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PITCH
Ranked as Indonesia’s top C2C marketplace, with 1.3 billion page views per month; Tokopedia is aiming to be the next Asian e-commerce Taobao or Alibaba.
WHY?

Fragmented online marketplace

Many SMEs use a variety of social media and online forums to sell their products.

Lack of e-commerce expertise

About 36% of Indonesia’s 58 million SMEs still sell their products and services offline.

Underdeveloped business sectors

Untapped markets due to limited banking and credit services outside urban areas.

MARKET

US$130 billion

Projected e-commerce market value by 2020 in Indonesia.

Indonesia’s SMEs account for 60% of its total GDP of over US$860 billion. About 36% of the SMEs operate offline, with another 37% having basic internet services.

PRODUCT
Tokopedia is a free online marketplace for sellers to open their own e-stores and earns revenues from user upgrades, premium accounts and TopAds advertising services. Tokopedia also operates a secure e-payment system and provides an alternative e-wallet account facility for members of its e-commerce and mobile app platforms.
Tokopedia is a free online marketplace for sellers to open their own e-stores and earns revenues from user upgrades, premium accounts and TopAds advertising services. Tokopedia also operates a secure e-payment system and provides an alternative e-wallet account facility for members of its e-commerce and mobile app platforms.
BUSINESS MODEL
Tokopedia’s free e-commerce hosting platform is attracting thousands of sellers and buyers to its online marketplace, including well-known retailers and public sector companies. Selling over 16.5 million items a month, Indonesia’s innovative one-stop mobile-accessible virtual mall generates revenues from user upgrades, premium accounts, advertising and e-wallet banking services.

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Tokopedia’s ambitious drive, to become Indonesia’s Taobao, Alibaba or Google, has secured a reported total funding of almost US$250 million by 2016. The rapid entry into mobile devices shopping, real time delivery logistics and the provision of e-banking services have transformed the online marketplace into a fully integrated e-commerce one-stop platform for Indonesia’s plethora of entrepreneurs, SMEs, retail giants and government-backed enterprises.

Over 80% of visits to Tokopedia are from mobile devices compared to 56% just two years ago. Mobile transactions now account for about 74% of Tokopedia’s business compared to only 29% two years ago. Reflecting this big shift in shopping behavior amongst Indonesia’s 255 million population, Tokopedia is now investing millions to upgrade its e-commerce capabilities to stay ahead of its rivals. Tokopedia wants to boost sales and visitor numbers by producing user-friendly interactive product catalogues, faster delivery times and offering a wider range of banking and credit services to both sellers and buyers. 

All transactions are channeled through Tokopedia’s centralized, escrow bank accounts free of charge. Sellers may use instant payment facilities that are similar to the e-money, credit card and payment gateways at convenience stores. The money is then transferred to a seller’s Saldo Tokopedia e-wallet account once the customer has confirmed receipt of the goods purchased.

Sellers may use a free shipping fee calculator and are expected to deliver all orders within two working days. However, those who offer handmade or custom products may use the Pre-order feature to extend their order delivery times up to a maximum of 30 days.

Besides the Ramayana department stores and Century chain of pharmacies, which have opened their official flagship online stores with Tokopedia, the e-commerce marketplace is further branding itself as a one-stop convenience store by partnering with mobile service providers and the Indonesian Railways Company to sell prepaid mobile phone credits and cheaper train tickets.

Although social media forums are important marketing and distribution channels for SMEs to reach out to Indonesia’s diverse population of over 255 million, only 18% have intermediate engagement with customers through the use of websites and social media. With another 9% considered to have more advanced e-commerce capabilities, Tokopedia is gearing up to grow its database of sellers by launching Instoped, a special feature that lets online sellers easily migrate their product photos from Instagram to Tokopedia. 

Tokopedia has also created a mobile-optimized site for smartphones, a Blackberry 10 app, an Android app and an iOS app. In addition, Tokopedia has a new WAP site which functions as a mobile catalogue for potential buyers without smartphones, in order to tap into Indonesia’s vast pool of lower income and rural consumers without access to smartphone technology.

