Tokopedia: Stay ahead!

As a developing e-commerce ecosystem in Indonesia, Tokopedia expands its business vertically and horizontally through innovation and keeps staying ahead.

Tokopedia is beyond a leading Indonesian online marketplace. Tokopedia keeps staying ahead instead of only become the first one. In addition to its status as the 1st most visited page in Indonesia, big investment increases its pace to grow and innovate. It starts from initial seed funding for IDR 2.5 billion in 2009, IDR 1.2 trillion from Softbank and Sequoia, and lately $1 billion from Alibaba. Its co-founder, William Tanujaya, who comes from a humble background, have an empathy for sellers and customer. The customer often complains of the fraud that loses them money while the sellers even delete their account to avoid the responsibility. The other side, the sellers do not have a place which can assure the customer a safety transaction and comfort while competing with other sellers by their cheaper price than offline stores. Once, William worked as an operator in an ordinary internet cafe in Indonesia. It was his only internet exposure at that time. That was the brief history of this social venture.

Tokopedia scales up its business faster than its competitor. The technology in Indonesia at 2000-2007 can not support bigger value creation while the value captures are low because of many competitors. However, it was founded. At its earlier phase, Tokopedia approached merchant, sellers, and buyers from the unofficial marketplace in some Indonesian online discussion forums and other places. At that era, the discussion forums are misused for being a market. The service called “mutual account”, was the escrow service that had not been very secured for both customer and seller. The co-founders see the opportunity to build a secure and comfortable marketplace. They initiate the network by giving escrow service, free shipping, and discount for some transactions. The network grows through the direct and indirect network effect.

Although the multihoming tendency shows that customers prefer platform with bigger promotion, discount, and free shipping, Tokopedia does not concentrate only on being a marketplace but grows into platform-centric firms by creating an ecosystem. Paytm leader, Amit, was the man behind Tokopedia digital product growth after he exited his former company and joined Tokopedia after Sequoia’s investment. Tokopedia expand its business vertically by giving customer chance to pay bills (water, electricity, phone, credit card, insurance), selling ticket events, movies, lending the customer/company money, pay taxes, zakat (Islamic charity), cable TV installation, and many more. Tokopedia also develop tokocash, a close loop electronic money that will be used in the Tokopedia digital product. It creates its ecosystem.

In 2015, Tokopedia claims to have more than 4.9 million active product listings. It captures value from its escrow service, premium membership which allows sellers to have analytic reports, and the new official stores. It does not earn money from the marketplace. Tokopedia expand its business horizontally by attracting big brand to create official stores. This is not intended as a shortcut in the intermediation. A lot of products is a product that is not usually sold online in the marketplace, like gummy bears, shampoo, etc which are usually available in minimart shop. Customers are also attracted by its promotion, services, and also 0% APR in installment plan. The 0% APR is the killer feature that strengthen the network effect in customer side. Not only for transaction in official store or marketplace, the financing service is also available for public who wants to develop a business. Tokopedia establish relationship with more than 18 banks or financing institutions while the competitor are still growing its network through costly free shipping and cashback promotion.


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