Exploring Opportunities and Challenges Implementing the "Sharing Economy" Concept

The presence of Airbnb and Uber that brought the concept sharing economy able to inspire many people in the world to replicate it to other industries. Likewise in Indonesia, startups that now have unicorn status mostly run this concept as their business base.

What are the opportunities and challenges for new startups interested in this concept? In answering this question, this edition of #TuesdayStartup invites Titipku Co-Founder and CEO Henri Suhardja. Titipku is a startup from Yogyakarta that provides services personal shopper who can shop for consumer needs in their area.

Titipku business model

Henri explained, the concept of the Titipku business is quite simple. Consumers are connected with personal shopper to shop for daily necessities from stores around consumers. This concept is different from the site marketplace which also provides sellers selling tertiary products.

“In fact we are more specific. In Indonesia, there are tens of millions of conventional SMEs that have not joined the online because they find it difficult to register, use the application, and so on.”

Because Titipku only deals in daily necessities, this advantage is what differentiates companies from unicorns like Grab or Gojek. Even though Titipku's capital is not as big as the two companies, the company has been able to continue to expand from 2017 until now.

Titipku's expansion is more systematic and not random. The company targets in one week to enter one sub-district. Before selecting the location, the company compares the supply and demand levels of each district within a city.

“We are carrying out the expansion in a different way than unicorn because we have to be wiser. In one district, we research which points have the most potential for us to enter.”

This business model doesn't just appear right away. Through the learning process, finally found product market fit right at the beginning of last year before the pandemic. Initially, Titipku still used validation with national concepts, such as marketplace in general.

But at the beginning of last year, applying the concept hyperlocal to reach micro businesses that sell daily products because they want to target local residents. He admitted that he was very lucky with this decision because Titipku became a startup that reaped blessings from the pandemic. The reason is, with this concept psychologically, consumers would prefer to shop at stores in the vicinity because they already know it. “If this [business model] has not been replaced, it will definitely be difficult for us to [develop].”

It is claimed that the company's income is able to cover variable costwas redeveloped to support the company's development. Over the past year, Titipku was able to add 31 traders to Titipku. This was achieved thanks to the performance of about 7 thousand 'explorers' (a term for application users who upload information on SMEs they encounter).

Titipku has also formed 47 digital marketplaces containing 1219 traders in them. The 47 digital markets are traditional markets spread across Greater Jakarta, Central Java, Yogyakarta, East Java, and Bali. In addition, the company recorded a turnover growth of more than 700% supported by an increase in transactions per month by an average of 80%.

Take a culturally appropriate approach

Titipku has only operated in two locations, Yogyakarta and parts of Jakarta (West Jakarta and North Jakarta). Interestingly, the story behind the expansion to Jakarta happened by accident. Henri said he was in West Jakarta when the government decided on the PSBB for the first time in March 2020.

“My colleague, Ong Tek Tjan happens to live in Kelapa Gading. So we discussed again to enter the market. I myself explored the West Tomang Market, even though at first I didn't know the area at all. Finally, June 2020 start growing and one by one recruited the field team, finally opening a branch office here.”

Internet penetration in Yogyakarta and Jakarta is quite different. Merchants in Jakarta are familiar with the application in smartphone and transfer methods, so there is no need for massive education. Meanwhile, in Yogyakarta this is not the case, but the people's curiosity is very high for something new.

From here, the company learns to adapt its marketing strategy. In Jakarta, the company chooses to market with digital channels to create new transactions. Meanwhile, in Yogyakarta there is still a process of going to the field to meet consumers directly.

Moreover, when the company tried to get 100 users initially, it did not immediately build an application. Instead of going directly to merchants and consumers to find out the point of the problem, rather than finally immediately create an application.

“We are doing everything in stages, starting with using brochures, only using social media, WhatsApp contacts, and telephones. After getting 100 consumers, we will know what consumer profiles are so that the next strategy can be right on target.”