- Unicorn startups are growing fast in Indonesia.
- Their north star for growth is speed.
- Indonesia’s unicorn startups embrace familiar ideas.
- They utilize local businesses.
- Indonesia’s market has big potential.
As of January 2019, there are currently over 300 unicorn startups in the world.
Indonesia is the country with the highest number of unicorn startups in Southeast Asia. There are currently four unicorns based out of this country, which are:
- Go-Jek, an on-demand transport and logistics service,
- Traveloka, a transport, hotel, and leisure booking platform,
- BukaLapak, a customer-to-customer (C2C) online marketplace, and
- Tokopedia, another C2C online marketplace.
This doesn’t include the many unicorns originating from other countries that have set up shops in Indonesia, such as Singapore’s Grab, India’s Zomato, or China’s ByteDance.
Unicorn startups are growing fast in Indonesia.
Startups in Indonesia have been growing exponentially. Go-Jek has reached milestones such as hosting over two billion transactions a year and a 13.5x increase in gross transaction value from 2016 to 2018. Their app has accumulated over 142 million downloads; over half of Indonesia’s population.
For comparison, BukaLapak claims to process two million orders a day and 50 million total registered users. As of January 2019, their gross merchandise value was reaching US$283 million per month.
What is it about Indonesia that makes it so favorable for unicorns to grow quickly?
Their north star for growth is speed.
Indonesia’s market is big, but so is the competition. In 2018, there’s estimated to be up to 2,000 active startups in Indonesia.
In other words, whatever you build in Indonesia, chances are someone else is already doing more or less the same thing. One way you can stand out is by growing as big as possible, as quickly as possible.
John Fitzpatrick, head of Google Cloud’s Startup Program in Asia, believes that Indonesia’s most successful unicorn startups have something he calls a ‘transformational mindset.’
Most companies have a ‘migration mindset’ where their strategy for growth is simply getting from point A from point B. For these unicorns, however, there’s no point B. They’re constantly accelerating and innovating new ways to grow.
Go-Jek, for example, started as a motorcycle ride-hailing phone service in 2010. Since then, however, they’ve focused on being a ‘super app’ offering other services such as food delivery, grocery shopping, and even on-demand make-up artists. As of 2019, the Go-Jek ecosystem contains about two dozen different product lines with no signs of stopping there.
In Go-Jek’s case, this strategy allowed it – together with its chief competitor, Grab – to maintain large market shares by the time Uber entered Indonesia in 2016. If they hadn’t grown so much, these two companies probably wouldn’t have been able to become the tough competition that contributed to Uber’s exit from Southeast Asia in 2018.
Indonesia’s unicorn startups embrace familiar ideas.
Indonesia has a diverse population with many different consumption habits. If a company wants to scale across Indonesia, they need to be able to relate to any demographic. That’s why Indonesia’s most successful startups are building brands that are local, familiar, and accessible.
According to a study by McKinsey, 60 percent of Indonesians claim to prefer local brands. Familiarity matters a lot to Indonesian consumers. We can see this in how the main idea among Indonesia’s unicorns is simply providing platforms for products or services that locals are already familiar with.
While commercial ride-sharing might be a novel idea in the West – which allowed Uber to gain the traction it did – the same thing isn’t true in Indonesia. Motorbike taxis had been a staple of Indonesian urban transport for decades by the time Go-Jek came around. All Go-Jek did at first was try to make it more convenient.
This can be found in Indonesia’s other unicorn startups as well. At their core, Traveloka allows people to buy tickets and book hotels, while BukaLapak and Tokopedia allow people to buy and sell things online. These are all simple concepts that any potential customer can easily grasp.
However, McKinsey’s research also stated that the perception of being local also matters. Grab, for example, is a foreign company in Indonesia that also operates on ride-sharing. Despite their foreign origins, Grab’s familiar and local-friendly business model still helped them grow considerably in Indonesia.
They utilize local businesses.
In scaling across the country, most Indonesia’s unicorn startups are tapping into a pillar of the country’s economy: small and medium enterprises or SMEs. SMEs comprise about 99 percent of business units and 90 percent of jobs in Indonesia.
This is a sector that always needs support, development, and organization; all things that tech platforms can provide. But for Indonesia’s unicorn startups, empowering SMEs goes beyond creating social impact. It can also be a central and lucrative part of their business models.
In the case of e-commerce, for example, an in-house supply and warehousing model like Amazon would be challenging to scale quickly in Indonesia. Indonesia’s high disparity in infrastructure development means that building logistics and infrastructure will be hurdles that such companies have to deal with.
BukaLapak and Tokopedia use a customer-to-customer marketplace model, which means that goods are directly delivered by local sellers and SMEs. They also cooperate with third-party logistics partners to handle delivery. This helped allow them to more efficiently expand their ecosystem across Indonesia.
Go-Jek similarly incorporates SMEs into their business model, such as through their Go-Food product line. Functioning similarly to Deliveroo or Uber Eats, this service uses Go-Jek’s vehicle fleet to deliver products not only from major restaurants but also food and beverage SMEs.
Indonesia’s market has big potential.
However, these strategies probably wouldn’t have worked if not for Indonesia’s large and flexible market. Indonesia’s massive consumer base means that there’s room for any startup to scale, as long as they play their cards right.
Indonesia is a very prospective place to build a business in, but not necessarily a simple one. There are a lot of legal and bureaucratic hurdles you’ll need to face; luckily, you don’t have to do it alone. Our network of consultants is here to help.
Greenhouse empowers you to book business incorporation services and connect with market entry consultants in your target markets.
We’ll connect you with experienced consultants on the ground who can help answer your questions about doing business in Indonesia.