Lynk at Tech In Asia Conference 2019 in Jakarta – Day 2 Highlights

Here are wrap-up thoughts on Day 2 from the Tech In Asia Conference 2019 in Jakarta, Indonesia from the Lynk Team:

1. Tipping Point for Early Stage Startups in SE Asia by Rajan Anandan (Managing Director, Surge/Sequoia Capital) and Randy Jusuf (Managing Director, Google Indonesia)
– 7 years ago, SEA had 0 unicorns, fast forward to 2019, SEA has more than 70 startups who have immense potential to be the next unicorn and is home to 11 unicorns; Indonesia is the largest market of the SEAs currently with 40% of the digital economy based in Indonesia (which is also home to 5 unicorns)

– It is foreseen that the next 10-15 years down the road will be golden years in the consumer space in Indonesia, which is in line with Tokopedia’s CEO’s vision (growth is vast and fast; expected 2x growth in metropolitan regions and 4x growth in non-metropolitan regions in the next few years)

– Sequoia Capital’s, Surge, aims to accelerate the growth of startups by going as per cohorts/batches twice annually (15-20 startups per cohort), where startups get USD 1-2 million upfront capital to build product and business for the next 6-18 months. They also provide mentorship access to startups and help with the business (i.e:. hiring engineers to scale up).

– Sequoia Capital’s recent batch of investment in SEA, India, and Indonesia include Qoala (InsurTech), Bobobox (Hotel Capsule Pods), Chillibeli (Social Commerce), Rukita (Co-living), and Storie (Content Creation)

– Rajan highlighted for investors to look out for EdTech, Healthcare and Consumer brands (food, beauty products, etc.) which have huge potential in Indonesia, especially considering the demographics of millennials who are generally eager to see interesting new concepts (which are coupled with technology-enabled applications)

2. What’s next in Asian eCommerce? – In Discussion with Aadi Vaidya (COO, Zilingo), Bimo Darmoyo (Head of Operations Development & CX,  Zalora Indonesia) and Haikal Bekti Anggoro (SVP Traffic Operations, Lazada ID)
– Diving into the eCommerce industry of Indonesia, there stil exists plenty of room for players in Tier 2 and 3 cities since penetration is relatively low in those areas. Thus, targeting growth via repeated and frequent purchases is a common KPI for eCommerce

– Larger chunk of sales and traction still comes from metropolitan areas, while larger chunks of the challenges eCommerce players are trying to solve come from Tier 2 & 3 cities as well. These challenges are mainly high logistics costs, infrastructure to improve reach, and the unit economics (frequency and customer acquisition cost metrics)

– Key goal is to offer and tailor recommendations bearing in mind that eCommerce players cannot put millennials in the same bracket as the other general consumers, considering that all consumer markets have varying consumer behaviours (i.e: price sensitivity, preference, etc.). eCommerce players need to think through the growth and sustainability strategies of business in lower tier cities

– Social commerce (the social experience in the eCommerce platforms) is a  strong trend in Indonesia, even when considering ride hailing apps for instance, most of the demographics prefer sending text messages and chatting (chat ratio in Indonesia > Sinagapore & Malaysia) and transacting via social media platforms (such as Instagram). eCommerce players need to adapt to this pattern and onboard these sellers to their platform to adapt to the dynamics of social commerce

– Soon social commerce strategies would be adapted to different product categories, likewise with the trends of using social media influencers that will be widely adopted in Indonesia soon. eCommerce players in Indonesia are trying to adapt to the hyperlocal culture where reliance on social media engagement is heavy, thus encouraging sellers to leverage such straegies to upsell and cross-sell products

3. Driving Growth Through Collaboration by Rahul Taparia  (VP Fintech, Tokopedia), Ongki Kurniawan (Executive Director, Grab Indonesia), Ershad Ahamed (CMO, OVO), and Aditya Hadi Pratama (Analyst, East Ventures)
– Grab, OVO and Tokopedia have formed unprecedented partnerships among themselves (2 unicorns and 1 decacorn) through aligning their visions with common goals of value creation and improving customer experience

– Logistics partnerships such as supporting on logistics services and instant deliveries by utilising the downtime of drivers during off-peak hours have been enabling deliveries to be done within less than 3 hours from point of receipt of order 

– Payment partnerships such as supporting holistic collaboration in Grab and Tokopedia (high frequency, low value payments), leverage on OVO’s acceptance, seamless top-up process, cross platform rewards, enhancement of customer value and experience further

– Further development in the lending industry is another key point as to how Tokopedia provides merchants access of financing to businesses, and with such partnerships, eCommerce players can also tap into the data of credit scores which can be used for consumer financing

– Recent launch on charity program collaboration in Indonesia such as during the Ramadan season where eCommerce players collaborated to further employ the use of platforms to enable donations for education in Indonesia (IDR 11 billion) was regarded as the biggest digital charity movement in Indonesia

– On partnerships with other vendors and startups within the region: “Partnerships are to leverage on one another’s capabilities based on requirements with an ultimate goal of improving lives in SEA.” Examples to note include:

– Grab & Mandiri Health who provided insurance to drivers, which served as a campaign that led Grab to have the best driver retention in SEA, while also promoting financial inclusion

– “Acquisitions serves as a collaborative means to create value (sometimes more than partnerships), such as when Grab acquired Kudo to enable them to tap into assets to acquire 700,000 drivers and expanded to 200 cities in Indonesia”

– Grab’s investment to Ninja Van (USD 250 million) was also to promote an open ecosystem to improve logistics and enabling more pilot partnerships

– OVO’s acquisition of Taralite to build more synergies in the payment space to serve larger customers and merchants

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