Local e-commerce not fazed by Alibaba expansion plan

Local e-commerce company Bukalapak is not worried about Chinese giant Alibaba’s plan to expand into Indonesia as local players can still compete with foreign ones, the company’s co-founder said.

Bukalapak co-founder and chief financial officer Muhammad Fajrin Rasyid said that unlike social media, which adopted a general model for their users worldwide, e-commerce business models needed a so-called “local touch”. This was because customers’ preferences for goods, methods of payment and logistic systems were different in each country, he went on.

“Our customers mainly buy ‘local goods’ such as sambal [traditional hot relish] and they prefer to use cash on delivery as a method of payment. We must understand things like this,” Fajrin said at a Centre for Strategic and International Studies (CSIS) seminar on the digital economy in Jakarta on Monday.

He further said that some foreign e-commerce companies had fallen victim to their own poor understanding of local customs. Japanese online market Rakuten Belanja Online closed in March while German-backed online delivery service Foodpanda Indonesia was shuttered on Oct. 3.

“We are sure our customer to customer [C2C] model is still suitable for Indonesia. We have 1 million sellers and our mobile apps have the highest rate by users compared to other e-commerce companies,” Fajrin said.

During the event, Investment Coordinating Board (BKPM) deputy of investment planning Tamba Parulian Hutapea confirmed that Chinese tech giant Alibaba would enter the Indonesian market soon. The company has bought German e-commerce company Lazada and plans to use the latter’s resources in Indonesia to make entry into its market.