How Tokopedia Democratizes E-Commerce Leveraging a Digital Infrastructure

An Indonesian technology company unlocks e-commerce innovation to secure growth during the pandemic and beyond

Thomas Lee
How Tokopedia Democratizes E-Commerce Leveraging a Digital Infrastructure

The pandemic has propelled e-commerce to the forefront of global trade. In 2021, retail e-commerce sales amounted to approximately US$4.9 trillion worldwide and is forecast to continue growing by 50% over the next four years, reaching US$7.4 trillion by 2025.[1] Asia-Pacific accounted for nearly half of those sales, amounting to roughly US$2.9 trillion in 2021.[2] The sharp rise in e-commerce sales was driven by the strict lockdown and mobility policies implemented in several countries. To capitalize on the market opportunities, retailers adopt digital channels more swiftly to meet the demand of customers who have become increasingly reliant on online platforms for shopping.

For many retailers, their priorities are not only offering products and connecting payments seamlessly but also ensuring a reliable logistics network for efficient next-level inventory and order management is in place as they begin to leverage big data to transform customer experiences.

Making a difference through technology

Tokopedia, a technology company with the biggest marketplace platform in Indonesia, has long been bracing itself for disruption. Established in 2009, the company was created with a mission to “democratize and empower commerce” through technology in Indonesia, the world’s fourth most populous nation. Both Tokopedia founders, William Tanuwijaya and Leontinus A. Edison, wanted to address the disparity in access to goods and services among large cities and far-flung towns, and at the same time, build people’s trust in online transactions.

Tokopedia democratizes e-commerce with digital infrastructure

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Today, Tokopedia has reached out to 99% of districts across the archipelago, and is home to more than 12 million merchants who offer more than 638 million products on the platform. One of its key business priorities is to sustain its growth plans across the thriving e-commerce industry in Indonesia, valued at over US$30 billion in 2020. By 2025, Indonesia’s e-commerce market is expected to reach US$83 billion, presenting a considerable opportunity for Tokopedia to continue innovating and serving internet users in the country.[3]

To continue driving business growth, Tokopedia is focusing on elevating the innovations that brought them on this journey so far—digital infrastructure. As part of the ongoing enhancements, it has collaborated with Equinix to accelerate its digital journey further, guided by its five core ‘pillars of technology’.

We take a closer look at how building a best-of-breed infrastructure enabled Tokopedia to confront the disruptions brought by the pandemic head-on, and maintain its leadership position in the highly competitive and booming e-commerce sector.

Strengthening the platform through instant, reliable and on-demand connections

To ensure the company delivers a frictionless experience to its millions of users, Tokopedia needs to distribute their digital infrastructure closer to users while enabling its merchants to deploy, run and manage their data on the cloud of their choice. Equinix Fabric™ allows Tokopedia to connect directly, privately and securely to major cloud service providers (CSPs) anytime and anywhere. This software-defined interconnection service ensures Tokopedia connects to the right CSPs based on the specific needs for optimal performance, speed and flexibility, creating a consistent and resilient user experience regardless of location.

Going beyond CSPs, Equinix also makes it effortless for Tokopedia to connect with payment players to offer a seamless payment experience. This is critical as customers always want to execute payments as swiftly as possible with a broader choice of payment options. By utilizing Equinix Fabric, Tokopedia can pivot at pace with the changing payments ecosystem and rapidly reduce the time it takes to capture opportunities in the ever-changing forms of digital payments.[4]

Focusing on customer innovation, AI-first and data driven transformations

Customers are shifting to online activities and becoming more demanding than ever before. Tokopedia recognizes this shift in consumer expectations and leverages digital infrastructure to help foster innovations to bring customers the highest-quality experiences. By working with Equinix, Tokopedia unlocks new capabilities with software-defined connectivity to thousands of partners and providers, accelerating delivery.

Furthermore, by distributing infrastructure to the edge, Tokopedia is closer to users and can process data in real-time for precise business insights. This enables them to have visibility to high-quality and accurate data to make informed decisions in their business growth, meeting their goals for data-driven transformation and customer innovation.

Reinforcing and safeguarding platform security and privacy

Another key priority for Tokopedia lies in data security, as customer data needs to be processed and stored in a safe, reliable and proven way. This is particularly true when considering the large amount of sensitive data transferred from the customer to the business. Leveraging Equinix’s extensive footprint, Tokopedia can deploy close to customers and locations that matter most to their businesses via Platform Equinix®, enabling low-latency performance and achieving secure data storage within compliant facilities. Tokopedia also benefits from better control and adaptability; as new regulations come into effect, they can easily administer and apply them to local data.

Additionally, Tokopedia can build direct and secure connections with Equinix Fabric to bypass the public internet and reduce security threats and attack surface to mitigate risks. Together with SmartKey™, Equinix’s SaaS-based secure key management and cryptography service, Tokopedia can enjoy easy access more securely.

Achieving sustainable business growth by reducing capital expenditure and bottlenecks

Expansion during the pandemic can be challenging for businesses as it takes time and investment, especially if they set up everything physically. To help overcome this, Tokopedia needs to seamlessly bridge the distance between their distributed digital infrastructure with virtual devices such as routers, firewalls, and SD-WAN gateways by using a solution like Network Edge.

By removing the hurdle of establishing manually configured networks, Tokopedia can build virtual infrastructure from the core to the edge and reduce bottlenecks. Without hardware or additional equipment needed, Network Edge provides on-demand virtualized network functions, which significantly reduce capital expenditure, while still promoting growth. This means they can be more efficient and flexible to accommodate any business expansion plans as needed, all within a few clicks and cost-effectively.

A new era of e-commerce

Looking forward, e-commerce retailers have the potential to emerge even stronger in the recovering economy. Asia-Pacific consumers are predicted to shop online more significantly after the crisis than they did before, for Indonesia, a 16% increase in online activity was indicated.[5] In order to support retailers, Tokopedia is committed to continued investment in digital infrastructures to future-proof their operations and provide next-level customer experiences.

Tokopedia’s story is still being written as they continue to leverage digital infrastructures while expanding its service portfolio to offer fintech, payment, logistic services and beyond. Its priorities— platform strength, customer innovation and data-driven transformation, data security and financially optimized execution, continue to drive the company’s digital growth plans. As part of this story, Equinix provides the essential building blocks for Tokopedia to reach its goals. Learn more about how our solutions can power retailers to deliver a next-generation experience.

[1] https://www.statista.com/statistics/379046/worldwide-retail-e-commerce-sales/

[2] https://www.emarketer.com/content/top-global-ecommerce-markets

[3] https://www.trade.gov/country-commercial-guides/indonesia-ecommerce

[4] https://www.equinix.hk/resources/playbooks/payments-interconnection-playbook

[5] https://www.mckinsey.com/~/media/mckinsey/industries/retail/our%20insights/perspectives%20on%20retail%20and%20consumer%20goods%20number%208/perspectives-on-retail-and-consumer-goods_issue-8.pdf

Thomas Lee
Thomas Lee Senior Product Manager, Network Edge Services
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