In 2011, when Indonesia-based Bukalapak was just one year old, the company’s co-founders—Achmad Zaky, Nugroho Herucahyono, and Fajrin Rasyid—had to decide whether they would shut down the business or keep it online.
By one metric, they had found success. With just a team of four or five people, they built a marketplace that was generating 8.7 million monthly page views by February that year. It was an impressive leap from the 150,000 hits in their first month.
But the revenue they were pulling in couldn’t even cover their own wages, much less the company’s general overhead. At the time, Bukalapak’s monthly top-line figures were running in the range of IDR 6–10 million (USD 660 to 1,100), drawn from advertisements and fees paid by merchants. In short, the company was facing a cash crunch.
“We were crazy and irrational because we were still trying to survive and had not shut it off. If we were rational people, we would have shut it down. We thought of Bukalapak as our baby, so we worked day and night to achieve our dream,” Zaky recalled during a conversation with KrASIA.
Bukalapak’s existence can be said to be an accident. After Zaky graduated from the prestigious Bandung Institute of Technology (BIT), he failed to find work no matter where he turned. Dejected, he went back to his hometown, Solo, where many micro and small businesses were forming. Back to Jakarta, Zaky and his friend Nugroho Herucahyono decided to start something for themselves. In a dorm room, they created the framework for Bukalapak, which means “open a market stall” in Indonesian. Zaky’s friend from BIT, Fajrin Rasyid, pitched in to manage their finances.
The project held promise. By the following year, Rasyid left his job at Boston Consulting Group to join Bukalapak full-time.
The idea behind Bukalapak is simple: it digitizes transactions for small businesses. But, in the company’s early days, it was difficult to convince merchants to switch over. Only about one in every five businesses they met with was willing to give it a go.
The team decided to pour money into Facebook ads. They asked friends to spread the word about Bukalapak. “We tried to add more friends to our Facebook circle, even though we didn’t know them. For instance, we add people who liked the fan pages of online shops. We thought they might like to shop online,” Zaky said.
It just so happened that many of the people who were added by Bukalapak’s team as friends were into biking—a hobby that was becoming popular in Indonesia. In particular, people were after fixie bikes, so Bukalapak switched gears to give them what they wanted. For a while, Bukalapak was known as a marketplace where users could find bikes of every stripe. Even so, that wasn’t enough to keep the company afloat.
In June 2011, when Bukalapak was about to shut down, help arrived in the nick of time. Japanese venture capitalist Takeshi Ebihara invested IDR 2 billion (USD 288,000) in the company. Ebihara was a director at Batavia Incubator and had previously mentored the three co-founders. “It felt like we got a windfall. With that money, we could continue our business operation,” Zaky added.
Zaky said they used the money “super efficiently.” The company recruited three new team members and bulked up their offerings. They deployed a low-cost promotion strategy, which included moves like handing out stickers to city transport drivers, members of the biking community, and aggressively promoting Bukalapak on Kaskus, a forum that was Indonesia’s largest online community at that time.
After finding some success, the team applied the same strategy to other communities and social groups, like photographers, gadget lovers, and gear heads. “We often joined community forums, participated in their events, and maintained contact with sellers,” Zaky said. Yet trust issues abounded.
“We saw the worries from both sides—buyers and sellers. Buyers were wary of online transactions: whether the goods purchased would arrive on time, whether the items matched their expectations, and fraud,” Zaky said. And for sellers, the worry was that broader competition online could lead to price wars, slashing profits and squeezing out smaller merchants who weren’t as well known.
Bukalapak developed promotional materials about e-commerce to demonstrate that the platform was reliable. Merchants that were certified by the company as “top sellers” would guarantee dependable customer service and shipping, ensuring a level of trust between buyer and seller.
In 2013, Bukalapak booked an average of IDR 500 million (USD 47,900) in daily transactions, or IDR 1.5 billion (USD 143,700) each month, according to Tech in Asia. The marketplace had more than 80,000 sellers, drawing 30 million monthly page views.
That trajectory drew the attention of Garena and Emtek group, Indonesia’s largest media and digital business group, in late 2013 and early 2014. “I had no intention to sell Bukalapak. In my mind, if conglomerates invest in the startups, they will acquire majority stakes. Emtek group, however, approached us and only wanted to invest in minority stakes,” Zaky said.
Garena’s bid fell short, and Emtek joined Bukalapak’s Series A round in February 2014 to take a stake that was less than 20%. After some adjustments, Emtek now holds 35.17% of the company’s shares—the largest stake among the firm’s shareholders.
“Emtek is very supportive and always backs up Bukalapak. If there is no Emtek, I think Bukalapak couldn’t be a unicorn. That’s the importance for founders to find investors who can always support the startup,” Zaky said.
What’s ahead for the company? “Currently, Bukalapak’s revenue is above IDR 1 trillion (USD 68 million),” Zaky disclosed. The company isn’t booking a profit yet, but he believes that Bukalapak could do this if it trimmed its marketing budget—even though this would hamper the company’s growth.