This weekly newsletter chronicles top digital themes and trends playing out in SE Asia, especially Indonesia. We will decode policy and regulatory changes affecting digital economy sectors, crunch earnings data of top players, track developments related to gig economy workers and attempt to piece together ecosystem buildouts in some of the fastest-growing, venture-backed plays. You can access the previous editions of the Vantage Point weekly posts here.
Executive Summary
- Warung tech is not all plain sailing
- LINE MAN Wongnai IPO will grab investor interest when it comes
- GoTo’s funding from IFC highlights the ESG factor in fundraising
- GoTo makes a user-acquisition bid by ramping up several initiatives
Warung tech is not all plain sailing
Indonesia is a nation of small-scale traditional retailers or warungs, who account for 60-70% of the country’s retail market. The 3.5 million-odd warungs in the country sell a wide range of goods and services, predominantly FMCG, to local communities.
Enabling and digitising these small retailers, particularly outside tier 1 cities, became a core focus of tech companies in Indonesia over the last few years.
The appeal of this vast largely untapped market, which historically relied on offline middlemen to provide them with goods and services, was huge. The opportunity attracted e-commerce players seeking to digitise those warungs and give them access to a broad range of products under various Mitra schemes.
Undoubtedly, the most successful player in this respect has been Bukalapak, which now has more than 17 million Mitra partners including warungs and kiosks, with more than 70% outside tier 1 cities.
Bukalapak’s strategy has been to create a circular ecosystem, where its Mitra partners create demand for its marketplace and more specifically its specialty stores. This strategy has started to bear fruit and drive better growth for its marketplace business and has also led to increasing take rates.
Other major e-commerce players including Tokopedia, Shopee, and BliBli have also entered the space with their own Mitra programmes. However, they have started to pull back since the end of the pandemic, as they focused on profitability.
