Since late 2020, Tokopedia has built scores of warehouses in six major cities and is investing in more. - Reuters
JAKARTA (The Straits Times/Asia News Network): Indonesian e-commerce giant Tokopedia is banking on expanding its "hyperlocal" fulfilment business to sustain growth gains during the pandemic when online buying surged, while also seeking more ways to empower its merchants to grow their businesses.
The firm, which vies for the No. 1 spot with shopping platform rival Shopee in terms of market share, is continuing to invest in warehouses across the country, to enable its merchants' goods to reach buyers faster - within a day or overnight.
"Sellers can drop their inventory at Tokopedia-run warehouses and orders coming to them will be fulfilled by the nearest warehouse to the customers making the order," Tokopedia's vice-president of seller experience Puput Hidayat told The Straits Times.
Since late 2020, Tokopedia has built scores of warehouses in six major cities including capital Jakarta, Surabaya and Bandung, and is investing in more.
Geolocation technology shows buyers the product listings nearest to them first, as the firm has found that shoppers are more willing to make purchases if they can receive their buys faster. Thus, the drive to increase its network of fulfilment centres.
"Sellers that use warehouses saw their revenue increase up to four times," said Puput, adding that more than 865 million products are currently listed on the platform.
Sellers are charged flexible storage and fulfilment fees for every item that goes through the warehouse, based on their business model and market conditions.
"Early during the pandemic, we wrote off a lot of our commission to help sellers grow. Because if they die, we die. We grow together. The fee structure represents how we grow together," said Puput.
Tokopedia gained seven million of its 12 million merchants in the past three years due to the pandemic.
In the past year, the largest increase in merchant sign-ups came from the more remote areas of Pasangkayu and Pakpak Bharat in Sumatra and Banggai Islands in Central Sulawesi, among others, Puput said.
Tokopedia's online sales have not waned even with the reopening of Indonesia's economy since April as the Covid-19 curve flattened.
E-commerce gross revenue grew 59 per cent year on year to 2.1 trillion rupiah (S$196 million) for the second quarter of this year, the company reported in August. The quarter before, gross revenue was 1.9 trillion rupiah, up 53 per cent year on year.
While online shopping has become entrenched among consumers, Tokopedia is bracing itself for challenging years ahead due to declining consumer buying power and rising inflation.
To help its merchants weather the storm, the firm is helping mom-and-pop shops on its platform aggregate orders so that they can benefit from bulk discounts from factories or big distributors in Tokopedia's ecosystem.
Its seller's app also enables merchants to offer new products and services such as mobile phone data and domestic remittance, Puput added.
