Indonesia Ecommerce and the role of Warungs

If you are connected to Digital services/ Fintech economy and have time for only one Podcast irrespective of which part of the world you maybe from, i will recommend this podcast from ARK Investment Management LLC interview with Teddy Oetomo, President of #Bukalapak.

Some key insights which stood out for me :
Indonesia had a low Card/ Banking penetration -less than 150,000 ATMs , Less than 30,000 Bank branches. So ensuring how do customers pay for e-commerce transaction in a cash priority economy was a big initial challenge.
And the answer they saw was in the Mom & Pop stores .

1. Approach to Mom & Pop stores ( locally called Warungs )
– CX journeys – Customers purchase but pay at Mom & Pop stores who have a Digital Wallet . So the Mom & Pop stores act as payment facilitators as well as Delivery collection points in some cases
– Mom & Pop stores as a customer – They have access to a larger pool and start sourcing- goods from Bukalapak
– Use Mom & Pop stores as a facilitators ( Utility , Tax payment etc ) – Upgrading the Moms & Pops as a service centre and increasing their service revenues

2. The journey to converting Mom & Pops
– Using intermediaries initially but quickly realizing that CAC was too high ( ~20 USD )
-Once they were able to show the value wrt how they could increase the Revenues of these Mom & Pop shops by 2-3x not thru increased FMCG products in the shops but through digital services. ..the initial converts acted as huge word of mouth influencers and led to organic growth

3. Financial services
– Approach to Financial payment / Wallet – Partnership with major wallets
– Allo Bank investment – Bukalapak invested in Digital bank and has plans to introduce advanced financial services to Mom & Pop stores.

What stood out for me was a couple of things in this podcast:
– The candor that Bukalapak made mistakes on the way or did not have the answers but learnt as they evolved . In an age where most interviews by Founders/ Chairman are about how we had everything figured out , this comes as a refreshing change.
– Growth at all costs philosophy counter – The clear view expressed was that Subsidy/ Discounts could have only taken so far . But key was to add value . To make it more Win-Win and increase Revenues for the Mom & Pop stores .

Listen to the whole podcast for some interesting insights !

https://ark-invest.com/podcast/ecommerce-in-indonesia/