Tokopedia also uses official logistics partners that offer online delivery status tracking to enable sellers and buyers to check on the progress of the goods despatched. The logistics partners include:

  1. JNE
  2. TiKi
  3. Pos Indonesia
  4. Wahana
  5. Pandu Logistics
  6. First Logistics
  7. SiCepat Express
  8. Ninja Xpress
  9. Go-Jek’s GO-SEND
  10. GRAB
  11. RPX (FedEx’s Indonesian subsidiary)

TIMELINE

  • Launch
  • Growth
  • Recent Developments
  • Future Plans
  • 2007-2009 - Inception of Tokopedia but failed to secure funding for two years, finally secured seed funding in 2009 to launch Tokopedia.

    Read in detail:

    The launch

    August 2009, officially launched Tokopedia on Indonesia’s Independence Day.

    • Used Indonesian logistics courier services company JNE for deliveries.
    Fundings

    February 2009, received seed funding from PT Indonusa Dwitama, whose CEO Victor Fungkong was the former boss of Tokopedia co-founders.

    • Incorporation of Tokopedia.com.
    Challenges

    Co-founders William Tanuwijaya and Leontinus Alpha Edison struggled to raise funds for their idea of an online marketplace during 2007 and 2008.

    • Met as co-workers in content provider company, PT Indocom Mediatama. 
    • Came up with the idea for Tokopedia and pitched to 11 potential investors.
  • 2010-2013 - Series A-D funding, rolled out mobile site; accepted first e-currency; added new payment methods with two of Indonesia’s largest banks, unveiled Gold Merchant premium seller system.

    Read in detail:

    Products and services

    August 2010, rolled out Tokopedia’s mobile site

    • Accessible to both smartphone and regular feature phone users with Internet access.
    • Plans to launch a Blackberry, iOS and Android app in future.

    November 2011, accepted e-currency UNIK 

    • Operated by PT Transmaya, with top up facility. UNIK used for both online and offline transactions.

    March 2012, 16,390 active merchants and IDR 9.9 billion worth of transactions.

    July 2012, added search functions and product catalogue features.

    January 2013, upgraded Tokopedia’s mobile site for smartphone users.

    June 2013, re-released WAP mobile site; rolled out Blackberry 10 app.

    • Users using regular cellular phones and Blackberry OS6 and below would be automatically redirected to the WAP mobile site.
    • Added logistics partners,TiKi and RPS, FedEx’s Indonesian subsidiary.
    • July, unveiled a new desktop website.
    • September, added fourth delivery logistics company Wahana.
    • October, accepted e-cash by Mandiri Bank; released User Management paid feature for sellers; unveiled paid Gold Merchant seller category.
    • User Management allows sellers to add up to 10 administrators to the Tokopedia shop account, subject to the main shop owner’s authorization.
    • December, added a new payment method by transferring to Tokopedia’s BRI bank account, one of Indonesia’s largest banks.
    Fundings

    March 2010, Series A funding led by East Ventures (EV) for preferred stocks.

    April 2011, Series B funding from CyberAgent Ventures.

    April 2012, Series C funding led by Netprice.com (now known as Beenos).

    June 2013, Series D funding led by SoftBank Ventures Korea.

    Key personnel

    March 2010, new board of directors and committee members from East Ventures and with Victor Fungkong and Yohana Fran from PT Indonusa Dwitama.

    April 2012, Teruhide Sato, Netprice president and group CEO joins Tokopedia’s board.

  • 2014 -Series E funding; launched Android app; launched new Tokopedia TopAds option for sellers; launched Resolution Center to help resolve transactional issues.

    Read in detail:

    Products and services

    January, added fifth logistic company Cahaya Logistik; added new payment method using BCA Klikpay by BCA bank, one of Indonesia’s largest banks.

    February, launched the official Tokopedia Blackberry Messenger channel.

    • Regular updates to users of Blackberry, Android phones or iPhones.

    March, released Tokopedia’s Hot List feature to highlight trending products.

    June, launched Tokopedia Android app; added Pandu Logistics partner.

    July, used seventh delivery company First Logistics.

    August, launched a Resolution Centre system that facilitates buyers and sellers when resolving transactional issues.

    September, released TopAds to earn advertising income from sellers who wish to promote products to Toppers or Tokopedia shoppers.

    Expansion

    November, popular actress Chelsea Islan became Tokopedia’s brand ambassador to promote corporate social responsibility (CSR) goals and to show support for the performing arts and social media fan clubs.

    Fundings

    October, closed a US$100 million Series E funding round led by SoftBank Internet and Media Inc., including Sequoia Capital. It was the largest funding round for an Indonesian startup on public record at that time.

    Policy changes
    March, all mobile phone numbers connected to Tokopedia must be verified.
  • 2015 - Launched iOS app; introduced a two-way feedback system for buyers and sellers; added new payment methods and delivery options.

