QUIZ ANALYSIS

BUSINESS STRATEGY AND ENTERPRISE MODELING

INNOVATION LEVEL OF TOKOPEDIA

Submitted By :

Ahmad Taufik (29115452)

Annisa Kharina (29115699)

Fimel Gresiana (29115444)

Hana Fauziyyah Lisma (29115478)

Karina Permata Sari (29115447)

Program: GM 2

Master of Business Administration Program

School of Business and Management

Institut Teknologi Bandung

Chapter 1: Brief Description

Tokopedia is one of Indonesias biggest online marketplace. Launched in 2009, Tokopedia

provides a customer to customer (C2C) retail by providing a platform for individual
entrepreneurs and small/medium businesses to open online stores. Tokopedia has been offering
basic transactional features for free from launch until at least the end of 2015. PT Tokopedia
was founded by William Tanuwijaya and Leontinus Alpha Edison on February 6, 2009. The
company manages Tokopedia.com, which was publicly launched on August 17.
Tokopedia.com uses escrow as the payment system. In this case, Tokopedia.com act as the
third party which mediate transactions between sellers and buyers in order to minimize online
fraud. Until early 2015, there are 5 payment methods that can be used for transaction in
Tokopedia.com, including Tokopedia Balance (Saldo Tokopedia), bank transfer, and instant
payments methods such as Mandiri ClickPay, Mandiri E-Cash, and BCA KlikPay. In the end
of 2015, Tokopedia has 11 million transactions.

Chapter 2: Architectural Innovation

Tokopedia have some service they covered to cover multiservice that customer need because
they try to change the manual transaction towards online transaction. For this Architetural
innovation they use current platform (existing technology) to catch new market, as the result
they added top-up service on their website to capture new customer segment. To cover this
multiple service that previously using manual payment so they architcture website to
acomodate this payment method. In order to do that they try to simplify the transcation
procedure by providing top-up service. So customer deposit their money in Tokopedia, once
they do transaction the amount of deposit money is deducted. Beside that they integrated this
payment method with all Bank in Indonesia. Of course they covered it with security procedure
so there is no fraud for this transaction such as they should upload bill payment, payment code
and so on. For their main service for as an e-commerce website, they provide easiness to do
the transaction with some additional feature such as Calculate postage and tracking orders can
all be done automatically and in real time. So with many service they covered their architecture
changed to accomodate this multiple service, so we conclude their architecture using the
existing platform, added more capture to become service oreinted towards customer.

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Chapter 3: Radical Innovation
Radical innovation blows up the existing system or process and replaces it with something
entirely new. An innovation that has a significant impact on a market and on the economic
activity of firms in that market. This concept focuses on the impact of innovations as opposed
to their novelty. Radical innovation, concerned with exploration of new technology,
is fundamentally different from incremental innovation that is concerned with exploitation of
existing technology. create a new market and value network, and eventually disrupts an existing
market and value network displacing an earlier technology. It is about radical changes to the
current business, capabilities or markets. It lets a technology or product reach a new frontier.
Tokopedia provide a new payment method for every features they have. In tokopedia we can
pay it with any kind payment method wed like to use, they offer easiness and convenient
payment method for those features, they grab a new market by adding payment method such
as Indomaret, alfamart, and Pos Indonesia. They grab new market because they offered
payment method for those people who dont have Bank account, but they still can buy and pay
for it. For example, in the rural area there so many people having no bank account but as we
know that alfamart, indomart and Pos Indonesia is all over the place so that they can purchase
tokopedias product through this merchant.

Chapter 4: Incremental Innovation

Incremental Innovation is a series of small improvements to an existing product or product line
that usually helps maintain or improve its competitive position over time. Incremental
innovation is regularly used within the high techology business by companies that need to
continue to improve their products to include new features increasingly desired by consumers.
In Tokopedia, incremental innovation can be seen in the additional features that they have in
the websites. For instance: PDAM Payment, Game Vouchers, Installment loans, Donation
(Baznas, Dompet Dhuafa, YCAB, Human Initiative) and Cellphone Postpaid Billing.
Tokopedia also provides Buyer and Seller ratings, which either buyer or seller could make a
review of how they perform in negotiation. So, the more good ratings that the users have, the
more reliable and trusted the users would be. And the buyers also could make a review how
well is the product. This could become an indicator for the buyers, to finally decide whether to
buy or not to buy. As a seller, Tokopedia provides Capital Loan through Tokopedias
Partnership which make the seller easier in expanding their business, certainly with terms and
conditions applied. One more incremental innovation of Tokopedia that they established

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Mobile application, which enables all sellers in Indonesia to manage online stores easily and
to help buyers find the desired millions of products right from Cellphone.

Chapter 5: Disruptive Innovation

Disruptive innovation is an innovation that leverages new technologies to attack existing
markets from the bottom up. To be a disruptive force, this new product or technology has to
have additional characteristics: It begins as a low-cost solution to an existing problem. Initially,
its performance is inferior to the existing technology, but its rate of technological improvement
over time is faster than the rate of performance increases required by different market segments.
In the case of Tokopedia, the platform itself that provided by this firm is a disruptive
innovation. Tokopedia enable both seller and buyer to meet and do the transaction online in
one platform, that change the conventional behavior in which people conduct buying and
selling transaction. The platform advantages the seller with low-cost virtual shelf space, which
can reduce its cost that previously used to open a quite expensive physical store. The behavior
of buyer changes as well since they do not have to put effort by going out to buy stuffs. In
addition, inside Tokopedias platform they provide easiness by adding several features that
change market behavior on how they conduct their activities on selling and buying stuffs.
Tokopedia disrupts the existing traditional market such as Tanah abang, Pasar baru, etc.

Chapter 6: Conclusion
From the explanation above, we can see that innovation in Tokopedia had create them into one
of the leading platforms of online shopping in Indonesia. Based on existing technology,
Tokopedia able to catch new market with their architectrural innovation like top up service.
Tokopedia also successful in grab new market by conducting radical innovations like providing
new instant payment method. By adding incremental innovations like new features to increase
the service, this could provide easiness in using Tokopedia service. Tokopedia also succeed in
creating disruptive innovation by changing behavior of buyer and seller regarding with buying
and selling activities in online shopping service that Tokopedia provide. These innovations
made Tokopedia capable of being competitive in E-commerce industry against other
competitors like Bukalapak, OLX, and Elevenia. We can say that it is necessary to keep
innovate in order to reach sustain competitive advantage and gain the competitive position in
industry.