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Bukalapak is on its way to profitability, says co-founder

The e-commerce firm achieved a three-fold gross profit increase in the first half of 2019.

Indonesian marketplace unicorn Bukalapak said it has generated more income this year to achieve business sustainability and is on the path to profitability.

Bukalapak co-founder and president Fajrin Rasyid shared that the company has made concerted efforts to monetize its platform. The company’s main revenue comes from a paid feature called a super seller program, which it established earlier this year. The superseller program is a freemium (free and premium or paid) feature, which benefits sellers or merchants. It offers a premium merchant badge, sales statistics, goods inventory, performance scores, and positive instant feedback.

The platform charges commissions within the range of 1–3% of every transaction made to sellers who join the program. In fact, the paid feature was introduced three years ago, however, Bukalapak revamped it with more features and benefits this year.

Rasyid said that the paid feature program has grown as much as 135% this year, equivalent to hundreds of thousands of merchants of the five million total online merchants on its platform. The paid feature program is one of the marketplace firm’s ways of getting revenue from its platform.

Rasyid admitted that some investors have expressed concern about how the company would create a path to profitability.“I realized that either e-commerce or ride-hailing industries have similar objectives these days. Some factors might be the reasons. The global factors include the US and China trade war and some IPO cases that did not work well in the US.”

He added that these have impacted investor perception and made them more careful investors, instead of only focusing on a startup’s gross merchandise value (GMV). Hence, he added, today Bukalapak is focusing more on how the company can achieve its path to profitability by increasing gross profit, rather than transaction growth or GMV that e-commerce companies had focused on one or two years ago.

The company also receives commission fees from the logistics companies it cooperates with. Rasyid declined to reveal the commission amount, however said that they have received the fees since this year, and that they have become part of Bukalapak’s recurring income.

Commenting on their expenditure, Rasyid claimed they are an ‘efficient’ spender compared to other e-commerce firms and that they are focused on achieving a high return on equity, without revealing details.

In September, Bukalapak had downsized by around 100 employees, and said the layoffs and restructuring were a necessary and calculated move to make the company become sustainable. Bukalapak chief strategy officer Teddy Oetomo said that the company has progressed to the next stage and has successfully delivered on monetization. He added that the company targets to break even and turn profitable in the foreseeable future.

He also shared that it has achieved a three-fold increase in gross profits in the first half of 2019, compared to the same period last year, and that it has halved its EBITDA losses in the past eight months.

In October, Bukalapak, which is led by CEO Ahmad Zaky, closed a series F round, where South-Korean based Shinhan GIB became its new investor. This brought Bukalapak’s valuation to over USD 2.5 billion, according to a press statement by Shinhan GIB.

According to Bukalapak’s September 2019 financials, Indonesian media conglomerate Emtek Group owns a 35.22% stake in the company. Other investors are Alibaba subsidiary Ant Financial, Singaporean sovereign wealth fund GIC, and South Korea’s Mirae Asset-Naver Asia Growth Fund.

Based on the iPrice report for the third quarter of 2019, Bukalapak ranked third among e-commerce players for monthly web visits, lower than Tokopedia and Shopee.