Bukalapak.com will stop selling physical goods and focus on selling virtual products … [+]
Bukalapak.com shares fell for a second straight day after the Indonesian e-commerce pioneer said it would stop selling physical goods and instead retail virtual products such as phone credits, electricity tokens, tax payments and loan installments.
Bukalapak's exit from the e-commerce platform highlights fierce competition in Indonesia's e-commerce market, including Singapore's Sea Ltd.'s Shopee and China's ByteDance, which has a stake in its Tiktok Shop.
Hendra Wardana, founder of Stocknow.id, said: “Competitors have strong financial support, advanced technology and extensive logistics networks, allowing them to provide highly competitive services and huge subsidies to attract users.”
Co-founded in 2010 by Achmad Zacky, Muhamad Fajrin Rasyid and Nugroho Herucahyono, Bukalapak is a platform that engages small traders, known as food stall, to the digital economy. The company reported a net loss of 1.4 trillion rupees ($86 million) in 2023, despite revenue growth of 22% to 4.4 trillion rupees.
Tycoon Eddy Kusnadi Sariaatmadja's Kreatif Media Karya and Elang Mahkota Teknologi, backed by billionaire Anthoni Salim, are among Bukalapak's largest shareholders. Singapore's sovereign wealth fund GIC also holds shares through Archipelago Investment. Ant Group, a subsidiary of Chinese e-commerce giant Alibaba, sold its entire 13% stake in October 2024.
Samuel Sekuritas Indonesia analyst Farras Farhan said that by deciding to stop selling physical goods, the company hopes to cut operating costs and contain losses. He added that layoffs are likely as the company restructures its operations.
“On the company's earnings call, management said they were going to reorganize,” Farhan said. “In the process, the company needs to cut back on the business with the highest cash burn rate, which is marketplace, as it has lost market share to rivals like Shopee and Tiktok-Tokopedia.”
Bukalapak shares fell 9% to 116 rupees in Jakarta trading on Thursday morning after falling 4.1% yesterday. The stock has fallen more than 85% from its IPO price of 850 rupees in 2021, when it raised $1.5 billion and was billed as Indonesia's largest IPO.
“If the negative sentiment persists and the stock price falls below the psychological support level of Rs 107, there is a possibility that the stock price may fall further to close to Rs 100,” Wardana said, adding that investors should sell the stock.
Farhan also recommended selling Bukalapak shares with a target price of Rs 110 as he expects the company to post further losses of Rs 750 billion in 2024 and Rs 700 billion this year.
