Google Invests in Tokopedia Online Shopping Platform
Google and Singapore Temasek Holdings investment company are investing approximately $ 350 million in Tokopedia, a technology company from Indonesia. Meanwhile, representatives of the e-commerce platform have been negotiating with American companies from the BigTech industry, including Facebook, Microsoft, and Amazon. The funding will help expand Tokopedia’s capabilities during and also following the COVID-19 pandemic.
What Is Tokopedia?
Tokopedia is a C2C Indonesian online marketplace headquartered in Jakarta. “Toko” in Indonesian means “shop.” SoftBank Group Corp. originally supported the platform; it received a $1.1-billion investment from Alibaba in December 2018 and $500-million funding from Temasek in June 2020.
More than 20 million products are available on Toko Pedia in 25 categories: food and drink, products from the categories: Health, Beauty, Fashion, and others. The online platform also offers digital products and services: BPJS payments, utility and telephone bills, airline tickets and tickets for events, game vouchers, and other goods. Since 2016, Tokopedia has made FinTech products available, including digital wallets, virtual credit cards, and so on. In 2018, these products were already being sold in a specific Mitra Tokopedia app.
Functions and Possibilities of Tokopedia
Tokopedia not only connects buyers with sellers on a major online platform. It also makes ordering more convenient, improves the accuracy of door-to-door delivery through the use of Google Maps Platform technology:
- Accurate delivery.
- Simplified checkout process with the ability to autocomplete in the Places API search bar.
- Help to users who need to define their addresses.
- Collecting data about the location of the buyer and seller to improve operations in the process of buying, shipping, or return.
Accurate location data, developed in partnership with Google Cloud OniGroup, enable partners in logistics to find customers and deliver orders quickly.
Investments in the Platform: Prospects
Tokopedia was launched in 2009. Since then, the indicators of the Indonesian trading floor have grown:
- More than 9.4 million sellers.
- There are 100 million active users and visits every month.
- The online sales of the platform are $15.1 billion as of 2019. According to data from representatives of the trading platform, Tokopedia’s income is more than 1% of the Indonesian economy. Also, thanks to it, 98% of Indonesia’s territory is supplied with the necessary goods, and 25% of customers receive delivery from Tokopedia sellers the very next day after placing an order.
America’s major Internet corporations are increasingly investing in Asian companies. For example, Facebook bought a stake in Jio Platforms, the Indian digital services, and mobile communications company, and WhatsApp representatives invested in Gojek, a multi-service platform with GoPay online payments. According to research by Google, Temasek, and Bain & Co., the money inflow from the Indonesian e-commerce market for the period within 2019-2025 will increase from $21 billion to $82.
As of November 2019, more than 4 700 employees work in Tokopedia, there are approximately 7,000,000 sellers. 86.5% of them are young entrepreneurs, and more than 6.4 million people started and developed their businesses on this trading platform. Tokopedia’s online trading volume is expected to reach $65 billion by 2022.
Tokopedia Shows Record Sales
Nuraini Razak, Vice President of Corporate Communications at Tokopedia, said on his blog that sales of Food and Beverage goods, Health Products, Household, Electronics, and Mobile devices and tablets have considerably increased. Sales in July and September 2020 were compared.
The pandemic and partial travel restrictions have more than doubled purchases in the Home category. The number of purchases in the Health category has also increased by about 2.5 times compared to the period before the pandemic. Masks are the most requested product in this category. Work and homeschooling products have also improved in sales. These include books, electronic devices, computers, and portable gadgets.
Tokopedia Tops Indonesia’s Ecommerce Site List
On the E-Commerce Outlook 2018 report, Tokopedia is listed as one of the five most visited e-commerce websites along with Shopee, Lazada, Bukalapak, and Blibli.com.
Thus, Indonesia with a population of over 260 million is one of the most promising e-commerce destinations. The Tokopedia marketplace is also introducing artificial intelligence technology to process requests faster, predict product demand, and maintain high-quality communication with warehouse operators.
Statistics: Who Uses the Platform
The growth in sales of the Internet platform is also associated with the transition of millennials and Gen Z to online shopping. According to Ipsos Indonesia, 64% of all online purchases are made by millennials or by the 25-30 age group. The online shopping format attracts them primarily due to its convenience, competitive prices, and the development of online payment platforms such as OVO and Go-Pay.
Data on millennials, the main group of buyers of the Tokopedia Internet platform in the period of 2018–2020:
Currently, the e-commerce site is most often visited from mobile devices. Thus, William Tanuwijaya, the general director (CEO) of Tokopedia, reported that in 2014, about 56% of the total number of visits were made from mobile devices. Mobile purchases accounted for 29%. From the first half of 2016, the number of visits to the Internet resource from mobile devices exceeded 79.55%, and the volume of transactions amounted to about 73.5%.
In June 2020, Tokopedia also partnered with GroupM, the US advertising company. As part of the partnership, GroupM customers have access to limited offerings from the Indonesian online trading platform.
For Google, investing in an Indonesian trading platform is something unique. These investments go beyond the usual advertising, search, and analytics frameworks that Google is willingly developing and investing in. Google representatives refrain from commenting without explaining what the ultimate goal of the investment is.