Now, you've mentioned earlier in the conversation that Bukalapak indeed boasts relative competitive dominance in lower tier markets. Are there any other elements that we haven't touched on that explains this?
TEDDY OETOMO 30:51
The company mind you started with a very MSME "DNA", even when it first started in 2010-2012, because of its community base. And I think it was very natural for us to be more focused on more MSME mass market. And the moment that we realised that with our target segment, a majority actually resides outside tier one cities, we quickly formed a strategy that allows us to leapfrog into that space. And that was when we realised that in a country like Indonesia, where there are 270 million people, a majority residing outside your one cities, scattered across a vast amount of geographical locations, we cannot penetrate into this segment using a single strategy. We cannot be using an online-only strategy. That's when we realised that we need to leverage the existing offline infrastructure of Indonesia to allow us to tap into this vast amount of mass population across Indonesia. So it is a function of a very well-planned strategy. And it took a long time building this Mitra strategy. It took us three, four years of investment throughout that period to get to where we are today.
ALAN 31:59
Well, congrats on all the progress there. And Teddy, congrats again on the IPO. I also personally have a much better appreciation of the unique e-commerce offering that Bukalapak has created in what frankly, I thought was otherwise a pretty crowded space. Really appreciate you spending your time with us today. Thanks a lot for joining.
TEDDY OETOMO 32:18
Thank you very much, Alan. Always a pleasure.
ALAN 32:21
Great. Well, we hope our listeners have also enjoyed today's episode. As always, please consider sharing any feedback that you have about the Indo Tekno podcast with us. Terima kasih telah mendengarkan. Sampai jumpa lagi!