Tokopedia: Indonesian Ecommerce Giant

This piece was originally published in my newsletter Emergent.

The War for the Indonesian Ecommerce Market

Southeast Asia is the fastest growing economic region in the world – growing over 5% per year. The region has been transformed in the last decade with ecommerce and digital payments in particular having grown exponentially. One of the companies that best embodies this growth story is Indonesian ecommerce giant Tokopedia – thanks to its sheer scale.

Tokopedia is an Amazon-like company connecting merchants with buyers in the Indonesian market. The company sells everything from books and laptops to children’s toys and makeup. In addition, Tokopedia offers its merchants a range of supporting services from loans to logistics, inspired by Amazon Fulfillment and similar to Jumia’s fulfillment service

Tokopedia operates at huge scale:

  • It has over 10 million sellers
  • Has over 100 million monthly users (out of a population of 260m)
  • Has 400 million products on the marketplace
  • Has a team of 4,700 employees
  • Offers its service in 99% of Indonesia (a country made up of 17,500 islands)
  • Is valued at over $7.5 billion

What’s even more impressive is Tokopedia’s gross merchandise value (GMV) – the total value of the goods sold through its marketplace. Its GMV tripled from $5.1 billion in 2018 to $15.6 billion in 2019. That’s equivalent to an astonishing 1.5% of Indonesia’s GDP, a country of 260 million people.


While Tokopedia started as an ecommerce marketplace, over time it has broadened its offering and now offers over 42 different digital services to its users. Some of these services include: 

  • Financial products: Digital wallet and credit cards for consumers and loans and insurance for merchants among others. 
  • Tokopedia Fulfillment: Merchants can leverage Tokopedia’s warehouses and logistics infrastructure to handle delivery to customers
  • Mitra Tokopedia: Tools that enable small mom-and-pop retailers to sell digital products like game vouchers and internet data packages
  • Tokopedia Salam: Muslim-friendly financial products and services and Umrah travel services
  • Tokopedia Academy: Courses and bootcamps for learning about data, technology, product dev

Tokopedia’s third-party marketplace is the engine powering the entire platform, and it is driving a giant wave of entrepreneurship across Indonesia. Of its 10 million merchants, over 85% are first-time entrepreneurs according to Tokopedia. Merchants are not the only beneficiaries of this trend, Tokopedia’s delivery drivers also benefit from the rising number of merchants on the platform and growing number of transactions. 

Across both merchants and its drivers Tokopedia estimates it helped facilitate an additional $1.3 billion in total household income in 2018, equivalent to $31.36 for every single Indonesian worker in 2018. This kind of impact is astonishing and there are few companies globally that have such large impacts on an economy. 

Mitra Tokopedia is one of Tokopedia’s most unique offerings with few comparisons anywhere in the world. Mitra empowers small retailers in Indonesia to participate in the digital economy unlike most small retailers globally. Retailers can onboard onto Mitra and sell digital products to their customers in addition to their existing offline retailing business. Mitra empowers small retailers to participate in the digital economy, and not be left behind by its rapid growth. In addition to empowering retailers, Mitra is also a wholesale purchasing and sourcing platform for retailers – similar to Udaan in India. Through Mitra, retailers can buy inventory for their store and take advantage of Tokopedia’s free and fast delivery. This allows retailers to transition their wholesale purchasing activity, at least partially, online – helping drive efficiency. 

Lastly, every month Tokopedia organizes a shopping festival called Waktu Indonesia Belanja. This shopping festival often includes Korean K-pop band BTS – who are brand ambassadors for Tokopedia. 


Indonesia is one of the fastest growing internet economies in the world and one of the most populous – with a population of almost 270 million. Today, the ecommerce market in Indonesia is estimated to be worth about $40 billion. This is set to soar to over $120 billion by 2025. The Indonesian Internet Providers Association (APJII) estimates that over 75 million people in Indonesia today have made an ecommerce transaction, out of 196 million internet users. While Tokopedia claims it has 100m monthly users, significantly higher than the APJII estimates, this is likely because merchants can have both a merchant and consumer accounts – two different accounts for one person. 

Ecommerce is projected to have an outsized impact on the Indonesian economy in the years to come. Incredibly, McKinsey estimates that ecommerce will directly or indirectly support 26 million jobs in Indonesia in the years to come – 20% of the total workforce. In contrast, the Bureau of Labor Statistics in the United States estimated (pre-pandemic) that ecommerce will directly employ only 500,000 people in the US by 2022. 

