Tokopedia is considered the largest marketplace in Indonesia. It is a platform for individuals and small businesses to create online shops via. It was founded by two ambitious young men, William Tanuwijaya and Leontinus Alpha Edison, on February 6, 2009 but then launched publicly exactly on the date of Indonesian Independence Day, 17th August 2009. Tokokpedia’s tagline is: “Marketplace is a Business Model Most Beautiful in the World”. As seen from its tagline, Tokopedia aims to reach success in the business marketplace which can only be achieved by making individuals and their businesses successful. The Tokopedia service claims that its service enables thousands of small and medium enterprises in Indonesia sends millions of products per month to its customers across Indonesia which, also creates more jobs across the nation.
From Small Investment to Largest Funded Start Up Company in South East Asia
Tokopedia is the first internet company from South East Asia which received trust funds accounting for $ 100 million from SoftBank and Sequoia Capital in 2014. This makes it the largest investment ever in a start up company in South East Asia. Sequoia capital, a well respected VC first funded notable tech companies such as Apple, Google, Cisco, Yahoo!. SoftBank is a large Japanese investment first and have large stakes in companies such as China based e-commerce company, alibaba.com.
William Tanuwijaya, who began the start up in 2007, began to learn about the funding of tech company such as Facebook and Google, which are freely accessed by customers. This idea lead him to find investors to fund Tokopedia. First funding Tokopedia received in 2009 was from PT Indonusa Dwitama to establish the company under legal entity PT Tokopedia. Then, East Ventures (2010), CyberAgent Ventures (2011), NetPrice (2012), Softbank Ventures Korea and Sequoia Capital (2014).
How Tokopedia Works
If you are small business or entrepreneur and want to access wider consumers, Tokopedia will provide you a platform for your business. By opening an online store on Tokopedia you will be automatically connected with many options such as logistics agents and large banks in Indonesia. Instant payment methods such as ClickPay Mandiri, Mandiri e-Cash, BCA KlikPay, KlikBCA, Credit Card, and Indomaret are available as the main features of transaction.
To create an online shop is simple. You can access the website then find the tutorial to open the online shop. All you need to do is fill information such as your online shop URL, shop brand and the tagline, delivery services, payment methods and profile picture. In such simple steps, you can own your online shop. To begin selling your goods, you need to list products in the website and be sure that each items includes information such as product name, category, description, weight, price and product image.
All the entrepreneurs who utilize the website can regsiter free of charge. In the interview with Tempo, William Tanuwijaya explained that the free service of Tokopedia, whether for sellers or buyers, is actually possible through the funding they have received. Thus, the start up can subsidy each transaction. He explained that, for the Toppers (as they call Tokopedia users, both sellers and buyers) who also build their own website, they know that there is actually a fee to the bank for each transaction. The investments haev made it possible for Tokopeedia to give free access- excluding credit card transactions.
As a buyer, you can search in the website for any kind of products, ranging from fashion items to household equipment with incredibly varied price. Once you buy stuff, you can track your order online. Tokopedia claims that online shopping on their site is more secure and fraud-free, because your payment is forwarded to the seller after you receive the goods. Through the joint account (escrow) facilities for free, you are free from the impostors online with no clear identity.
6 Year Loss
According to Interview with Tempo in 2015, William Tanuwijaya, said that for 6 years the company suffered from losses since all the services provided are for free. This concept of business is similar with other tech based companies, such as Facebook and Whatsapp, which provide services for free and gained loss at their initial operation. The goal of Tokopedia at its initial stage is not to reach a profit, but rather create value for the company. The start up maintained its operation by accept funding from investors.
In the first six months following its launch, Tokopedia had over 23 thousand active members, consisting of 2,500 stores, and offered 42 thousand products, goods and services. During that time, the total transactions that occur through Tokopedia has reached a value of over 1 billion rupiah, proving it to be a trustworthy and promising business website. However, the funny thing about its initial operation is that the most sold products during 6 month operation were nail clippers for wedding souvenirs, as many as 250 pieces. Since it was first launched, all their statistics- number of users, number of stores, the number of products offered, to ranking, website statistics- always increased and never decreased. The growth of the business has also been significant, according to interview with Chief Operating Officer (COO) Tokopedia Leontinus Alpha Edison in Bisnis Indonesia. According to him, Tokopedia transaction value increased 200% per year in average.
What Makes It Survive?
In terms of the competition itself, Tokopedia doesn’t compete head to head with the providers of e-commerce in Indonesia because it has a different system. Even though it is an e-commerce company, Tokopedia is not a provider of online classified ads and B2C website as an online retailer. Currently Tokopedia, which is a marketplace, has its own business strategy. One of them is Gold Merchant facilities which offers to the seller a subscription system. Through this offer, the seller can be helped to be more efficient in sales such as checking sales orders and other management user activities. In addition, there are also facilities such as Top Advertising that can be used by the seller for product advertising with display advertising disseminated as well as on other social media.
Clearly, Tokopedia has quite a large range of add-ons to offer buyers and sellers and plenty of strategies to monetize the site moving forward.