    Read in detail:

    Products and services

    April, added Wishlist feature.

    May, added Visa or MasterCard payments by credit cards.

    June, launched Tokopedia iOS app; added new payment method via Indomaret, one of Indonesia’s most popular convenience chains.

    Unbanked customers to shop at Tokopedia by paying cash at Indomaret.

    August, started a two-way feedback system as a more transparent seller rating system. Both sellers and shoppers able to rate each other online.

    • Top sellers earn a badge depending on customer satisfaction ratings.
    • Buyers can view detailed data on a seller’s product accuracy, overall transaction satisfaction and the percentage of successful transactions.

    September, added eighth logistic company SiCepat Express. 

    October, launched a new search filter for wholesale products.

    November, unveiled the Shop Statistic feature for Gold Merchant sellers.

    December, accepted BRI e-pay from one of Indonesia’s largest banks.

  • 2016 - Series F funding; partnered state-owned Indonesian Railways Company; launched official online stores of large corporations; launched new Instagram migration feature; partnered ride-hailing startup Go-Jek.

    Read in detail:

    Products and services

    January, start to sell cheaper train tickets by waiving transaction fees, with exclusive discounts and promotions.

    February, introduced Instoped that allows sellers to migrate product photos directly from their Instagram account.

    • Sellers who originally used Instagram as their selling platforms are able to easily migrate or transfer their product photos to Tokopedia.

    March, offered prepaid mobile phone credits; rolled out Pre-order feature for sellers; updated search system with three new filters.

    • Pre-order feature benefits sellers selling handmade or custom products.
    • New filters: Shipping method, New/Secondhand product, Pre-orders only.

    May, partnered ride hailing startup Go-Jek for deliveries; added new payment methods via minimarket chain 7-eleven and post offices; released a Tokopedia Google Chrome Extension.

    • Chrome Extension lets users discover products by highlighting keywords.

    June, launched lending scheme Mitra Toppers for sellers; added new payment method via Alfamart, one of Indonesia’s biggest minimarket chains.

    • Mitra Toppers allowed sellers to borrow capital to expand their business from banks such as BRI, UOB, Amar Bank and DBS, as well as fintech startups like Modalku.

    July, introduced the Snapsearch feature for iOS users

    • With Snapsearch, Tokopedia will search for items based on pictures uploaded by users, available only for the Fashion & Fashion Accessories.

    August, rolled out the Free Return feature for sellers

    • Sellers can mark the products that qualify for free returns.

    September, Ramayana, one of Indonesia’s biggest department stores, launched official online mall; Added a new payment method via BRI Virtual Account.

    October, added new payment method via BNI Virtual Account by BNI Bank.

    November, pharmacy chain Century Healthcare launched official online store.

    Expansion

    August, received Top 50 Most Valuable Indonesian Brands 2016 award from BrandZ, ranking second on the “One to Watch” category.

    • Employs over 400 staff members and over one million registered merchants, selling 16.5 million items per month in 2016.
    Fundings
    April, secured a US$147 million Series F funding from undisclosed investors.
    Policy changes

    January, discontinued transaction services via Tokopedia WAP mobile site due to limitations in WAP technology. 

    September, shortened the processing time for sellers to two days.

  • Recent Developments

    In August 2017, Alibaba led a US$1.1 billion funding round for Tokopedia together with several undisclosed existing investors. As a result, Alibaba is now a minority shareholder of one of Indonesia’s biggest e-commerce platform. 

    Number 6 on the Alexa rank for Indonesia, with daily page views of 7.62 per visitor.

    Started Nakama Learning Class program in November 2016, where Tokopedia’s employees or nakamas are encouraged to share knowledge after office hours, for example free lessons on coding given by IT staff.


  • Future Plans

    Tokopedia aims to host more official e-stores of large corporations and state-owned enterprises and to diversify into e-banking, e-credit, e-lending and other business verticals.

    With the backing of Alibaba, Tokopedia expects to improve the variety of higher quality e-vendors being offered to customers. The extra funding and Alibaba partnership will also help the Indonesian e-commerce to develop Big Data capabilities to make it easier for merchants and vendor partners to connect their supply chains across the archipelago.

    Competition in Southeast Asia is expected to increase with more international players trying to grab a share of the region’s e-commerce market estimated at US$88 billion by 2025.

Updated: 08/2017

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