Google and Singapore’s Temasek to Invest $350 Million in Indonesian Shopping Platform
Nigeria’s ecommerce market, currently estimated to be worth $12 billion, is projected to reach $75 billion in revenues per annum by 2025. Indonesia has a population of 267.7 million, GDP of $1.042 trillion and per capita income of $12,670, compared to Nigeria’s population of 195.9 million, GDP of $397.3 billion and per capita income of $5,710.
Tokopedia, an Indonesian online shopping platform, is set to receive a $350 million investment from the American tech multinational, Google, and Temasek Holdings, the state-owned (through a sovereign wealth fund) Singaporean investment firm.
Tokopedia also has received investment from the likes of SoftBank, East Ventures, Sequoia Capital and Alibaba.
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Tokopedia is an extremely popular marketplace that helps seven million merchants sell goods to its customer-base of 90 million users every month. It contributes 1% to Indonesian GDP. This backing from Google and Temasek will help the company funds its expansion plans post-COVID-19.
Beyond being a profitable e-commerce platform, Tokopedia represents a crucial market player in Asia, where a lot of American corporations have set their sights. As growth has slowed down in Europe and the US, these companies are looking to the region’s tech market for investment. In June, WhatsApp and Paypal invested in Indonesian digital payments platform Gojek, and Facebook bought a $5.7 billion stake in India’s Jio Platforms.
This investment is only yet another development in the business relationship between Tokopedia and Google. Tokopedia currently uses Google Cloud to perfect its delivery services. Being able to use the geolocation API to determine the exact location of the app’s user is a goldmine for Tokopedia.
However, the $350 million investment falls short of the goal of between $500 million to $1 billion funding that Tokopedia appeared to be looking. It was previously reported to have been in talks with Facebook Inc., Microsoft Corp. and Amazon.com Inc. Google and Temasek began negotiations with the company back in June.
Tokopedia has been keen to attract new investors before offering shares in an Initial Public Offering (IPO) that analysts think will happen in 2023; the company is aiming to list on the Indonesian stock exchange and on a foreign bourse.
The company’s VP of Corporate Communications Tokopedia Nuraini Razak had said in February that “It is not only a matter of money but also the best practices. How is the application of technology or business from Alibaba elsewhere, for example (SIC),” while confirming Tokopedia was interested in funds from investors who could provide added value such as such as Alibaba, SoftBank, and Sequoia Capital.
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Indonesia’s e-commerce market is expected to grow from $21 billion in 2019 to $82 billion in 2025 while the global e-commerce industry is expected to grow to $6.54 trillion in revenue by 2022.
Orders on Tokepedia surged during the coronavirus lockdown, a further proof of the robustness of e-commerce in Indonesia.
Nigeria’s e-commerce giant listed in 2019 on the New York Stock Exchange, becoming the first e-commerce firm operating in Africa to list on the exchange. While having its operations in Nigeria and a few African countries, Jumia has its headquarters in Berlin, Germany.
Nigeria’s ecommerce market, currently estimated to be worth $12 billion is projected to reach $75 billion in revenues per annum by 2025. Indonesia has a population of 267.7 million, GDP of $1.042 trillion and per capita income of $12,670, compared to Nigeria’s population of 195.9 million, GDP of $397.3 billion and per capita income of $5,710.