Empowering Small Business with Digital Infrastructure
Indonesia has a vibrant digital economy, but much of it is concentrated in Jakarta and the largest cities. Over 200 million people live outside of Indonesia’s five largest cities, and connectivity is often challenging due to the archipelago’s geography. An innovative and inclusive approach to digital transformation is required to reach them. Bukalapak’s focus on inclusive development results in over 70% of our transactions happening outside the five largest Indonesian cities.
Bukalapak built an innovative digital ecosystem called Mitra Bukalapak (Mitra meaning ‘Partner’ in Indonesian). Mitra Bukalapak provides economic opportunities for the micro, small and medium enterprises (MSMEs) that are the backbone of Indonesia’s economy, responsible for 60% of GDP and more than 90% of all jobs. Mitra Bukalapak is the market leader in the MSME sector with over 17 million MSME touch points across the country.
Breaking Barriers to Financial and Digital Inclusion
The Mitra Bukalapak platform provides digital infrastructure for entire communities across Indonesia to access life-changing digital solutions, overcoming key challenges in last-mile connectivity.
Mitra Bukalapak brings together dozens of private and public sector partners into a one stop shop for MSMEs, enabling them to offer a wide range of physical, financial and digital services. MSME owners that previously sold a limited range of physical FMCG goods such as water bottles and noodles can now sell dozens of physical and digital products sourced directly through the application.
Our platform breaks down barriers for the customers of MSMEs, many of whom are unbanked and do not use a smartphone. Customers of MSMEs using our platform (our ‘Mitra’) do not need a phone, internet connection or bank account to access Mitra Bukalapak’s products. They simply access the platform through the Mitra’s smartphone. The application is built to be robust and operate even with intermittent connections, allowing enormous reach throughout Indonesia: for example, 50% of all Indonesian households have paid their electricity bill at one of our Mitra.
Mitra Bukalapak’s primary goal is to grow the income of our MSME partners. We do this by continually introducing new products and services, allowing our Mitra to diversify revenue streams and make more productive use of their time. While they are waiting for the next grocery customer, they can sell financial products or earn a commission by acting as a logistics agent and accepting delivery of e-commerce parcels for their community. After joining the platform, Mitra report revenue growth of up to 300 per cent, which leads to positive economic outcomes for their communities.
An Inclusive and Open Digital Ecosystem
‘Buka’ means open, and underscores Bukalapak’s approach to building its ecosystem. We are able to offer the most comprehensive digital platform on the market because we understand the need to leverage the expertise and experience of a wide array of partners.
We are driving the digitalisation of payments by working with a range of financial institutions and payment providers, ensuring we can deliver innovative solutions efficiently and with proper safeguards in place. We are supporting the rollout of the Indonesian Government’s QRIS payment system, which is helping to reduce the need for physical cash handling and bank visits by our Mitra. Our partnership with digital bank Allobank allows Mitra to become bank onboarding agents, helping customers open their first ever bank account without leaving their community.
Mitra Bukalapak’s digital infrastructure enables a more efficient physical supply chain, aggregating demand from millions of MSMEs. Our suppliers and logistics partners gain access to economies of scale and customers in areas that were previously not economically viable. In turn, our Mitra secure better prices and better delivery schedules.
Mitra Bukalapak also levels the playing field for MSME owners, and particularly women, who traditionally struggle to access capital needed to grow their business. Mitra Bukalapak is able to provide productive financing to purchase a wider range of physical stock, and gives Mitra the opportunity to sell digital and financial products without the need for inventory. In addition, carers can earn money using our digital platform without needing to leave their home or community.
Bukalapak continues to expand its network to reach underconnected areas. We have been proud to work with the Bill & Melinda Gates Foundation (BMGF) to develop last-mile solutions to ensure our platform can reach more remote areas. In East Nusa Tenggara (NTT), we leveraged the agent banking expertise of BMGF partner, Microsave Consulting, to develop innovative and scalable operating models. This will allow us to roll out digital and financial services to residents who have not yet been able to participate fully in the digital economy.
The Importance of Digital Public Infrastructure
Digital Public Infrastructure describes the systems in place to facilitate the provision of digital services and economic opportunity. Bukalapak has developed innovative solutions that contribute to three key components of Indonesia’s digital public infrastructure: proof of identity, digital payments systems, and a robust data exchange system.
Proof of identity
Leveraging Indonesia’s national identity card system and other data sources, Bukalapak has developed a comprehensive system for identifying Mitra and their customers, and onboarding them into the digital economy. This allows customers of Mitra across Indonesia to pay utility bills, health insurance, and access government services such as pre-employment training programs (Kartu Prakerja). As the Indonesian Government rolls out the digital ID system over the next few years, Mitra will be able to offer an even broader range of services.
Digital payments systems
Cash is still dominant in many regional areas of Indonesia, and the majority of Indonesian towns do not have access to bank branches, ATMs or bank agents. By enabling Mitra to accept cash from their customers and bring them into the digital economy, we are accelerating digital transformation in communities across Indonesia.
The Indonesian Government recognises the importance of innovation in digital payments, and has been rolling out QRIS (QR codes) across the country. QRIS infrastructure can be used by any smartphone application to enable quick and efficient digital transactions. QRIS has enabled Bukalapak’s Mitra to offer an even broader range of digital payment options to their customers. The rollout of cross border QR codes across ASEAN will further enable customers at our Mitra to remit funds internationally to family.
Safe and robust use of data
Mitra Bukalapak’s platform leverages AI and big data to effectively bring together products and services from dozens of partners in a cohesive ecosystem. Our technology ensures we can safely develop unique insights from the high quality data gathered over time from our 17 million MSME users. Importantly, our users trust us: a 2022 Ipsos survey showed more than 80% of our Mitra have developed a positive relationship with technology since joining MItra Bukalapak. This is possible because of Indonesia’s legal protections for data handling and privacy, which gives service providers and their customers confidence to transact in the digital economy.
Accelerating Economic Development
The development of Digital Public Infrastructure is one of the fundamental drivers needed to achieve the Sustainable Development Goals. Mitra Bukalapak is a successful model of an inclusive digital platform that provides economic opportunity and services at enormous scale. In Indonesia, ecosystems like Mitra Bukalapak will be key to achieve the Indonesian government’s target of reaching developed country status by 2045.