The Indonesian ecommerce sector is in the early days of a long growth trajectory. JP Morgan estimates that ecommerce only has 3% market share of Indonesian retail sales today, as opposed to around 16% in the US. As market share grows, the number of internet users continues to soar and the number of new ecommerce buyers continue to rise – Tokopedia stands to benefit from a wave of ecommerce demand in the years to come. 


The massive Indonesian ecommerce market has attracted the attention of companies globally and Tokopedia is facing increasing competition. Tokopedia’s primary competitors are Sea and Lazada

Sea is a Southeast Asian conglomerate based in Singapore and an intense competitor to Tokopedia. Its business is made up primarily of two parts: 

  1. Garena – its immensely profitable mobile gaming business with over 500m users
  2. Shopee – its third-party ecommerce marketplace

Shopee is available in numerous countries including Indonesia and last year grew its GMV by over 100%. In the last two years, funded by the profits from Garena, Shopee has been able to capture growing market share in Indonesia and in the middle of 2020 Shopee overtook Tokopedia in terms of monthly active visitors. Shopee is competing with Tokopedia at every level: It has a competitor to Mitra Tokopedia, it offers a range of financial products and it is building a fulfillment network for its retailers. 

However, today Tokopedia’s delivery and fulfillment network is far broader and more robust than Shopee’s and its focus on the Indonesian market contrasts with the 8 countries Shopee operates in. Tokopedia needs to lean into these strengths as it continues to battle Shopee for dominance of the Indonesian market.

Singapore-based Lazada – founded by Rocket Internet like Jumia – is Tokopedia’s other major competitor. However, Lazada is facing significant challenges and the business is struggling to match Tokopedia and Shopee. Lazada was unprepared for the pandemic and was unable to meet demand for many products as the lockdowns began, leading them to cut the number of goods on their platform and limited customers to 35 items in the grocery category. In June Lazada’s CEO was replaced – the company’s fourth CEO in just two years. Despite being owned by Chinese Ecommerce Giant Alibaba – which bought the company in 2016 – Lazada has struggled to compete in the market and represents a weaker competitor to Tokopedia than Sea. 

Growth Opportunities

The road ahead for Tokopedia is a complex one with significant opportunity. Late last year the news broke that Tokopedia and Gojek were in talks to merge and create a new combined internet giant in Southeast Asia.

Gojek is a ride-sharing and on-demand delivery platform in Southeast Asia with over 2 million drivers and 900,000 merchants on its platform, very similar to Uber and UberEats. In recent years, GoJek has been facing intense competition from Grab in the region. The intense competition Gojek faces from Grab and Tokopedia faces from Shopee has helped motivate merger discussions between the two companies.  

This potential merger is deeply strategic for both companies, combining their respective strengths and helping address some of their weaknesses. The merger would give both companies the capacity to pool their resources and compete against Grab and Sea for market share. In particular, GoJek’s payment product GoPay is of particular strategic value to Tokopedia. Shopee’s growth has been driven and enabled by SEA Money, the digital wallet and payments tool owned by Shopee’s parent company Sea. Likewise, Tokopedia’s deep merchant network and market share of ecommerce are of strategic value to GoJek, helping maximize utilization of its logistics network and infrastructure. 

In recent days, the news has reported that both companies are nearing a merger agreement. It is being reported that the combined company will then go public on the Indonesian and potentially US stock exchange via a SPAC, traditional IPO or direct listing.

Tokopedia’s biggest challenge in the years to come is fighting off competition from Shopee, a much larger public company with the resources to fund an aggressive campaign to acquire market share. A merger with GoJek would strengthen Tokopedia’s hand tremendously, but even if a merger doesn’t go through, the company will have to develop a strategy to defend its market share against Shopee. 

It is still early days in the Indonesian ecommerce market. The growth in the years to come will be immense and the opportunity for Tokopedia broad. A merger of Tokopedia and GoJek and a public offering of either of these companies will be a watershed moment for Southeast Asia and give global investors the opportunity to invest in one of the most exciting internet businesses founded in Southeast Asia.

This piece was originally published in my newsletter Emergent.






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