MBiz moves to lead the e-commerce market in B2B and B2G
By Yunnie Marzuki April 19, 2017
- Platform provides free e-procurement solutions to enterprises and government institutions
- MBiz offers 11 categories and 4,359 sub-categories of products and services
INDONESIAN conglomerate Lippo Group’s MBiz is a business-to-business (B2B) and business-to-government (B2G) e-commerce platform that also offers free e-procurement solutions to enterprises and government institutions.
“Mbiz is an e-commerce platform and offers e-procurement solutions. When it comes to the procurement process, it is not cheap. Usually a company is required to invest or pay a certain amount for the procurement process and if a request for a change is made, further payment is required. We have disrupted the market by providing free e-procurement services for our users,” MBiz co-founder and chief operational officer Ryn Hermawan tells DNA.
Mbiz is a part of Lippo Digital which comes under the Lippo Group umbrella. They started developing a digital ecosystem in 2015. MBiz is categorised under Build and Play ecosystem along with MatahariMall as a B2C e-commerce player, Indo Network for SMEs, OVO for financial technology (fintech), and Red Carpet Logistics, MBiz’s third party logistics partner. The other category is investment arm called Venturra.
“The beauty of being a part of the biggest conglomerate in Indonesia is that there are lots of places for practice. If we want to expand into the medical sector, we can join forces with Siloam Hospital (which is part of the Lippo group). If we want to expand to housing, we can work with Lippo Homes, and if we want to go into telecommunications, we can join with Bolt,” he adds.
MBiz offers 11 categories and 4,359 sub-categories of products and services from various vendors and industries such as IT and electronics, automotive and transportation, retail products, and services such as customised items, event organising, and leasing.
Revenue and valuation
MBiz’s revenue is comes solely from sellers. Mbiz purchases products from vendors and sells them to clients at a 1% to 2% increase from the suggested retail price (SRP).
“We are quasi-retail. We do not have inventory, but we buy separately and have agreements with vendors. We then sell to our clients with certain agreements too. Even if the price is higher by 1% to 2%, it will be acceptable to our clients because we focus on the total procurement process,” Mbiz commercial director Andik Duana Putra tells DNA.
“It is not about the amount of transactions. As long as we still have the agreements with our clients, we will provide e-procurement processes for every type of transaction. It also depends on users’ buying habit and their company's standard operating procedure (SOP),” Ryn explains.
The standard number of vendors per purchase in MBiz is three. However, for some categories, there may be only one vendor for each brand.
According to Andik, there are benefits for vendors and clients of MBiz, including seamless access through their website, and help in promoting their products online.
“For clients, the benefits include access to our multi-vendor system with its unique Stock Keeping Unit (SKU) for a similar product from various vendors. Vendors can sell their product by doing digital marketing through our website,” he says.
MBiz received Series A funding from Japan’s Tokyo Century Corporation (TCC). The undisclosed sum was used as working capital, which led to MBiz garnering sales of 1.3 trillion rupiah (US$98 million) in 2016.
Andik says that MBiz became profitable after its first year of operations (April – December 2016).
“From our total achievement last year, Lippo contributed only 1.3% from the business side. And because we are non-captive, investors are interested in us,” he says.
“MBiz is non-captive, we want to test ourselves outside of Lippo. We want the solutions that we offer to work in the market,” adds Ryn.
They also aim to increase their value to 20 trillion rupiah (US$1.5 billion) and will seek Series B funding by the third quarter of 2017.
“We have to be brave enough to go for a ‘scary’ number. It will show that we really in the effort to develop this platform and are prepared to educate our users,” Ryn says.
Creating its own value and ecosystem
Ryn thinks that the B2B market in Indonesia is still an infant compared to more established markets such as China and Korea.
The two tables above show that the combined B2B and B2G businesses in China and Korea are larger than their B2C markets.
“Based on this, we see that Indonesia has huge potential. Now, there are only a few B2B players and the products or services they offer are segmented or for small business. Others are hybrids and handle all models including B2B, B2C and customer-to-customer (C2C).
“I believe that the uniqueness of MBiz is that we are able to tap into the market,” he says.
To Ryn, Mbiz has the ability to master and manage every different requirement or policy that users have. He says that MBiz was the first to provide digital e-procurement solutions which integrated with the government’s e-catalogue. He also wants MBiz to be able to provide what their customers want and create mutual relationships with stakeholders.
“We need to understand our customers' businesses, so we are open for any kind of input. We also accept personalisation to ensure the solutions we offer will engage with their process. We also want to create a mutual ecosystem for all involved stakeholders,” he explains.
Having worked with Lazada Indonesia as its senior vice president, Ryn thinks that MBiz creates an ecosystem where it wants to accept greater challenges faced by B2B e-commerce in Indonesia especially in delivering oversized items and a large number of products.
“The main points in B2C are convenience, swiftness, and availability. In B2B, we face even more challenges because we cannot use regular or express logistics but need multimodel transportation with tracking systems,” he adds.
Ryn also said that MBiz has a ‘know your client’ (KYC) ecosystem for buyer and sellers. Every enterprise or vendor has to go through a compliance process and background check.
“We want to retain the trust of our users especially enterprises and the government where strict compliance is needed. That is why our vendors are mostly principals of the brands or master dealers and distributors”.
Andik says that MBiz focuses on local vendors across Indonesia but for large transaction amount or production capacity (100,000 to 200,000 units), MBiz has to work with some direct manufacturers from China.
“We are prioritising local vendors, but due to their limitation on production capacity, delivery time, and capital, we have to order directly from the same brand manufacturer from China. This is also due to our client’s concern about shipping costs,” he adds.
Ryn adds that MBiz offer re-financing services in collaboration with Nobu Bank to help vendors who face difficulties with the terms of payment (TOP).
“We can see that some vendors are struggling when they want to reach big enterprises, so we create an ecosystem where banks can help to provide financial solutions for them.”
Some vendors that were a part of the enterprise will be eliminated due to MBiz’s background checking process.
“MBiz is aiming for auditable and traceable businesses. If some vendors are not be able to fulfil the standards of our clients or they are non-taxable, they will be eliminated,” Andik says.
Once the KYC process is validated, those vendors will gone through a e-procurement process and MBiz will bring them on board with the clients.
“Because we are web-based, every procurement process will be accessible. This differentiates us from others and procurement processes will be adapted to our client’s SOP,” adds Andik.
There are total of 307 local vendors spread across Medan, Palembang, Bandung, Yogyakarta, Denpasar, Makassar, and Surabaya. Up to 600 partners are using Mbiz including PT HM Sampoerna Tbk, PT Toyota Astra Motor Tbk, and Air Asia.
For B2G or the government, MBiz has its own agreement with the National Procurement Public Agency (LKPP) in which the standard pricing has to be lower than prices on MBiz’s website.
MBiz handles IT and electronics products in the government’s e-catalogue with other providers such as Bhinekka and U-Click.
“Because this type of business is still new, the government is doing socialisation in promoting e-catalogues by collaborating with providers like us to educate users,” Ryn adds.
Plans for the future
MBiz is planning to expand the categories of their services. Currently there are nine new categories under services that are being developed.
“We try to fulfil all request from our clients. That is why our categories will keep increasing,” Ryn adds.
“Ninety-five percent of our clients’ transactions are under the services category, that is why we want to expand and develop it,” Andik explains.
Mbiz is also planning increase the number of employees to 450 from 220 this year and expand regionally in 2018 when the market is ready.