JAKARTA (TheInsiderStories) – Indonesian e-commerce player PT Tokopedia is investing in two logistics companies as part of an effort to speed delivery and slash shipping costs in a country of 17 thousand islands, where logistics costs can be exorbitant. The company backed by Japan’ Softbank Vision Fund and Chinese Alibaba Group.

“Tokopedia’s strategy is to partner. How to build technology that enables companies missions for digital economic equality is more quickly realized. We intend to invest more into Alibaba,” Tokopedia founder and chief executive William Tanuwijaya told media in Jakarta today (07/29).

He gave an example of the Smart Warehouse technology that Tokopedia is building so that people do not need to urbanize. The technology allows businesses from Aceh to Papua, he said.

“With Smart Warehouse traders in Aceh can put their items in accordance with the predictions of their merchandise where they will sell. Peoples can shop from anywhere and the goods are sent wherever that day is also at affordable costs,” he added.

Tanuwijaya also said the firm is in final talks to invest in an agri-tech startup that works with farmers and has been buying stakes in smaller marketplaces offering everything from wedding services to secondhand phones.

Backed by US$2 billion in funding from investors including SoftBank Group and Alibaba, Tokopedia aims to create a “super-ecosystem” with a wide range of services, including lending and payment services for both consumer and merchants. In 2017, Alibaba has poured $1.1 billion investment to Tokopedia, the first direct investment by the company in Indonesia.

Tanuwijaya expects Tokopedia to lift the proportion of one-day deliveries to 95 percent from the current 65 percent while cutting costs for merchants in the world’s biggest archipelago.

Unlike rivals such as homegrown Bukalapak, regional e-commerce retailer Lazada that is owned by Alibaba, and Singapore-based Shoppee, Tokopedia is strictly a marketplace and holds no inventory in its own warehouses.

Southeast Asia’s biggest economy, buoyed by a youthful and increasingly online-savvy population of 260 million, is among the world’s fast-growing e-commerce markets. Indonesian E-Commerce Association (idEA) reported that the number of internet users in Indonesia continues to grow every year, he added. In 2017, the number of internet users was 72.8 million, which then rose to 102.8 million in 2018. In 2019, Indonesian internet users are predicted to reach 112.6 million.

While sample data from e-commerce in the country shows an average of 87 percent of visits come from mobile usage. These findings further prove that the share of mobile device users is considerable potential in reaping a higher number of visits.

E-commerce sales reached $12.2 billion last year and are poised to hit $53 billion by 2025, according to a 2018 study of Google and Temasek Holdings.

While Tokopedia does not provide annual sales data for its 6 million merchants, sales in May during the Muslim fasting month of Ramadan hit a record $1.3 billion.

Tanuwijaya declined to say when Tokopedia would be profitable, pointing to the current focus on growth but said it doesn’t really need external investors anymore or to raise capital to just sustain our businesses. Tokopedia claims some 90 million monthly users.

Using Al, Tokopedia vendors will now get almost real-time data predictions on consumer demand in towns or regions, Tanuwijaya said. For a fee, Tokopedia will help store their goods in advance of purchase in partner warehouses across the country.

“More than 1 percent of Indonesia’s economy already happens on Tokopedia,” Tanuwijaya said. “We want to make it 5 percent.”

Previously, Tokopedia confirmed that it had acquired a full directory of Bridestory wedding vendor providers and Parentstory’s parent-child activity portal. In addition to the two pilot companies, several startup companies that are rumored to be joining the Tokopedia ecosystem include Sayurbox, Laku6, and AnterAja.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com