Why Indonesia’s E-Marketplace Blibli Chooses to Build In-House

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ecommerceIQ, Indonesia, blibli

Blibli.com is best known for being Indonesia’s first established online retailer where shoppers can find quality vacuums and handphones to local Indonesian fashion labels.

The ecommerce veteran has been around since 2009, raised over $13 million in funding and runs in-house operation of over 1,000 employees to ensure that its 5 million monthly customers receive their packages within two-days. How do they manage it?

eIQ caught up with Lisa Widodo, Blibli’s Head of Operations and Product Management, at Last Mile Fulfillment Asia to discuss one of the most common questions asked in logistics, buy or build?  

To answer this question, there are many factors to consider and understanding where the company stands is a good place to start.

Growing in a crowded B2B2C space

A quick glance at the e-marketplaces available in Indonesia show that there is already a number of strong horizontal ecommerce players.

To succeed in a saturated market like Indonesia, companies either need to differentiate or allocate a large budget to marketing to get their site in front of the eyes of consumers.

Blibli focuses on product differentiation and based on the latest data in 2016, has over 12,000,000 sellers, 12,000 brands and more than one million products on its platform to attract a growing population of wealthier young Indonesians.

By 2030, the highest concentration of top income earners will be 30-34 year olds (Euromonitor: Income and Expenditure Indonesia 2016) and Southeast Asians in general are willing to pay more for better everyday products especially in personal care and food (see chart below).

This is good news for Blibli.com as the company’s shoppers are comprised of equally male and female (55% and 45%, respectively), between the ages of 25 – 35, and digitally savvy.

Galeri Indonesia is the newest vertical by Blibli.com that puts local Indonesian entrepreneurs in the spotlight. These small shops sell items like handmade wooden watches, speakers that run without electricity, grow-at-home mushrooms and jewelry made out of rice.

Blibli internal data shows sales from this category has been growing 1197% MoM since its launch last year.

“Locals like to shop locally,” says Lisa.

The company also recently began offering hotel bookings and soon train tickets under Blibli Travel and electronic tokens for Indonesians to pay their utility bills with under Blibli Digital Product.

The company, Lisa assures, is in it for the long run.

So buy or build?

Blibli currently has five warehouses strategically placed near Jakarta’s airport, near Jakarta’s port, in the middle of the city and in Medan. The company’s facilities, which also includes a fleet operating out of five hubs in the Greater Jakarta Area, and two hubs outside Jakarta, serving all orders coming from Java – 70% of Blibli’s total volume.

Out of the five warehouses, only one was outsourced to a local provider because the company knew it would be set up faster and that the packing process was standard meaning irregular shaped items like guitars or products that needed special handling weren’t going to be stored there.

But even so, the warehouse management system used at the outsourced warehouse belongs to Blibli for complete product transparency tracked by four statuses:

  1. Order comes through and payment has been received → package will be delivered within two days, otherwise the merchant will incur a penalty
  2. Ready for shipment
  3. In shipment
  4. Delivered

Only 10% of Blibli’s orders are paid for with cash-on-delivery, which is quite low for Indonesia.

“What sets Blibli apart is our dedication and empathy towards our customers,” says Lisa. “This means we must have complete control over their happiness, their complaints and the ability to track the problem back to the source.”

Because Blibli holds its customers in such high esteem, it needs to ensure the last mile experience is of quality.

 

“Even down to smallest dent in a box, it all matters,” comments Lisa. “The only touch-point we have with the customer is the package at their door so it needs to be perfect.”

The company sends all new merchants a care package that includes free Blibli branded boxes in various sizes and tips on how to pack a product properly.

“Currently we work with 12 different last mile service providers to serve customers outside of Java and we’re always open to working with others as long as they have a solid business plan.

Buy or build? In short, if the company is a class brand that sells at a higher price point thus needs to prioritize a quality customer experience to keep retention healthy, they should spend the resources to build its own operations.

Other factors to take into account would be local knowledge, the urgency for expansion and financial allowance.

“Blibli.com had over 7.5 million transactions last month, it makes sense for us to do as much as we can in-house to give our customers their money’s worth,” comments Lisa.

If the company’s selling point is low priced goods, it should focus on scaling before investing in its own operations. Other factors to take into account are cash reconciliation, difficult delivery routes outside of the metropolises and capabilities of its tech solutions.

And of course, a hurdle to overcome is the key resource needed to make ecommerce operations a success – talent.

Changing the mindset of the people

As Lalamove International Managing Director Blake Larson commented at LMFAsia 2017,

“Technology isn’t magic dust you can simply sprinkle on logistics, it still requires a human element to work.”

Lisa believes the company’s strongest asset is its people and as with most digital companies in Southeast Asia, finding the right employees can be a challenge.

“It’s really about changing the way the general population thinks and getting them to take more ownership,” says Lisa.

She personally vets each employee during the onboarding process to ensure that there is a culture fit. Coming from a mechanical engineering background, Lisa identifies strongly with logical thinking as a necessity for anyone joining her operations “super team” of 400.

The Blibli mission

There are two main objectives for the future of this online company:

  1. Expansion in Indonesia
  2. Putting local talent on a global stage

“We plan to keep monitoring the data to determine how quickly we need to expand our reach outside of Java,” comments Lisa. “SLA and cost also need to match up.”

“We hope to make these small businesses internationally known through mentorship programs like The Big Start Indonesia. The strength of Indonesia is its local talent but it needs to be nurtured,” says Lisa.

By: Cynthia Luo
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