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Exploring B2B Commerce, Telkom's New Strategy After Closing of Shopping

Hard to catch up in the B2B/C2C segment, the latest report on the local e-commerce landscape shows Blanja in 16th place

On its website, Blanja announced to its users, starting September 1, 2020 all purchasing activities will be stopped. In its official statement, Telkom argued that this was part of a business transformation E-commerce in the company, in an effort to strengthen the company's profitability. As of October 1, 2020, Telkom will only focus onE-commerce in the business segment, targeting both corporations and SMEs.

Regarding the next plan, to DailySocial Telkom said, "In accordance with Telkom's strategic plan, which leads to B2B Commerce, it can develop from resource alone (builds), partner with other parties (borrow), or develop external competence (buy) including startups."

Blanja is part of Telkom's digital business, is under Fajrin Rashid leadership. Designated co-founder Bukalapak is to support the agenda of increasing business opportunities and the company's profit potential from digital business.

Shopping is not done alone, Telkom cooperates with eBay as a strategic partner. For the continuation of their cooperation, Telkom still cannot comment, "The continuation will be announced later." While we have also tried to ask for an official statement from eBay Indonesia, as of this writing, no comments have been submitted.

Towards the end of 2019, we had interviewing the CEO of Blanja Jemy Confido. He claims, compared to 2018 the number of revenue obtained increased up to 84%. There was an increase in EBITDA of 11% and Net Income of around 4%. It was also emphasized that the company's main metric is no longer GMV, but revenue.

Shopping hard to catch up

As a platform E-commerce which focuses on B2C/C2C, Blanja's position is not very attractive lately. One of them is proven from the results research conducted by iPrice, as of the second quarter of 2020, Blanja's position is ranked 16 – one ranking exactly below elevenia (PT XL Planet), which was previously co-managed telco company XL Axiata but has been fully released to the Salim Group.

In his research, iPrice uses several variables, two of which are site visit statistics and app rankings.

iPrice research on e-commerce development in Indonesia as of Q2 2020

With the experience of establishing and growing Bukalapak, Fajrin's business intuition has clearly been honed. Although details are not given, there must be a strong argument that underlies the possibility of Blanja to lead the market E-commerce local is very small, not compared to effort which is issued.

The market leader is filled by unicorn who continue to compete and innovate to be at the forefront. The scope of business is also very broad, not just as a place for buying and selling online, but includes aspects of fintech (payments and loans), logistics, online-to-offline (partnership with warung), and others.

Even though Blanja in 2020 has a target to sharpen its digital products, including payment of various bills, insurance, investment, and even digital products for education. The strategy is by cooperating with other players, for insurance they choose Invise as partner; for payment and paylater there is LinkAja and Finpay.

But the plan is just a plan, now everything will be changed to focus on B2B Commerce. Then what is the market share and business opportunities that Telkom will explore?

B2B Commerce Potential

B2B Commerce refers to the exchange of goods and services between companies through digital media. Most of the business models adopted are marketplace or direct-to-consumer. According to a report released by ecommerceDB.com titled "In-depth: B2B e-Commerce 2019", the B2B Commerce market value in 2019 reached $12,2 trillion, 6x larger than the B2C market.

Interestingly, Asia Pacific leads the market with a contribution of almost 80%, making global players step on the gas to work on their B2B units here. So far, the two most prominent players are Alibaba and Amazon Business. There is no doubt that it will be even more hectic, because the competitive landscape is starting to be enlivened by Rakuten, Mercateo, Global Sources, IndiaMART, to Walmart.

In Indonesia, so far there are Bhinneka, Mbiz, Bizzy, AXIQoe, Monotaro, and Ralali. For B2C players, not many have played there either -- one of the ones that has entered is Bukalapak through services OpenProcurement. Meanwhile, Bizzy pivot, instead of providing E-commerce for businesses, they are now prioritizing logistics and distribution services.

Chief of Commercial & Omni Channel Bhinneka Vensia Tjhin, through his latest interview with DailySocial  explained, the business contribution from B2B Commerce penetrated 90 percent, compared to last year's B2C. In addition to B2B.id, several other supporting features have been rolled out, including Bhinneka Smart Procurement omnichannel O2O, and has selected merchants.

Frost & Sullivan projects a CAGR of 59% in 2017-2022 for B2B Commerce growth in Indonesia, around double the B2C Commerce growth rate over the same period. MSMEs have the potential to be the main driver in this landscape – according to BPS, MSME businesses contribute to 60,3% of national GDP.

DSResearch ever released a report"Indonesia B2B Commerce 2018”, in which it discusses developments on the platform side and public perception. As is known, one of the uniqueness of B2B Commerce is that it allows businesses to get a system e-procurement, integration with ERP, e-invoicing, taxation, etc. – adjusting to the procurement system in the office. On average, B2B platforms also target government institutions, so players often define their business as B2B2G.

B2B marketplace for E-commerce may be in its infancy, trying to democratize the existing procurement system. The potential is clearly there, along with the increasing familiarity of the community with E-commerce. In addition, there are indeed many benefits that can be obtained by businesses, including convenience, transparency, and flexibility.

Telkom at B2B Commerce

As conveyed by Telkom, efforts to build B2B Commerce have actually started before. One of them is through MSME Digital Market (PaDi), in collaboration with 8 other SOEs. Consists of the MSME data center and SOE shopping (Control Tower Dashboard), the MSME digital market for SOEs (PaDi MSME B2B), and market features marketplace with centralized access for MSMEs (PaDi MSME B2C).

Telkom also supports the Ministry of Education and Culture in the procurement of school goods and services which are carried out on a regular basis online through the School Procurement Information System (SIPLah). SIP is designed to take advantage of marketplace which has certain features to realize the school budget work plan and meet the needs of the Ministry of Education and Culture in supervising the use of BOS (School Operational Assistance) funds in accordance with applicable regulations.

It is likely that more products will be initiated. With its infrastructure and business position, Telkom is likely to maximize its potential to help consumers from the business community. Moreover, through its many units, the company continues to intensify digital transformation, including through MDI Ventures by investing in digital startups.

There were also rumors of Telkom's acquisition plan for the Bhinneka platform to strengthen the B2B Commerce business, but when asked again, Telkom was reluctant to comment.

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