Mon, 06 Jul 2015
Rocket Internet launched OfficeFab in Indonesia back in late 2012 with the idea that the business supplies ecommerce site would service all of Southeast Asia. Despite some early traction, investor interest tapered off and the service eventually ceased in June 2013. Rocket then diverted the remaining funds to its India operation OfficeYes, a firm that may have seemed more promising to Oliver Samwer.

Fast forward two years. OfficeFab is long gone and OfficeYes in India is also nowhere to be found. But where Rocket Internet dropped the ball, Ardent Capital seems to think it can succeed. Earlier today, Ardent announced that it put US$2.5 million into its new Jakarta-based ecommerce site Bizzy, a marketplace that helps small and medium-sized businesses, as well as large corporates, fulfill their office equipment needs.

According to Ardent CEO Adrian Vanzyl, Bizzy provides office supplies through bulk and repeat purchases. It’s also looking to be the largest business-to-business (B2B) online office supplies estore in the archipelago. Bizzy carries items ranging from stationery and cleaning supplies to tools and stuff for the office pantry, as well as IT hardware.

Bizzy CEO Peter Goldsworthy says he spent the past eight years building companies in Indonesia, and saw a lack of innovation in business supplies and services. “I was constantly frustrated with ordering supplies,” says Goldsworthy. “In particular I felt the entire process of sourcing, approval, and shipping could easily be improved upon.” According to him, one of Bizzy’s unique selling points is that it simply streamlines the approval process for B2B bulk orders. He says:

We’ve just digitized the process. When you realize you’ve run out of coffee or printer ink in the office, what happens next? Somebody makes a purchase order, then it sits on the boss’s desk for about three days[…] Bizzy gets the order prepared and the summary is sent to the approver’s phone. […] The approver then taps a button and the order automatically fires out to us.

Goldsworthy speculates, but can’t confirm, why Rocket actually pulled the plug on OfficeFab. According to him, it may have been due to high delivery costs coupled with low profit margins. “Overall I can imagine as they weighed up the two separate battle fronts, doing both B2C and B2B at the same time would have had fewer network effects,” says Goldsworthy. “But I can’t comment directly if that truly was part of the thought process.”

As Goldsworthy points out, the complexity for a business like his is unlike that of a B2C model. With office supplies, businesses want everything delivered at the same time, he explains, even though one order could consist of 200 items from 20 different vendors. He adds that venture builders like Ardent Capital and Rocket Internet know having a warehouse full of stock is limiting from a scalability and cash flow point of view.

Addressing the challenge of low profit margins, Goldsworthy outlines Bizzy’s strategy of viewing the ecommerce market like a pyramid. At the top of the pyramid are things like software, cloud licenses, and virtual goods that have high margins but people don’t buy them as often. At the base of the pyramid are things like office supplies – the stuff people need to buy frequently but come with much lower profit margins.

“Right now, we are building the dependency on our platform by fixing the procurement process of the base of the pyramid,” says Goldsworthy. “To target the top of the pyramid, we will be building out on-demand services marketplaces in several areas that businesses need service support for, such as finance, HR, sales, marketing, operations, and IT.” The year of B2B?

Vanzyl says Indonesia’s B2B ecommerce market is still in its infancy, with a large opportunity ahead. With local firms like Tiket, Traveloka, HaloMoney, and GrabTaxi already onboard as Bizzy’s early customers, Vanzyl hopes to make 2015 “the year of B2B” in Southeast Asia’s largest market.

Goldsworthy is also hopeful. He cites a 2.5-year-old eMarketer study which indicates there was only an 11 percent difference between B2B and B2C when looking at Indonesia’s total ecommerce revenue.

It’s important to note, however, that a lot has changed in Indonesia’s ecommerce space since 2013, and players like Lazada Indonesia, BliBli as well as consumer-to-consumer marketplaces like Tokopedia and Bukalapak have aggressively built out the sector in the past 24 months.

In Indonesia, Bizzy will compete with a slew of traditional vendors like OfficePro, but also established ecommerce firms with similar B2B offerings like Bhinneka and Office1Superstore.

Goldsworthy says that an average Indonesian corporate spends around US$500 per basket and repeats the order every few weeks, which to him is an exciting proposition in Jakarta.

Editing by Michael Tegos and J.T. Quigley





News Search/Filter
Transaction Rates
22 Aug 17
Buy
Sell
AUD1
10,984.60
10,189.52
BND1
10,169.77
9,431.38
BTC1
50,800,140
50,800,140
CAD1
11,021.03
10,221.34
CHF1
14,374.16
13,329.87
CNH1
2,076.44
1,926.27
DKK1
2,197.45
2,038.33
EUR1
16,345.45
15,162.96
GBP1
17,845.48
16,552.03
HKD1
1,768.68
1,640.81
JPY100
12,669.84
11,752.11
LAK1
1.67
1.55
NOK1
1,751.87
1,624.24
NZD1
10,137.72
9,402.55
PGK1
4,476.59
3,941.27
SEK1
1,713.75
1,589.37
SGD1
10,169.77
9,431.38
THB1
416.31
385.99
USD1
13,838.00
12,838.00
VND1
0.61
0.56
Taxation Exchange Rates
31 Aug 16 - 06 Sep 16
USD 1
13,232.00
AUD 1
10,043.30
CAD 1
10,213.70
DKK 1
1,999.40
HKD 1
1,706.22
MYR 1
3,283.28
NZD 1
9,623.63
NOK 1
1,605.23
GBP 1
17,433.70
SGD 1
9,757.68
SEK 1
1,569.45
CHF 1
13,631.10
JPY 100
13,101.00
MMK 1
11.01
INR 1
197.29
KWD 1
43,920.70
PKR 1
126.23
PHP 1
285.00
SAR 1
3,528.53
LKR 1
91.12
THB 1
382.08
BND 1
9,756.53
EUR 1
14,885.50
CNY 1
1,987.61

Okusi Associates: Indonesian Business & Management Services