Microsoft investment, partnership empower Bukalapak to boost Indonesian e-commerce

06, Nov. 2020

online-shopping-4532460_1280.jpg

JAKARTA, NNA - Riding high on the cloud wave, tech giant Microsoft is investing in Bukalapak, which runs one of Indonesia’s fast-growing e-commerce platforms.

They are also forming a strategic partnership to enhance Indonesian e-commerce and expand digitalization in the Southeast Asian country.

The move is likely to accelerate Bukalapak's plan to grow the digital economy beyond e-commerce, by helping businesses including traditional warungs or mom-and-pop stalls to adopt digitalization to grow another wing for their business.

Microsoft will make an investment of an undisclosed sum in Bukalapak, while the latter will adopt Microsoft Azure as its preferred cloud platform as they begin their collaboration, according to their joint statement on Nov. 3.

Noted for its dynamic high-growth, Bukalapak has been recognized for its contributions to the development of Indonesian MSMEs.

Bukalapak, which started as a homegrown tech start-up before becoming a unicorn company, will leverage Microsoft’s expertise to develop a resilient cloud infrastructure to support Bukalapak services for more than 12 million micro, small and medium enterprises, and 100 million customers.

Rachmat Kaimuddin, CEO of Bukalapak, said in the media statement, “This partnership signals a deep collaboration with Microsoft on an array of technology projects that will transform the technology-driven commerce solutions and operations solution and operations in Indonesia."

Bukalapak, which runs online and offline platforms, said the Microsoft cloud platform will support its more than six million online merchants and six million offline merchants as well as their customers.

The partnership will also see the companies finding ways to make digital platforms relevant to the daily needs of users. In addition, Microsoft will provide digital skills training for Bukalapak employees and partner merchants.

Bloomberg has reported that Microsoft agreed to invest $100 million in the Indonesian online marketplace which aims to raise $200 million funds for expansion, according to sources.

"With this investment, we can grow innovations that can be utilized by Indonesian MSMEs to increase their business capacity with the support of Bukalapak technology infrastructure," Kaimuddin told NNA via text messages on Wednesday.

Haris Izmee, president director of Microsoft Indonesia, said, “Bukalapak and their services have had a real and enduring impact on Indonesian society, and their innovation mindset in a rapidly changing market will create new opportunities for merchants, businesses and consumers.”

He believes the enhanced infrastructure with new technologies will give merchants and consumers "more efficient and reliable buying and selling experiences." In turn, this will create business resilience and help accelerate growth in the Indonesian digital economy, he added.

Reporting on how cloud strength has fuelled the first quarter results of Microsoft last week, Amy Hood, its executive vice president and chief financial officer, said, "Demand for our cloud offerings drove a strong start to the fiscal year with our commercial cloud revenue generating $15.2 billion, up 31 percent year over year.”

She added that Microsoft will "continue to invest against the significant opportunity ahead of us to drive long-term growth.”

In Indonesia, its central bank, Bank Indonesia, had noted a 26 percent jump in e-commerce transactions over the past pandemic months.

In September, Bukalapak reported that three million new merchants joined its e-commerce platform in the first seven months of the year.

Bukalapak president Teddy Oetomo said almost 70 percent of the total processing value (TPV) came from areas beyond bustling first-tier cities.

Bukalapak also managed to partner with 5.4 million 'warung' food stalls and individual agents through its Mitra Bukalapak program.

Apart from brisk business-to-consumer activities growth, Bukalapak also saw a sharp increase in merchants participating on its business-to-business and business-to-government procurement platform this year due to rising demand for protective masks, disinfectants and rapid test kits.

Launched in 2016, the Buka Pengadaan Indonesia (BPI) procurement platform hosted 500 buyers who made 5,000 purchases with an average value of 150 million Rupiah each in 2019.

Bukalapak said it was planning to increase monetization to reach profitability. It was officially recognized by Indonesia as its 4th unicorn company in 2017, after Go-Jek, Traveloka, and Tokopedia.

Investors that had earlier supported the growth of majority Indonesian-owned Bukalapak included the country's broadcaster PT Elang Mahkota Teknologi, Singapore's sovereign wealth fund GIC Pte and China's Ant Financial, the Alibaba affiliate of billionaire Jack Ma.

Founded in 2010 with the singular purpose of empowering Indonesia through digital technology, Bukalapak also offers financial services and payment options to its users. These include gold and mutual fund investmenting, bill payments and credit services.