Businesses in the Era of Convergence and Coopetition

“What is Bukalapak?”

If I got this question some years ago, it would be easy to answer. E-commerce platform, online marketplace, platform to connect buyers and merchants online, or some variations of those. Yet currently, with our recent initiatives to offer virtual products and to have partnership with offline warung, the answer might not be as straight forward as before.

I then tried to look at example from global scale. Is Google search engine company? It was then, but clearly not only anymore. Google Cloud Platform, Google Map, and Google Suite are just few examples of its services that branched out from its core search engine platform.

This phenomenon is what I call convergence, where companies are trying to expand from its core services that the boundaries of its industry becomes not so clear anymore. Google is no longer just search engine company, Uber is no longer just ride hailing company, and similarly, Bukalapak is no longer just e-commerce company.

Convergence happens more often because through technology, especially in digital, it is getting easier to offer more services on top of already established ecosystem. With platform having sizable (>1 million) user base with frequent activities, we can develop other services with minimum level of advertisement to these millions of potential customers. In short, less investment is needed to ship the products to market.

Since the number of applications increase over time, the struggle to be selected as default or preferred applications i.e. the application that you download every time you buy a new phone become more and more difficult. The hope of some top downloaded applications to become super app i.e. single application for customers to do everything is also the result of this because by offering more services, customers do not need to download application specific for those additional services.

One of the side effects of convergence is many businesses can compete with other companies they previously did not compete with. Google, Amazon, and Microsoft were not direct competitors, but now they all compete in offering cloud services. In Indonesia, everyone, from e-commerce, online banking, online transportation, and even offline convenience stores, is selling pulsa (prepaid topup/phone credits). Hence the saying goes, right now everyone is competing with everyone.

What should businesses do given these facts — that everyone can become competitors? There is one term I like regarding this, coopetition, cooperation and competition. It is true that we can compete with other businesses in some aspects, but it does not mean that we cannot collaborate in other aspects. Hence instead of treating everyone as enemies, I suggest businesses to have mindset of “always think what potential collaboration we can have with other parties”.

Few weeks ago I was invited in an event named Indonesia Banking Expo (IBEX) 2018 by Perhimpunan Bank Nasional (Perbanas). This is one of the biggest events in banking Industry, attended by many CEOs from leading banks and opened by finance minister Ibu Sri Mulyani. I spoke there in main panel discussion alongside Pak Jahja Setiaatmadja (Presdir BCA), Pak Indra Utoyo (Direktur TI dan Operasi BRI), and Pak Bernadus Karmin (Direktur Kalbe).

As e-commerce player myself, how do we view bank? Are banks threat to e-commerce players (and vice versa)? Using the mindset above, the answer is clear. Rather than thinking whether banks can harm, I always try to explore what areas we can best partner to each other benefits. Thus, In that event I gave few examples of collaboration we conduct in Bukalapak with banks and financial institutions below.

1. Collaboration in payment

Payment is one of the main pillars of e-commerce. For bankable population, having collaboration with banks is essential since people keep their biggest source of funds in banks — through saving accounts or credit cards. Recently we see the rise of e-money but it only helps for low ticket size transactions such as transportation. For buying large ticket items, people cannot use e-money. People still pay by using their saving accounts or credit cards.

Therefore, Bukalapak is always trying to expand more payment channels and providing more seamless flows for the customers and this is done through growing partnership with banks. Thanks to this partnership, currently Bukalapak users have a lot of payment options, including Virtual Account, manual transfer, credit cards, and many others. Over time we continually monitor and improve to provide better user experience for the customers.

2. Collaboration in financial services (financing and investment)

As an e-commerce with proper payment system, every transaction in Bukalapak is recorded and hence, we can generate transaction data for every user. We can know for example that a particular merchant in Bogor is making IDR 50 million worth of transaction every month for the last 12 months; and other particular merchant is making IDR 25 million. A lot of these merchants were previously not eligible to receive financing because lack of collateral and business data but now with technology, they can receive financing.

In providing this financing service to merchants, we do not conduct risk analysis / credit scoring by ourselves. Instead, we send the data of merchants who are interested to receive financing to our banking or financing partners (with the merchants’ consent). These partners will conduct scoring and determine how much financing the merchants can receive.

Similarly for investment, we do not become investment managers ourselves. We partner with investment managers and APERD (Agen Penjual Efek Reksa Dana) for offering mutual funds investment products for users.

The two examples above can be illustrated below. In this case, Bukalapak acts as front-end that provides interface to users/customers, whereas banks or financial institutions act as back-end who processes the data.

When doing collaboration it is best to leverage ours and potential partners strength as seen in the example above. This way, businesses can still branch out but not all over the place. Eventually businesses and all of their partners can harness the potential of the digital economy better.

Finally, what is Bukalapak? As mentioned that we are no longer just e-commerce. The boundaries between online and offline in commerce space has becoming blur. As such, we prefer to be called technology company with mission to empower Indonesian economy including SMEs, regardless of where those SMEs operate. Note that however, due to the convergence, this definition can still change again in the future.

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