Indonesia-based e-commerce Bhinneka completed 21 years last February including nine in the online industry. The company, in 2013, showcased 50,000 products in 36 vertical categories ranging from computers and gadgets to household appliances and fashion from over 2,000 small, medium and big vendors, and summed up the revenue of IDR 600B (US$54.5 million), strengthening its position in the e-commerce industry in Indonesia.
Hendrik Tio, Founder and CEO, Bhinneka got candid with e27 and shared the travails of his journey from an offline IT product catalogue to one of the e-commerce giants in Indonesia. “I am still learning,” he said, and gave an account of the lessons he learnt on his journey with Bhinneka.
After having had an experience of 10 years as a white collared person in the IT industry, Tio felt it was time to start his startup Bhinneka in the form of offline distribution company. This was in 1993. He kept running the business model along with four of his friends until 1998, when it was hit by the economic crisis in Indonesia. “We handled brands and most of our products didn’t sell well. The situation was such that most of the brands pulled out their products from Indonesia because our sales had been in its lowest performance,” said Tio.
After a lot of research and a long discussion with friends, he zeroed in on the internet. With little investment at the time, Bhinneka then rebuilt itself as an internet brand, still in the catalogue form. Tio and his friends updated the content daily and changed the web design thrice a year.
There were a lot of ups and downs that Tio faced during the period; no traction and the traffic was also little. Investors doubted the business because it was not real, and then there was the internet bubble in 2000; many internet businesses collapsed and the customers’ trust on the internet was lost. Bhinneka even failed to get a bank loan because of the trust issue.
From all issues given at the time, Tio focussed on the customer trust. So he and his friends decided to open brick and mortar to win back customers’ trust. Linking between the stocks in the shop and the online store worked and soon became a success. After 2005, they started to focus on the internet side. “After succeeding in linking the brick and mortar, and online store, we started online payment in 2010 with credit cards, but since we had to pay a fine to banks, we were not protected as an e-commerce player. Hence we started off with bank transfer, cash on delivery, and then credit cards the following year. 2011 marked the year when we became a total e-commerce player, with various payment systems,” remarked Tio.
After nine years in e-commerce, Bhinneka today offers convenient shopping with 13 payment systems including bank transfer, cash on delivery, internet banking, offline credit card, online credit card, 0 per cent installment, 0.99 per cent installment, e-money, company invoicing and mobile payment.
The scene today
Currently, Bhinneka has 36 categories including computers, gadgets, household appliances and fashion. The idea beyond various categories came from the trends that led Bhinneka’s expansion strategy. “Before deciding the category, my friends and I always study the market and test if it will do well. We always start with a small investment and see how it goes,” remarked Tio.
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Of all, computer-related products are Binneka’s top performing ones. “I do not know how others play, but this category is our strength and pride. If we talk about computer, there is PC to tablet; there is movement due to technology trends. Sales stream are on top in this category, and growing well especially for gadget(s),” said Tio.
Customers and vendors pivotal
Tio gives customers and vendors a lot of credit for his Bhinneka’s success. “They trust us. For example, we were once asked to sell Zippo. When I asked why, the customer said that if it’s on Bhinneka, it has to be original. This makes us proud,” he said.
Tio also seeks to find ways to engage with vendors. “We also have flash sales. Vendors think it’s a good idea to help them clean up the warehouse every end of the month. Margin surely gets eroded, but IT products are dynamic. If they stay in the warehouse for long, the products get obsolete. So it’s a win-win marketing strategy for vendors and Bhinneka,” Tio explained.
Plans to expand
When asked about its expansion plans, Tio said he believes in the Indonesian market. “There are a lot of things needed to be done, to achieve here. We plan to tap other growing cities like Surabaya, Bandung, Bali, and Balikpapan.”
As part of his goal for Bhinneka, Tio plans to open brick and mortar in these cities. “We analysed that there are three reasons why we should start from brick and mortar. First is the internet connection. Second is the delivery charge, and the rest is the trust,” he explained.
Tio believes that the team has played a major role in shaping up Bhinneka. With 12 people in 1993, the company now comprises 500 young and enthusiastic people. “Before I decide what path to choose, I do my research and discuss with my friends. We test our estimates and learn from the result. This is what I want to teach my team: Always speak your mind, go upfront, and try; So you can learn,” concluded Tio.