TIM

WHAT ZIT TOOYA

THE UCC 2022

INITIATIVE

ECONOMICS BUSINESS CASE

COMPETITION 2019
 Abstract
Tokopedia is an online ecommerce platform and serves as a digital marketplace in based in Indonesia.
Tokopedia keep expanding as the largest ecommerce platform in Indonesia while at the same time,
Tokopedia struggled to make a better monetization strategy and keeping the competition within the
platform from excessive price war between sellers. In giving recommendations to achieve the
objective, we did a SWOT analysis, and included preliminary research as the basis of our analysis.
We formulate recommendations that focuses on extending Tokopedia current’s monetization strategy
and contributing back to the UMKM community. In order to efficiently communicate our
recommendation, we have developed a strategy called UCC 2022. The strategy extends to the problem
identification in three important stakeholders for Tokopedia: the User, Company, and Community.
Tokopedia need to make a comprehensive profiling mechanism in order to efficiently something.
Implementing Xpresshop and Instant Checkout to accommodate sellers and amplify the amount of
transactions within the platform. Finally, through UMKMPedia, Tokopedia can give back to the
community and something.
Keywords: Monetization, Profiling, Xpresshop, Instant Checkout, UMKMPedia
 Preface
Tokopedia was established in August 17, 2009. With a vision of ‘Developing Indonesia Through the
Internet’, Tokopedia focuses on developing Micro, Small, and Medium-sized Enterprises in Indonesia
or better known as UMKM. Tokopedia continuously to expand its service to various partners in B2B
(Business-to-business), B2C (Business-to-Consumer), and C2C (Consumer-to-consumer). This open
environment for all business model is the inherent value of Tokopedia. But, at the same time this
value comes with a side effect of the heating up of the competition and price war that makes it harder
for small sellers to compete. In monetization strategy, Tokopedia implemented Gold Merchant and
TopAds and is not able to implement sales commission. In order to achieve its goals and vision for a
more inclusive digital economy in Indonesia, Tokopedia need to plan carefully about its monetization
strategy, and operational strategy.
Problem Identification
From the current situation of Tokopedia, there are 3 problems that are identified and will be addressed
in this paper. The first is related to the open market system that welcomes all types of merchants
which creates potential risk to price war and may negatively impact users’ experience. The second is
addressing the issue of monetization of Tokopedia. The third is the marginalized small merchants due
to the open market system which does not support Tokopedia’s mission of economic inclusivity.
This paper will aim to give recommendations in addressing these three problems. The goal of the
recommendations is to increase users’ experience through a segmented market personalised to users’
preferences, to increase revenue of the company not through total monetization but through extension
of online monetization model and establishment of offline monetization model, and to give support
to the community through the growth of small merchants, in particular UMKM with products of local
culture in order to further realise Tokopedia’s mission and vision.
 Theoretical Framework
Choice Overload
Tokopedia has reached the condition where there are so many options of items for buyers to choose.
Choice overload is paralyzing for buyers and often causes them not to buy at all (Crobox, 2018). The
main reason being is that buyers will find it difficult to choose between differentiated products, the
choice set is complex, the buyers don’t have preferences, and they don’t want to put too much effort
into their decision. Tokopedia currently overwhelmed with the already crowded marketplace which
results in price war for seller and choice overload for buyers.
Monetization
Monetization is defined as the process of turning existing traffic in a website into revenue. In an
industry based on internet, monetization comes in a form of online advertisements, subscription fees,
and in-app purchases. Monetization often referred as the core model to generate revenue internet-
based companies. Failure in establishing an adequate monetization model will lead to problems that
happened in the infamous dot-com bubble bust, known as dot-com crash in 2000. Currently,
Tokopedia implements TopAds in terms of monetization in online advertisements and Gold Merchant
in terms of monetization on subscription in becoming premium seller.
Key Success Factors of UMKM
According to Wijanarko and Susila, there are 4 key factors that attributes to the success of an
‘UMKM’ or SME. Two of these key factors are related to the concepts of marketing: promotion and
branding, while the other two are interest of entrepreneurship and networking. Promotion is direly
needed, especially of SMEs, to increase awareness of a product and change buyers’ behaviour. On
the other hand, branding, defined by Kotler and Keller as a name, term, sign, symbol, or design or a
combination of these that identifies the maker or seller of a product or service, is needed for
consumers to be able to distinguish between products and convince that a product is better than its
competitors. Kotler also stated that brands represent a product’s quality and consistency.
 Analysis
SWOT Analysis

Strategy Recommendation
Based on our analysis and preliminary researches, in order for Tokopedia to achieve its goals, we
devise a 3 point strategy called The UCC 2022 Initiative which addresses the three main problems
through value creation for the three important stakeholders of Tokopedia: the user, the company, and
the community.
1. User
The first strategy point targets the user1 of Tokopedia. With the aim to increase users’ experience and
value, this point of strategy recommends the use of profiling to segment the marketplace and in turn,
decrease risks of price war.
User Profiling
In the status quo, on user’s first visit, the user will be directly see the homepage with varieties of
product offerings. There is no immediate profiling to characterize the first-time-user’s
preferences and orientation. User Profiling implements the use of profiling system1, which is
basically a set of questions aiming to identify the user’s orientation and preferences, on user’s
first visit to the platform. User profiling will allow Tokopedia to segmentize the marketplace into
B2B, B2C, and C2C in which specific type of merchants will interact with the same type of
buyers (e.g. B2B buyers will only be shown B2B merchants). Therefore, small merchants do not
have to compete in the same big segment with big merchants, since marketplace will be

1 see illustration.1 (loc. attachment)

 segmented by the profiling system. This will reduce the heat in the competition without reducing
the scope of consumer base in Tokopedia. Additionally, customization of content can start as
early as the user’s first time visit, which increases customers’ experience.

