April 20, 2024

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[THE INVESTOR] SINGAPORE -- Armed with its own digital money Tokocash, Indonesia’s largest e-commerce player Tokopedia is eyeing bigger opportunities in payment world.

“We are eyeing new segments that are not related to e-commerce, including fintech, lending and financial services,” Amit Lakhotia, vice president of business at Tokopedia told The Investor on March 13 in an interview on the sidelines of Money 20/20 Asia conference that is underway in Singapore. 

Although there have been reports that Tokopedia is seeking a partnership with ride-hailing giant Uber, Lakhotia declined to comment on it.

Ulitmately, he said Tokopedia aims to become a digital wallet provider beyond its own platform, like Alibaba’s Alipay and Tencent’s WeChatPay, by tapping into the country’s largely unbanked population. But first, it needs to get approval from the central bank for e-money transacations to operate wallets.

The latest US$1.1 billion investment in Tokopedia led by Alibaba, following previous rounds by SoftBank and Sequoia, is a sign that Tokopedia is seeking to emulate Alibaba’s success in marketplace Taobao and payment service Alipay.

“It was a strategic investment, which means we get an opportunity to learn from experience, and will not make some of the mistakes top Chinese firms made,” Lakhotia said. “With the investment, we are building infrastructure in payment and logistics. Second, we are improving merchant experience. We are educating merchants to sell more online on Tokopedia, while educating consumers to buy more online. And then finally we are building the fintech area, as well as developing marketplaces that are not in focus now.”

For Alibaba, the cash injection will cement its position in Indonesia’s e-commerce market by utilizing Tokopedia’s users, as well as logistics and merchant experience, he added. Chinese e-commerce giant Alibaba has been making a big push to break into the fast-growing Southeast Asian region. It invested around US$2 billion in Lazada, a Singapore-based e-commerce firm that rivals Tokopedia in Indonesia, to take over a controlling 83 percent stake.

Lakhotia, who previously worked at India’s largest payment and e-commerce platform Paytm, is betting big on Indonesia’s payment scene to heat up further in the coming years, the reason why Southeast Asian unicorns, including Go-Jek and Grab are all aiming to become the leading payment platform.

“As in all developing nations, cash transactions are an issue and there is also an opportunity,” he said. “They have the money to spend but they don’t have the right digital payment methods. Across Southeast Asia, there is a great opportunity. I saw that happening in India and I also see that happening in Indonesia.”

At the same time, he also emphasized the importance of localizing the business to meet unique and specific market demands.

“A lot of things that worked in India may not work in (Indonesia),” he said. “The first principal is to look at the business, see the model and think of solutions. You can’t just say this works in India so it will work in Indonesia.”

Having this in mind, Tokopedia is not interested in expanding to other markets. For now, it is focusing on Indonesia’s 250 million population. And it is also in no rush for an IPO as it wants to build the business first, he added.

“Indonesia has only 1 percent of population shopping online,” he said. “There is a huge opportunity here.”

He also said the growing number of merchants who sell their products via social media networks like Instagram and Facebook are a good sign for the whole e-commerce industry, not a threat.

“Anything that promotes online shopping is good for us,” he said. “If people get motivated from Instagram, buy more online and have that online experience, it is good for us. And as people become more comfortable with online shopping, they will make online payments and use more wallets, enabling more transactions conveniently.”

By Ahn Sung-mi (sahn@heraldcorp.com)