July 9, 2020 
The eCommerce ecosystem across the globe has been subjected to a paradigm shift due to the introduction of new and advanced technologies. Several businesses are eyeing and initiated efforts to expand their eCommerce selling boundaries globally.
Though it is a lucrative strategy, businesses must venture out to global eCommerce marketplaces that hold the utmost opportunity in terms of ROI for them. And, Southeast Asia and more precisely Indonesia is one of the most lucrative markets for cross-border selling lately.
Future of eCommerce Marketplaces in Southeast Asia
Many might wonder, why and how Indonesia holds such potential for cross-border eCommerce? To start with, Indonesia is the richest country in the Southeast Asian region with a population of approximately 270 million.
The quickly expanding population that majorly comprises of middle-class citizens, a low penetration rate of hardly 1% for mobile and internet, Indonesia offers plenty of room for expansion, both locally, and globally.
Unlike China, businesses don’t have to invest big for their eCommerce presence in Indonesia and other Southeast Asian marketplaces. Thus, it’s worth trying to penetrate the market in a fairly early stage.
Indonesia’s eCommerce marketplace is all set to witness the highest level of expansion in the coming decade. It was valued at USD 1.5 billion in 2015 and this is anticipated to hit the mark of a staggering 48 billion by 2025.
Thailand is trailing behind Indonesia as being the second most lucrative eCommerce marketplace that is anticipated to be worth USD 11.1 billion by 2025.
This reinstates the growth and expansion opportunities for cross-border eCommerce in Indonesia and it’s time to know more about the eCommerce giant of Indonesia – Tokopedia!
Tokopedia Overview
Despite Indonesia’s growth and expansion opportunities in the realm of eCommerce, cross-border selling, Tokopedia, the biggest eCommerce giant in Indonesia is yet to attain a magnanimous reach among the global businesses. Well, it’s time for the amendment. In this article, Tokopedia and everything one must know about it will be detailed.
Tokopedia headquartered in Jakarta started out in 2009 by William Tanuwijaya, a self-made entrepreneur who represented Indonesia as a Young Global Leader at the World Economic Forum and Leontinus Alpha Edison.
The funding from Alibaba and SoftBank worth USD 1 billion has been a turning point for Tokopedia. Currently, valued at approximately 7 billion, it is the second biggest eCommerce giant in Indonesia after Lazada. In fact, Lazada surpassed Tokopedia quite recently in terms of monthly traffic to the eCommerce platform.
Unlike other eCommerce marketplace giants, Tokopedia is only available in Indonesia. And, considering the growth trajectory and potential of Indonesia, it is soon to be a massive hit.
Tokopedia: Product Portfolio
Tokopedia with more than 4 million sellers adopts the C2C product selling model. The products mostly belong to low to medium price segment that is apt for the local population.
However, in the upcoming years, Tokopedia is anticipated to switch from C2C to B2C model and sell high-end products to cater to customer segments who are willing to buy them.
Here are some of the most popular products on Tokopedia in 2018.
- Mobile & Electronics: 22%
- Fashion: 12%
- Groceries: 11%
- Lifestyle & Hobby: 10%
- Home and Living: 9%
- Toys: 9%
- Beauty: 5%
- Health & Wellness: 5%
- Sports: 4%
- Mum & Baby: 4%
Selling on Tokopedia: All You Need to Know
Tokopedia is the second biggest eCommerce giant in Southeast Asia and is headquartered at Jakarta, the capital of Indonesia. Tokopedia is yet to allow overseas businesses for selling their products through its platform.
However, this may change in the forthcoming years with the rise in demand for high-end, sophisticated products from foreign countries.
To leverage Tokopedia’s platform for selling products, businesses have to establish a local presence in Indonesia which is unfortunately not an easy task unlike in China.
The entry requirements, start-up, and operational costs are often way beyond the budgets for small and medium brands. Though the profit potential may be restricted, it’s easy and cost-effective to sell products online in Southeast Asia.
Managing Product Fulfillment and Shipping on Tokopedia
As we have covered earlier in the article, there are approximately 4 million sellers on Tokopedia involved in C2C product selling. These products are most apt for the local population.
Considering Indonesia is home to 17000 islands, product fulfillment, and shipping inside Indonesia also has its own set of challenges, logistics being the most prominent one.
Initially, Tokopedia was not holding any inventories and sellers were responsible for finding fulfillment centers and take care of the shipping on their own. However, looking at the surge in demand and growth potential, Tokopedia soon ventured out to build effective logistics systems.
This effort led to the culmination of TokoCabang, Tokopedia’s own fulfillment service. This service is rather cost-effective as the seller has to pay USD 0.2 per item that is stored for more than 60 days.
Currently, this service is available in Jakarta, Surabaya, and Bandung, yet, it is soon expected to be available across Indonesia. And, this service is available for both online and offline sales, thus, is available for a wider user segment.
Tokocash: The e-Wallet for Tokopedia
Ensuring safe, secure, and hassle-free payment is critical for the success of any eCommerce endeavor irrespective of the size and scale of business.
Tokopedia ensures seamless payment solutions for its sellers. Sellers are required to open escrow accounts that are ultimately integrated into Tokopedia. This ensures the money transfer to a local bank account.
Apart from expanding its service portfolio by venturing into FinTech, and lending, Tokopedia is also planning to build its own payment systems or payment gateway solutions.
Tokopedia had its own E-Wallet called Tokocash, which was later replaced with an advanced, robust wallet called OVO. OVO has been successful in securing support from some of the big investors.
With the ever-changing eCommerce landscape and rapid economic growth, Indonesia will have high growth potential. It’s imperative for businesses to be aware of the market scenario, past, present, and the future to stay competitive.
Got more queries on cross-border selling or eCommerce marketplace? Turn to the experts at Vinculum, today!
