Make IaaS Real, Tokopedia Soon to Build Technology-Based Warehouse for SMEs

Tokopedia said it will be coming soon build technology-based warehouses throughout Indonesia after receiving funding worth $1,1 billion (16 trillion Rupiah). Tokopedia is looking for a partner who is competent in logistics to realize its ambition as an IaaS provider for the next 10 years.

"The first 9 years we helped people [SME merchants] become e-commerce companies. In the next 10 years we will turn them into technology companies, no longer e-commerce companies. We will invest a lot in tangible infrastructure," explained Co- Founder and CEO Tokopedia William Tanuwidjaja at Indonesia Economic Day 2019, Thursday (31/1).

The warehouse will later be rented out to SME merchants to develop their business according to their respective capacities without having to open their own warehouse. The locations that will be targeted are not served well enough by large merchants based on big data collected by Tokopedia. William did not elaborate further when the discourse could be realized immediately.

"At first, if you want to buy banana chips in Aceh, you have to wait a few days, now it can be faster. It seems that banana chip sellers can have branches throughout Indonesia," William gave an example.

According to him, Tokopedia's ambition from the start was to achieve economic equality digitally, so the target is not only to lead sellers to use e-commerce platforms, but also to think of solutions that can be utilized through technology.

William again gave an example, in Indonesia until now not everyone wants to move to the online realm. There are those who are comfortable with their offline business every day. One of them was directly experienced by Uncle William, a grocery store entrepreneur in Pematang Siantar.

His uncle admitted that he was very comfortable with his offline business because he could interact with the people around him. He could not immediately switch his business to Tokopedia.

When correlated with Tokopedia's current ambition, turning the grocery store owned by his uncle into a technology company. Then the consumer experience will certainly be much better.

The reason is, the current issue of grocery stores is that they can only sell according to the stock they have. If the stock of a product is empty, you can't help but have to wait for the agent to come to their store and buy it.

Another problem is that the amount of product stock they can buy depends on cash flow, even though their business is still growing. For this reason, in the technology era, credit profiling can actually be done just like online sellers who can receive business capital facilities through their track record.

"This issue can be solved by stock now, pay later or stock on demand. Grocery store can stock goods in a short time and can sell again. This solution has made them a technology company, even though the business is offline."

Overview of Tokopedia in the next 10 years

William also has a philosophy about the picture of Tokopedia in the next 10 years. From the first year to the ninth year, Tokopedia was on its way to the bottom of the mountain. In the 10th year it will start climbing the mountain for another 10 years until it finally reaches the top.

During the trip, he hopes that all businesses in Indonesia are technology-based. No longer distinguishes between e-commerce and commerce. The letter e in e-commerce is solely a channel and core drives which helps commerce to be more efficient but its business scale can grow many times faster.

Currently, Tokopedia has around 5 million SME merchants, around 70% of whom are new businesses with no experience at all. A total of 90 million visits every month occur in the Tokopedia application and website.

Last year, Tokopedia's business grew almost 4 times on an annual basis. In fact, William claims that the growth is faster than 2017. According to him, this acceleration is due to the business encouragement of merchants who have joined at the beginning of the first to eight years experiencing exponential growth.

"In that year [2017] there were 4 million sellers, now there are 5 million sellers. That means we grow together with others and the results are extraordinary," he concluded.