Tokopedia projects to contribute USD 12 billion to the Indonesian economy this year

Tokopedia’s gross merchandise value in 2019 is estimated to hit USD 15,6 billion, equivalent to 1.5% of Indonesian GDP

Indonesian e-commerce unicorn Tokopedia will contribute IDR 170 trillion (USD 12 billion) to the Indonesian economy in 2019, according to recent research by the University of Indonesia’s economic and social research institute (LPEM FEB UI).

The number more than doubled from last year where Tokopedia’s contribution to the economy amounted to IDR 58 trillion (USD 4 billion). The figure was generated using the researcher’s input-output methodology, according to Kiki Verico, vice director of LPEM FEB UI. There are several aspects that contribute to this calculation. For example, it focuses on local products only.

This surge was caused by the increase of sellers on Tokopedia’s marketplace in the past year.

“Many sellers started out small on Tokopedia and as their business gradually grow, they decided to focus more on this platform. This is in line with our consistent campaign in boosting the spirit of entrepreneurship in Indonesia,” said co-founder and CEO William Tanuwijaya at a press event in Jakarta.

Tokopedia’s co-founder and CEO William Tanuwijaya

According to him, Tokopedia had 5 million sellers in 2018 and this figure increased to 6,4 million this year. Approximately 86,55% of Tokopedia’s merchants are first-time entrepreneurs and 94% of them are micro-enterprises with a sales turnover below IDR 100 million (USD 7,000) per year.

Meanwhile, Tokopedia has 90 million active users per month. Its gross merchandise value (GMV) reached IDR 73 trillion (USD 5,1 billion) in 2018 and the value is expected to increase to IDR 222 trillion (USD 15,6 billion) in 2019, equivalent to 1.5% of the Indonesian economy, the research suggests.

The USD 12 billion economic impact of Tokopedia factors in transaction value but also the number of job creation, the rise in sellers’ income, and more economic equality throughout Indonesia, the researchers say.

Tokopedia also contributed to a total household income of IDR 19 trillion (USD 1,3 billion), which is equivalent to an increase in income of IDR 444,000 (USD 31,37) for each Indonesian worker in 2018.

Tokopedia helps decrease prices for users by 21% while it helps sellers increase their sales by 22% this year. Tokopedia also saw significant sales growth in parts of the country outside of the most densely populated island of Java. The company is now focused on the rural areas of Indonesia.

“While several fellow unicorn companies are currently focusing on regional expansion, we chose to go local instead. We believe that if we’re able to penetrate into all small villages throughout Indonesia, there are around 100 million people that we can empower so we can help realize economic equality throughout the country,” said Tanuwijaya.

With the variety of financial products available on the Tokopedia platform, it helps increase digital financial literacy for its users. According to research, 82,11% of users had a better understanding of digital wallets and 78,6% of users understood digital investment products better after using Tokopedia.

Tokopedia also plays a role in creating new job opportunities in Indonesia. According to the research, the company has created 857,000 new jobs, from active sellers residing from Aceh to Papua. The number is equivalent to 10.3% of total new jobs for Indonesia in 2018. A total of 309,000 of sellers use Tokopedia as their main source of income.

Entering the second decade, Tokopedia targets to hit profitability next year. Tanuwijaya also did not rule out the possibility of going public in the next few years although he does not yet have a definite timeline for this plan.

LPEM FEB UI is the largest community of academic researchers at the University of Indonesia, one of the largest academic institutions in Indonesia. Earlier this year, it published similar research involving the country’s super app Gojek that is said to have contributed IDR 44,2 trillion (USD 3 billion) in added value to the Indonesian economy in 2019.

The Indonesian government forecasts that the country’s economy to grow by 5.3% in 2019. However, the World Bank has lowered its expectation for Indonesia, saying that it will only achieve 5% growth this year, which is lower than the previous projection in April of 5,1%.