The Jakarta Post's Aditya Hadi sat down with Bukalapak president Teddy Oetomo on April 4 to discuss the company's current strategy and its plans moving forward amid the tech winter.

Question: What are Bukalapak's services right now, and how do they connect to each other?

Answer: We have three main businesses, namely general marketplace, vertical ecommerce, which specializes in one or a few products, and an O2O service named Mitra Bukalapak.

When we started with the marketplace Bukalapak.com, we realized we could not be the masters in the hundred categories available on the website. Thus, we tried to look for some that we could do better. One of these was gaming.

In gaming, we are not focusing on demand generation, which may need subsidies. What we do is ensure the supply is better and cheaper. So, it's not about burning cash, but about how we find good and reliable sellers. It's pretty similar to a conventional business.

However, compared with other vertical ecommerce platforms that started from zero, we have Bukalapak.com and its traffic. After securing the supply, we can "harvest" the demand from our marketplace.

Then, we realized that many gamers in Indonesia don't have credit cards. So, we have Mitra Bukalapak that can help them buy game credits with cash.

That's why these three services are actually connected to one another. If one of them is missing, none can run.

What is your strategy in developing vertical ecommerce?

In general, it should not rely on subsidies; it has to be monetizable; and we must secure the supply.

We’ve picked several segments that are possible to be improved upon. Then, we do multiple trials to check if it's feasible to grow them into the next big businesses.

During that period, if the trial fails, it should be "fail fast" and "fail cheap".

Read also: Tech investors now want EBITDA, not growth at all costs: JP Morgan

In the latest financial report, Bukalapak transactions still grew while increasing the take rate. How do you do that?

There are two strategies: sourcing cheaper goods and focusing on products with higher margins.

I always say that not all gross merchandise values (GMVs) are equal. Some products with a high GMV usually have a low take rate, and vice versa.

Transaction volume in the gaming sector will not be as high as electricity tokens, for example, but the take rate is significantly higher. That's why we focus on that type of product. Even a small increment in its GMV, can have a huge impact on revenues.

Recently, Bukalapak acquired Malaysia-based price comparison site iPrice. How can it fit into the existing ecosystem?

We always look for a traffic generator that can work efficiently, and can be harvested, iPrice fits into that parameter. It can help our vertical ecommerce in the electronic or gadget segments, especially the secondhand ones, which we have rolled out.

How do you keep employees' morale up during the tech winter?

It's natural for our employees as human beings to have that insecure feeling. It is our job as the management to be transparent.

In the past, there has been a culture in local tech start-ups to just tell about the good things. Because of that, there is a big shock when bad news comes.

In Bukalapak, we have started a transition [in management and business models] since 2019. The process is not all hunky-dory nor all sunshine. I hope our employees already have more experience in responding to bad news, as we have faced ups and downs repeatedly.

Read also: Will start-ups change when the winter passes?

With less “cash burn” compared with other major tech start-ups, Bukalapak is sitting in a huge pile of cash. Do you still need to make efficiencies amid the tech winter?

Bukalapak has cut subsidies for years. If other tech companies posted triple-digit growth, we only saw double digit due to much lower subsidies. However, some people say that other technology companies are converging to our growth due to the current investment climate.

So, we have arrived in this position sooner than others. If you ask whether we want to run the business efficiently? It's a must. But do we have to cut 30 percent of our costs? No, because we have made efficiencies gradually.

Do we think that it is time to lavishly spend money on hiring? Not necessarily.

I understand why many people are asking about this. History shows, when a company is over capitalized and the management is not prudent, it tends to expand into areas that are not very beneficial for the company.

So, for us, we need to keep our focus straight. We should not become "orang kaya baru" (newly-rich people who suddenly spend money recklessly). Whatever we do, we need to review it repeatedly before we spend the money.

So how are you going to use the cash?

The tech winter is interesting. When the time is bad, it's actually the right time to buy or invest in other companies because everything is cheap.

So, there will be a lot of interesting projects and investment potential [that we would like to explore]. I think it is time for us to work very hard for this is our window of opportunity. When the investment climate has recovered, the prices will increase.

But of course, it doesn't mean that we should spend the money right away. If there is a project, we need to negotiate and evaluate. Maybe we just need to pay less.

— Editor's note: This article has been revised to correct an erroneous job title.