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How Tokopedia’s hyperlocal approach is unleashing the potential of Indonesia’s non-metro regions

After making a start in 2019, Tokopedia has relied on extensive merchant education and public-private partnerships to build a robust hyperlocal business across Indonesia

If you consider the statistics, figures and size of the opportunity, looking beyond the metros for growth is an obvious path for companies wishing to make an impact in Indonesia, Southeast Asia’s largest economy.

From the beginning of the pandemic to the first half of 2021, the country added 21 million new users to the internet, of which an overwhelming majority — 72% — came from non-metro areas, per research from Google, Temasek & Bain. The research further reveals that among the post-pandemic online population, 96% are still active and 99% claim they will continue to use these services going forward.

Internal data from Tokopedia shows that 3.8 million merchants joined its platform since 2020 bringing the total number to over 11 million – prominently including micro, small and medium sized enterprises. It points to a massive opportunity to offer hyperlocal services — targeted offerings that take into account and super-serve the specific needs that exist within a particular geography.

Late last decade, Tokopedia had started to realise that if it was to live up to its mission of democratising and empowering e-commerce through technology, the potential of the local economy had to be maximised. It was essential to give them the same opportunities as the metros when it came to developing business and increasing competitiveness.

The hyperlocal story so far

Tokopedia’s Hyperlocal strategy began in 2019 under the aegis of the Regional Growth Expansion (RGX) team, reaching sellers and buyers across cities in Indonesia. Tokopedia was soon to realise that a key barrier was the overall digital literacy of the population. The need of the hour was educating merchants about building and maintaining a digital presence. To this end, Tokopedia began community outreach, gatherings, webinars, onboarding and incubation sessions to help sellers.

Besides educating MSMEs on the use of the marketplace platform and its key features, a seller community called Keluarga Tokopedia (K-Top) was built to facilitate the exchange of insights. With on-demand content available via a Seller Education Centre, merchants on the platform could learn according to their convenience.

Trian Nugroho, head of regional growth expansion at Tokopedia said, “Through this, Tokopedia ensures that every seller can become a king in their own city or market by presenting local campaigns. An example is the Preferred Shop Collection (KTP) program. Buyers in an area can easily access various products offered by local sellers, while at the same time helping them maintain business and contribute to the local economy.”

All these initiatives bore fruit once the pandemic hit. Digitalisation moved from an option worth exploring to a necessity. Lockdowns and movement restrictions severely curtailed the ability of merchants and their clientele to reach one another. Nugroho said, “We sharpened our strategy in helping local businesses, especially those that were previously offline-only. Before the pandemic, the RGX team on the ground actively reached local business owners and communities directly with an offline high-touch approach including education and communication. But during the pandemic, significant changes needed to be made in how we supported these businesses. The approach has demonstrated effective results in onboarding and supporting local businesses,”

Forging private-public partnerships

Realising the difficulties in going the distance alone, Tokopedia has actively collaborated with local governments, particularly when it comes to onboarding traditional wet markets (pasar) across Tier 2 and Tier 3 cities. Nugroho said, “This is the result of our intensive collaboration with the Ministry of Trade of the Republic of Indonesia and regional governments. Launched in April 2020, the digital market initiative helps businesses, including traditional market traders. They can continue operating and increase competitiveness even amid a pandemic, by utilising technology and selling online through Tokopedia.”

Nine wet markets including Cikurubuk and Sehat Sabilulungan in Cicalengka West Java, as well as the Beringharjo market in Central Java have been onboarded. In Batu City, Tokopedia worked with the government to put together a Local Products Festival, to help boost digital platform adoption among businesses. Nugroho said, “Pia Mangkok Shop, a food merchant in the city who participated in the event, saw a 100% increase in transactions during the festival.”

Speaking about a recent foray into Manado, Nugroho said, “We collaborated with all local stakeholders, from the government, local communities, logistics partners, users, and businesses in the city. Understanding their needs and wants is essential to map out our strategy. For example, in Manado, we assessed the city’s condition and product category trends to come up with recommendations for sellers. Supported with proper education and a local campaign, they have more visibility of market trends and demands. By doing so, within three months, we were able to increase the local seller’s transactions.”

Bringing the hyperlocal approach to life

Having pursued the strategy for over two years, Tokopedia is now familiar with the different shopping trends across cities. Nugroho said, “In Denpasar, for example, fashion, mom and baby, children’s fashion, health and personal care, and F&B are best-selling categories. Meanwhile, in Makassar, F&B, fashion, health and personal care, automotive, mobile phones and gadgets are the fastest-growing categories.”

To ensure the delivery experience lives up to that of its metro consumers, Tokopedia has tied up with 13 logistics partners. Nugroho said, “According to our internal data, orders from local sellers joining this program have increased by over 50% with intracity orders growing by 75%. For intracity transactions, we have been able to serve ~25% faster and reduce the total delivery cost of local buyers by ~5%.”

The fact that the space is getting increasingly competitive does not bother Tokopedia who at present are welcoming every effort to drive digital adoption among MSMEs. Nugroho said, “We focus on becoming the merchant’s partner whom they can rely on for any assistance in growing their business. In boosting sales of our onboarded merchants, we leverage all channels in Tokopedia including home pages, landing pages, and banners that are tailored to the locations of buyers and sellers in each city.”

Thanks to the hyperlocal approach, e-commerce appears to be on its way to becoming a habit or second nature among consumers. Nugroho cited internal research with LPEM FEB UI in 2020, which revealed that over 60% of respondents would still shop online even after the pandemic. On the seller side, its data showed that 90% of merchants who were newly onboarded and incubated through hyperlocal initiatives are able to transact for the first time in their first month of joining, and 75% of them continue to have transactions in the following month. Nugroho said, “This strong positive trend is a great hook for the sellers to grow their business with us. Going forward, we will continue to bring the consumer experience of intracity sales in Tier 2 and Tier 3 cities to the same level as those in Jakarta — enabling people to get anything they want locally at a cheap price with faster delivery times. We have a good starting point in this space and we hope to see more transactions happen locally in the future.”

This article was created in partnership with Tokopedia. For more information on Tokopedia and its hyperlocal approach, please visit the official site