Bukalapak, one of Indonesia’s leading e-commerce platforms, has announced a significant shift in its business strategy. Starting in February 2025, the company will stop selling physical products through its marketplace. This decision comes as Bukalapak aims to focus more on digital services and virtual products, which have a higher growth potential.

The move aligns with the rapid growth of Indonesia's digital economy, which reached a valuation of $77 billion in 2022, up from $41 billion in 2019. By 2025, the country’s digital economy is expected to hit a Gross Merchandise Value (GMV) of $146 billion. Indonesia is also a dominant player in Southeast Asia’s digital economy, capturing 40% of the region’s market share, with projections suggesting it could grow to $360 billion by 2030.

Industry analysts view Bukalapak’s strategic pivot as a smart decision. Nafan Aji, an analyst at Mirae Asset Securities, stated that focusing on digital services like e-commerce and gaming would support long-term growth, especially given the challenges faced by the traditional marketplace model. These challenges include the shrinking purchasing power of the middle class post-pandemic and the intense price competition that has eroded profitability.

Bukalapak’s decision to exit the physical product market is also expected to improve its bottom-line growth. While profitability will take time to improve, the company’s net losses have been decreasing, and the company is on track to achieve greater financial efficiency by reducing operational costs.

Rita Efendi, an investment expert, agrees with Bukalapak’s move, noting that physical product sales only contributed around 3% of the company’s revenue and were becoming a burden on operational expenses. In contrast, digital services, such as Mitra Bukalapak and the gaming platform Itemku, have brighter prospects.

Bukalapak has made significant investments in the digital space, including its 2021 acquisition of Itemku, a gaming marketplace. This reflects the company’s commitment to diversifying its offerings within the growing digital ecosystem. Additionally, Bukalapak’s Mitra program, launched in 2018, continues to empower small businesses and has become a major contributor to the company's revenue.

This transformation shows Bukalapak’s willingness to adapt its business model to the changing market dynamics, positioning itself as a stronger player in Indonesia’s digital economy. The company’s focus on efficiency and innovation is expected to drive further growth in the long term. The Indonesian Ministry of Trade has supported Bukalapak's digital transformation, emphasizing its potential to enhance local businesses and promote digital inclusion.

Bukalapak’s shift to digital is a strategic response to the e-commerce industry’s evolving landscape, and it underscores the company’s dedication to improving its services for the digital age.

PHOTO: BUKALAPAK