Teddy Oetomo, president of major e-commerce company Bukalapak, sees a silver lining in rising prices as consumers may seek out products in smaller volumes sold by Indonesia’s ubiquitous small and midsize family-owned warung retail shops.
“We see the possibility that if there is inflation, there will be downtrading from consumers,” Oetomo said on Wednesday, citing the example of changes in consumer behavior during past bouts of costlier goods.
“From Indonesian history, [we can see that] if inflation occurs, consumers will switch, for example, from consuming bottled shampoo to sachets,” he said. “This is a positive catalyst for warung, where most of their sales are in small volumes like shampoo sachets.”
The e-commerce platform operator, which in 2021 became Indonesia’s first unicorn—a private company valued at USD 1 billion or more—to go public, is making a major effort to help warungs go digital and is promoting inventory order and management services for them.
Amid rising inflation concerns, many manufacturers across the globe are seeing a sharp increase in inventory as consumer demand weakens.
Oetomo spoke during a public exposure that the Indonesia Stock Exchange (IDX) requires listed companies to hold. He described an “optimistic” outlook for “sustainable” growth despite Bukalapak forecasting a wider pretax loss this year, citing the offering of an increased product mix more attractive to customers.
“This has begun to see results in the last few quarters,” he said. “We also see that this progress will continue into 2022.”
Bukalapak on Tuesday revealed its forecast for financial results this year as part of presentation materials offered to the IDX ahead of the public exposure, seeing a potential pretax loss of as much as IDR 1.5 trillion (USD 101 million) for 2022, compared with red ink last year of IDR 1.41 trillion. The projected figures are on an adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) basis.
Oetomo, however, attempted to put a positive spin on the outlook.
“Indeed, this is widely seen as a message where losses may widen,” he said of the guidance. “This is not the company’s target,” he stressed, instead calling it “a guide that adjusted EBITDA is expected to be relatively flat compared to the same period last year.”
For all of 2022, revenue is forecast to come in at between IDR 2.7 trillion and IDR 3 trillion, jumping as much as 61% from the previous year. Revenue in the first quarter was IDR 788 billion, while for the first three months this year the company had an EBITDA loss of IDR 372 billion.
Asked if the company wants to expand investment in banks, Oetomo said it will continue to evaluate potential opportunities.
“It’s not that Bukalapak wants to be a digital bank. … So the strategy we take is partnership with those who are experts in this field, because of the infrastructure needed.”
He added, “In the future, for investment in general, we realize that this cash must be used as efficiently and prudently as possible.”
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.