Jakarta, Gizmologi – The development of the digital economy in Indonesia is increasingly rapid. Even the Minister of Finance (Menkeu) Sri Mulyani Indrawati said that the potential of the digital economy in Indonesia could reach US$ 124 billion by 2025.
The statement apparently refers to Google's 2020 e-Conomy SEA report, where Indonesia's internet economy is worth US$124 billion (equivalent to Rp1,75 quadrillion) in the next five years. To achieve this potential, within a five-year period, the government will prepare policies that can accelerate the digital economy. The potential for the digital economy this year is US$44 billion.
On the other hand, there are still unsolved eye-stretching issues. For example, around 120 million Indonesians living in rural areas have to struggle more to gain access to goods and services. Various types of transportation modes are needed to manage logistics routes that can reach more than 17.500 islands in Indonesia.
One company that is concerned about the digital future in Indonesia is Tokopedia.
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Digitalization of 60 Million MSMEs
According to Randall Aluwi, Vice President of Corporate Finance and Investments Tokopedia, as reported by TechInAsia, Indonesia's digitalization will help improve productivity and the quality of life of society as a whole. On the other hand, this step will also be an integrated effort to support more than 60 million MSMEs in Indonesia who are experiencing business obstacles due to regional quarantine policies due to the COVID-19 pandemic.
"Digitalization helps create new jobs and opens access for all citizens to participate in the digital economy. Democratization of trade in Indonesia provides equal opportunities for all parties, removes barriers, increases efficiency and productivity across economic activities, both for consumers and businesses," Randall said.
In line with Randall, the Center for Indonesian Policy Studies (CIPS) also stated that digitalization can help Micro, Small and Medium Enterprises (MSMEs) survive during the Covid-19 pandemic. MSMEs need to adopt digitalization to maintain productivity and maintain their income amid Covid-19.
Digital sales penetration could be their main strategy as this strategy can expand market reach and promote their products while complying with social distancing policies that set certain limits for store capacity and reduced operating hours.
Research conducted by Delloite Access Economics shows the barriers to digital transformation for MSMEs in Indonesia. As many as 36% of MSMEs in Indonesia still use conventional marketing methods and only 18% of MSMEs can use social media and websites to promote their products. Meanwhile, as many as 37% of MSMEs are only able to operate computers and the internet simply.
"Digitalization provides an opportunity to maintain the sustainability of MSMEs, for example by opening new markets. Digitalization can also be accelerated if the authorities work together, one of which is to provide and guarantee sustainable and affordable internet connectivity," explained CIPS Researcher Noor Halimah Anjani.
Becoming a One-Stop Online Store in Indonesia
Since its founding in 2009, Tokopedia has been at the forefront of supporting digitalization efforts in Indonesia. Tokopedia's strategy began with a focus on developing its platform as a "toserba" marketplace that helps bring together sellers and buyers.
Furthermore, the company has grown to be more than just a C2C (customer to customer) marketplace. Tokopedia offers more digital goods and products to eliminate inequality of access to various services to improve the quality of life of users.
For example, users can pay electricity bills, taxes, top up mobile credit, and make various other payments. All can be done only through a smartphone application. Not stopping there, Tokopedia also directly entered the microeconomic sector in the community.
Indonesia is one of the countries with the largest number of grocery stores. Tokopedia is determined to bring these grocery stores and stalls into the digital realm through Mitra Tokopedia. Through online-to-offline services, the company has empowered millions of offline merchants in more than 500 districts across the archipelago to utilize technology to expand access to merchandise.
“Typically, grocery stores buy shampoo from one distributor and soap from another, which adds to the cost. We can simplify and centralize the ordering process, cut costs and help them be more competitive,” Randall said.
For Randall, the transition from physical to digital goods is a natural progression of the company’s goal of creating a “virtuous cycle” for buyers and sellers. Tokopedia not only enables users to shop and complete their daily tasks, but also increases sellers’ access to a wider range of merchandise and consumer bases, helping them reach across Indonesia.
Impact of the Pandemic
Amid the policy of implementing restrictions on community activities (PPKM) due to the Covid-19 pandemic, Tokopedia's services are crucial in helping offline businesses deal with the adverse impacts of the condition. The pandemic has drastically changed consumer habits to online shopping, while also driving significant growth among sellers.
Randall said that from 7+ million sellers, it has now increased to more than 11+ million in a year. As many as 70 percent of these sellers experienced an average increase of 133 percent in sales volume. This development increases the need for more reliable logistics and payment services.
Tokopedia’s logistics network, for example, includes 13 third-party partners, all of whom help the company provide efficient delivery and fulfillment services to 99 percent of Indonesia’s geographic regions. Furthermore, the company launched its TokoCabang fulfillment service in 2019, which provides warehousing facilities to sellers.
“If you are a seller located in Kalimantan, but have significant demand in Jakarta, you can store your merchandise at one of our partner fulfillment centers in Jakarta,” Randall explains.
Tokopedia has also made significant investments in payment and fintech services to enable buyers to pay for goods and services, even without a bank account. These efforts include supporting payments using digital wallets, as well as providing cash payment points at convenience stores.
Tokopedia's Strategy to Grow Indonesia's Digital Future
While Indonesia has a ton of potential, there is still a lot of work to be done, especially in promoting financial literacy. “This is still in its very early stages in Indonesia. That’s why we curate the products on our platform, with new users in mind,” Randall said.
Randall explained that Tokopedia's strategy is to offer low-risk investment products such as money market mutual funds, which allow customers to experiment with investing safely and see the results for themselves.
“Only about 20 percent of Indonesians have a bank account,” Randall said. “With that in mind, we thought, how do we build the right level of financial education to take advantage of these products and be responsible with our finances?”
As financial services penetration increases, Tokopedia will continue to ensure that users receive the right level of market education so that they do not make mistakes in managing their finances. "We will continue to build, invest, and grow for all Indonesians, whether they are in tier 1 or tier 3 cities," Randall emphasized.
With high smartphone and internet penetration rates, Indonesia is on its way to reaching its true potential. For Tokopedia, China is a great example to follow.
“I think that kind of dynamic is the future – where you can [do anything] on your phone. It also drives significant efficiencies across the business sector as entrepreneurs realize that they are creating opportunities and solutions that simplify processes for everyone across the board,” he concluded.
Now, Tokopedia has transformed from a startup to a unicorn, even approaching decacorn with a valuation of more than USD7 billion. Especially after Tokopedia merged with Gojek in mid-May to form the GoTo Group and plans to enter the stock exchange. The Group's Total Gross Transaction Value (GTV) was more than US $22 billion in 2020 with a contribution of 2% to Indonesia's total GDP
The formation of the GoTo Group is the largest business collaboration in Indonesia, as well as the largest collaboration between two internet and media service companies in Asia to date. They bring together the strengths of two leading technology companies in Indonesia to create a unique and complementary ecosystem globally.
With the backing of GoJek and Tokopedia, the group combines e-commerce, food and delivery, transportation and finance. The new holding is said to create the largest digital consumer platform in Indonesia, serving most of the needs of household consumption.
Disclaimer: This article is a collaboration with Tokopedia
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