Burning less money, Bukalapak is in the right position towards profitability

Bukalapak has proven its position in the right position as a sustainable company and is heading towards profitability as a unicorn local compared to its competitors. The company's business sources are said to be dominated from cities outside tier 1, through its business units, namely Open Procurement, Bukalapak Partner, and virtual products.

In performance exposure Bukalapak for the second quarter of this year, President of Bukalapak Teddy Oetomo explain growth total processing value (TPV) of almost 400% compared to the first quarter of 2018. It is claimed that the majority of TPV's growth of more than 50% came from transactions originating outside the city tier 1.

Next, related to EBITDA, it was recorded to increase by more than 60% compared to the fourth quarter of 2018. Burn rate the company is in a position that is still rational. That is, the company continues to make efforts to acquire new users by providing promotions, but in a rational number. From a growth perspective marketshare said to be stable even during the pandemic.

“Our main key is healthy growth that aligns with the industry and what we have done for 18 months is to continue to increase monetization, rationalize spending so that our income can be more robust," he explained during a virtual press conference, Friday (11/9).

Related money burning strategy, Teddy said that giving promotions was not wrong. All newly opened stores must use this strategy. It's just that this excessive promotion can be a problem. According to him, a successful business is if we can provide the services that users need.

“The key is in value added. To accelerate growth, you can do promotions, but if you are not disciplined, you will definitely get a headache. [..] There is peers we who may be what they are spelt in that month, enough for us for a year.”

Bukalapak CEO Rachmat Kaimuddin also emphasized, "Businesses don't always expect success growth only. The solution is to provide added value that can make the company sustainable.”

Teddy continued, with the company's focus on Mitra Bukalapak - according to the plan for the next five years - it has been in accordance with what conditions consumers need the most. That the true service E-commerce This is really needed by consumers who are in lower tier cities, not in the tier 1.

“Since 3-4 years ago we started to make Bukalapak Partners because they need financial inclusion. People just come to the shop to pay for virtual products. In Indonesia alone there are 5 million warungs.”

Bukalapak's main business contributors

On this occasion, officials from each of Bukalapak's main businesses were also present at the presentation. For Bukalapak Partners, in the last year the number of stalls and individuals joining has tripled with a total of around 5 million partners.

The majority of the locations are still concentrated in Java with 4,5 million partners, followed by Sumatra (550 thousand partners), Eastern Indonesia (226 thousand partners), and Kalimantan (128 partners). This expansion is supported by additional wholesale stock distribution coverage to more than 50 cities, in collaboration with national and local distributors to ensure the availability of goods for partners.

In terms of payment innovation, transactions at Mitra stalls using the QRIS payment method increased by more than 50%. “We also launched products based on financial inclusionSo, we hope that with the diversification of products in stalls, partners can get more turnover and become agents of change," said SVP of Mitra Bukalapak Howard Gani.

Virtual products are the second flagship product at Bukalapak. During the pandemic, the average growth of virtual products reached more than 60% compared to before the pandemic. This increase occurred for credit products and data packages, bill payments, streaming vouchers, voucher study for courses online, and purchase Gift card.

The company itself provides more than 30 types of digital products, which are available on the platform marketplace or the Bukalapak Partner application. This virtual product category includes investment products; payment of bills, credit cards, and BPJS; travel, purchase of credit and electricity tokens; and credit loans.

"There are various kinds of virtual products, some are dropped because of the impact on the pandemic, such as travel tickets, event, and transportation,” said Director of Payment, Fintech & Virtual Products Bukalapak Victor Putra Lesmana.

Next is BukaPengadaan product which has been released since 2017. BukaPengadaan Director Hita Supranjaya said the growth in the number of customers was more than 48% and more than 32% of sellers joined from the beginning of the year to August 2020. The most sought after products were MRO tools. , masks, disinfectants, PPE & rapid testing, voucher electricity, pulse, voucher shopping, smartphone and laptops.

"As well as lifestyle supporters such as bicycles and medical devices, they are the top list of needs for corporations or governments that are met by MSME actors," he explained.

Last for product marketplace which is the oldest product in Bukalapak. VP of Marketplace Bukalapak, Kurnia Rosyada, said that until this pandemic, the company had received around 20 thousand new sellers who registered every week. Now it is recorded that Bukalapak has around 6 million pelapak and more than 90 million users. The platform has also been integrated with 26 financial institutions and 12 logistics partners.

Regarding shopping trends, Kurnia explained that currently there is a shift in shopping time online. Before the pandemic, the biggest increase was at night when I came home from work, now it's even more evenly distributed every day. Even the products that are bought a lot are also more dynamic, the beginning of the pandemic the most sought after products are related to health.

“Now the category of bicycles, sports equipment, games for children, such as tents, swimming pools, and gardening tools are being sought after. This market change cycle is much faster than before the pandemic," he concluded.

Competitor performance

The spirit that is inflamed by Bukalapak is indeed different from what is happening in its competitors. Shopee to be the closest, considering that the company had also boasted of its achievements in the second quarter of 2020.

In performance exposure Shopee's parent, Sea, said revenue growth adjusted (adjusted revenue) company amounted to $510,6 million, up 187,7% yoy from the same period in the previous year.

Indonesia is Shopee's largest source of business, recording more than 260 million transactions during the second quarter. On average, Shopee manages to record more than 2,8 million transactions per day. Compared to the second quarter of 2019, Shopee recorded an increase of more than 130%.

However, the company still recorded a loss. Because the adjusted loss (adjusted loss) of $305,5 million or greater than the previous year's $248,3 million. But the company made progress towards profitability, adjusted EBITDA loss per order from $1,01 to $0,5.

Looking at the GMV figures, there was a drastic growth of 109,9% or $8 billion, compared to the previous quarter with an increase of 74,3% yoy.