#Asia Tokopedia’s CEO: Focus on customer experience, and the rest will follow

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Tokopedia’s William Tanuwijaya

Tokopedia’s William Tanuwijaya speaking on stage at TIA Jakarta 2016.

William Tanuwijaya, co-founder of online marketplace Tokopedia, is one of the luminaries of Indonesia’s startup ecosystem. The shy, soft-spoken, and baby-faced entrepreneur rose from humble beginnings to establish an ecommerce goliath, snaring in superstar investors Softbank and Sequoia along the ride.

In a fireside chat with Tech in Asia’s Nadine Freischlad yesterday at TIA Jakarta 2016, William reminisced on his journey so far and laid out his plans for where he envisages Tokopedia in the coming years.

“We were lucky to face global competition since day one,” affirmed William. “The reason we’re still here so far is because of three things we did right.”

1. Fight like an underdog

Everyone in the company remained fast, nimble, and agile. They thought like a startup from day one, and still hold that belief. At the same time, there were some bold decisions to empower young, inexperienced college graduates and give them key roles in the firm.

2. Persevere

“You will definitely fail,” said William. “You will try to hire people, but you will fail.”

The key to overcoming these hurdles is to remain gritty and never lose faith. Always stay committed to the mission of the company and look back at the reasons why you started up in the first place.

“You need to run this like a marathon, not a sprint,” he advised.

3. Have a sustainable mindset

Tokopedia’s raised a colossal amount of cash – nearly US$250 million, to be precise – but William explained that’s never been a priority for the firm.

The tendency for ecommerce firms to lure in customers through deep discounting just to rack up vanity metrics is a practice Tokopedia largely avoids. It’s made some unpopular decisions too, like refusing to accept cash-on-delivery as a model and insisting that customers prepay.

Such decisions, William outlined, came from a desire to be sustainable and think long-term.

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Photo credit: Leeta Luminate.

Competition lurks

Despite so many players in Indonesia’s ecommerce space – Lazada, MatahariMall, and Zalora are a few examples – the straight-talking entrepreneur feels there’s still room for new incumbents to emerge.

“If you build a better product, a better service, customers will follow,” he outlined. “I always believe that competition will come from the unknown, where it’s least expected.”

These are the same principles that served him well when it came to competing against titans like Alibaba’s Lazada.

“The game is to appeal to users. In the early days the mindset shouldn’t be about the race to have one million registered customers. Even if you just have 10k, but the majority of them come back often, then you’re ahead. You go step-by-step, gain loyalty, ensure stickiness. Make something customers love,” he said.

“Our team members are perhaps not the smartest in the market, but they are hard-working, and care about the mission and the customers.”

Tokopedia’s customers buy on average five times per month.

The same principles should apply when it comes to the supply side, ensuring merchants provide real value and aren’t just there to make up the numbers.

“Quantity doesn’t mean quality. It’s better to have 200k excellent merchants than 2 million which aren’t very good.”

The focus on customer experience over metrics like app store rankings and downloads was a recurring theme throughout William’s chat. He believes it’s critical to engender loyalty – and that that’s the most effective indicator of how well a business is performing.

“How many daily active users do you have? Is it increasing or not? What we measure is how many times the customer purchases every month. On Tokopedia, one customer buys, on average, five times per month.”

Exit plan

So what’s the endgame for William’s baby? It’s been seven years since launch; when does it think of a potential exit, either in terms of an outright sale or an IPO?

The entrepreneur is steadfast in his belief that the company was built to last, so he rules out the prospect of an acquisition. An IPO seems to be the most likely route, but there’s still a long time to go before the team even starts thinking along those lines.

“We want to decide our own destiny, and we’re lucky to have patient investors.”

At the same time, William revealed that the early investors in Tokopedia have already sold a part of their stake in the firm through a “secondary market.”

How this works is that later-stage investors can choose to buy some shares from earlier investors.

“Some of [the early investors] have made more than 200 times the original amount,” he grinned. “I think that’s a good return.”

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Product innovation

The approach towards building new products at Tokopedia is dependent on a few key parameters.

“We identify what customers need, not what they want,” outlined William. “We have to help all our partners, including merchants, buyers, logistic companies, and payment partners. We can only be successful if we make them successful.”

It’s this tilt that’s shaping Tokopedia’s future. William is clear that he doesn’t see the firm as just another ecommerce company. The mission is to democratize access to commerce via the internet. The team will do whatever it takes to build an ecosystem where everyone stands to gain.

Some of the key areas of focus in the coming months will be strengthening payments, locking in offline stores, and helping existing merchants scale.

Tokopedia is addressing that last issue through a unique strategy of extending credit to some of the best-performing suppliers. William explained these are businesses that started out purely online and have no physical stores or offices.

“They’d sometimes shut down for a few weeks to deal with order backlogs. When we asked them why they didn’t hire more resources, they complained of a lack of cash. Banks were reluctant to offer loans, so we decided to step in.”

And he believes it’s unlikely that merchants will ever be charged a fee to list goods on the marketplace.

“Our revenue has grown 15 times in two years with advertising and logistics being the most important streams. We believe we can be profitable without charging merchants.”

Culture

One reason behind Tokopedia’s meteoric growth has been its steadfast commitment to maintaining culture. William explains that culture, for him, is “like a habit.”

“If you lose it, you die,” he adds.

He has other words of advice too.

“Change is the only way to survive, the only constant. At the same time, culture is not fixed but evolves.”

Tokopedia is one of the rare examples where most members of the original team are still with the company. But wasn’t it difficult for William to maintain a coherent culture as the startup scaled and hundreds more employees came on board?

“Always stick to the DNA of the company, always communicate it to your employees,” he advises. “Leaders can emerge in your company from anywhere.”

This is part of the coverage of TIA Jakarta 2016, our conference that took place on November 16 and 17.

This post Tokopedia’s CEO: Focus on customer experience, and the rest will follow appeared first on Tech in Asia.

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