Bukalapak Starts Warung Potential Validation in the Philippines

After BukaGlobal, PT Bukalapak.com Tbk (IDX: BUKA) has resumed its guerilla business outside Indonesia. as reported various mainstream media, Bukalapak seems to have officially operated in the Philippines through brandSmartSari since the middle of this year.

When contacted, Bukalapak was still reluctant to provide further information regarding this expansion.

Based on Bukalapak's annual report, the listed company has established the legal entity SmartSari since April 2022 with a 99,99% ownership percentage or equivalent to a value of IDR 2,69 trillion.

It is known that SmartSari is a form of duplication of Mitra Bukalapak's business line. The SmartSari platform allows MSME players to develop their business. One of the advantages offered is online product delivery.

In the Philippines, the term "Sari" refers to small shops that sell food, drinks and daily necessities. In Indonesia, we know it as a warung.

Through the SmartSari application, new business owners can now sell their products virtually (game vouchers, pulse). However, in the future product sales can be made in physical stores. Product categories will also be added, such as tickets, remittances, and bill payments.

Now, the SmartSari application has been downloaded more than 50 thousand times on the Google Play Store.

Philippines market potential

There are several theses that allow Bukalapak to expand its line Partner business as the first step of expansion.

Instead of entering through the Marketplace line, Bukalapak sees that there is a large market potential—similar to the potential that Indonesia has—none other than MSMEs. After all, so far the market marketplace in the Philippines it is controlled by two big players, namely Lazada and Shopee.

According to Venturra Discovery, which has already explored investing in Filipina, the country has a number of great potentials, such as a large population, relatively young population demographics, and buying power continue to increase.

MSMEs are the main foundation of the economy in Indonesia and the Philippines. The percentage of MSMEs in the Philippines is even greater. As a brief overview, according to Data Report, the population of the Philippines as of January 2022 reached 111,8 million, of which 16,4% were in the productive age segment, namely 25-34 years. There are 76 million internet users or 69% of the total population.

Then, from 1 million business people who are officially registered at Philippine Statistics Authority (PSA) in 2021, 99,58% will be MSMEs and the remaining 0,42% will be large-scale companies. Breaking down by category, 90% are micro businesses, then 8,63% small businesses, and 0,41% medium businesses.

Report e-Conomy SEA 2022 by Google, Temasek, and Bain and Company projected the value of the Philippines' digital economy to be $20 billion or growing 20% ​​In 2025, its value is estimated to be $35 billion. From these projections, the value of the industry E-commerce is estimated to reach $ 14 billion in 2022 and is predicted to increase to $ 22 billion in 2025. Meanwhile, penetration E-commerce in the Philippines has reached 88%.

Observing the performance of Mitra Bukalapak, this line of business has been the driving force for the company's growth in the last few years. Slowly its revenue contribution goes beyond the Marketplace which has been Bukalapak's core business since its inception.

Based on the third quarter of 2022 financial reports, Partners' revenue rose 191% to IDR 1,44 trillion compared to the same period last year. Contribution to total revenue also increased from 43% to 53% (YoY). Currently, Bukalapak has 15,2 million partners.