2. Company
The second strategy point targets the company itself, Tokopedia. This strategy is the monetization
strategy of Tokopedia aiming to increase its revenue through the extension of current online
monetization model and addition of offline monetization model.
Xpresshop
When a buyer is searching for a specific product in Tokopedia, there will be multiple merchants
offering the same product. With Xpresshop feature, buyer will immediately be offered one
product from one specific seller on the interface, and thus the buyer can immediately add the
product to cart, earning the merchant a sale. The merchant whose product is eligible for the
Xpresshop is selected through a metric2. The Xpresshop feature will automatically show under
the condition that the product searched on the search bar is specific (e.g. Smartphone Type Z
from Brand X). The Xpresshop feature is remodeled after Amazon’s BuyBox, which generated
over 80% of Amazon’s sales according to a study by Big Commerce (2019). Gold Merchants
will be given more chance to win the Xpresshop slot, increasing the value of the Gold Merchant
membership by substantial amount.
Instant Checkout
Cart abandonment is a huge issue in ecommerce marketplace. According to SaleCycle (2018),
the global cart abandonment in Q3 2018 was reaching 76.9%. Instant Checkout feature give
incentives in the form of TokoPoints to buyers whe2n they complete their purchase within 1 hour
after they place the items in the cart. Instant Checkout feature will increase the amount of
finalized transaction, which will further encourage merchants to buy and stay on the membership
as more products added to the cart through Xpresshop will be bought through Instant Checkout
feature.
Workshopedia
Workshopedia is an annual training workshop exclusive for Tokopedia merchants. For a fee,
Workshopedia participants will get a synthesized business course for merchants, including e-
commerce know-how and optimizing usage of Tokopedia platform which can help them to
optimize their store.

2See Table.1 (loc. attachement)

 Content Creator Service
Content Creator Service is a marketing consulting services offered by Tokopedia for a fee to help
merchants market their products optimally. The service includes product photography and
videography, branding and packaging recommendations, store management, to guidance on
customer chat service feature.

3. Community
The third strategy point targets the community, which in this sense are the SMEs offering local
products unique to Indonesia. This point aims to give support to local SMEs in order to move forward
to Indonesian economic equality.
UMKMPedia
The heating competition within the platform makes it harder for local brand to compete with the
big sellers. In this part, we recommend Tokopedia to extend its program of Modal Toko, which
gives financial loan to UMKM, to UMKMPedia. UMKMPedia gives Content Creator Service
free of charge to eligible local merchants and free spots with free accommodation on
Workshopedia for these merchants. Additionally, merchants registered as member of
UMKMPedia will be listed in its own category of UMKM shown on Tokopedia homepage, and
will be freely promoted on users’ interfaces to increase exposure and awareness. The initial gap
between small seller and big seller that make the competition inside the platform undesirable for
small seller can be minimized with this program. This program also acts as an altruistic
advertisement and enforce the nationalistic branding of Tokopedia that further promotes its
vision and mission.
 Conclusion
The UCC 2022 Initiative is a comprehensive strategy addressing the three main problems, which are
risk of price war, the company's monetization, and marginalized small merchants. These problems
are reflected to impact toward the three stakeholders of Tokopedia: the users, the company, and the
community. This is the foundation that The UCC 2022 Initiative is built upon, targeting these three
pillars and aiming to revitalise the impact toward the three stakeholders. By 2022, Tokopedia should
achieve better buyer and merchants’ experience, increased revenue, and betterment of local SMEs
livelihood. In the end, the user, the company, and the community, are all benefited through the
creation of value to further contribute towards the development of Indonesia.
 Daftar Pustaka

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 Lampiran

Ilustrasi.1 User Profiling

Table.1 Xpresshop Metric Variables

Metric Best Way to Win Minimum Eligibility Time Period for

Xpresshop (Rate) (Rate) Xpresshop

Gold Merchant Being a consistent Initial Purchase. Current

Membership member.

Shipping Time Up to 3 days less than 7 days Current

Order Defect Rate 0% Less than 3% Last 30 days

On-Time Delivery 100% Greater than 90% Last 90 days

Inventory Depth (Stock The higher the better. Last 90 days

Availability)

Valid Tracking 100% Greater than 90% Last 30 days

Feedback Score The higher and the most recent is better. Lifetime

Customer Response Up to 5 hours Less than 12 hours Last 30 days

Time

Late Shipment Rate 0% Less than 10% 30 days