Indonesia’s Tokopedia and Bukalapak were in acquisition talks. Nothing happened.

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Bukalapak is in dire straits, and may be looking for a buyer or face restructuring, Tech in Asia’s sources claim. A person familiar with the talks said that Indonesia’s ecommerce marketplace Tokopedia considered acquiring smaller rival Bukalapak, but decided to pass because it didn’t see enough value-add in the deal.

However, both Bukalapak CEO Achmad Zaky and Tokopedia CEO William Tanuwijaya deny this. Achmad told Tech in Asia after the article was published that there were acquisition talks between both companies this year and in 2014, but it’s Bukalapak who declined an offer. He adds that his company is not in a weak position nor looking for a buyer.

William declined to comment when approached, but claimed post-publishing that he never passed on acquiring Bukalapak.

Tokopedia is backed by SoftBank and Sequoia Capital. Its current valuation is unknown but likely near, or above, US$1 billion. Bukalapak’s valuation sits at about US$200 million.

It’s unclear whether it ever came to concrete talks between the two companies to discuss deal value.

Bukalapak CEO Achmad Zaky.

Bukalapak is backed by KMK, a subsidiary of Indonesian media conglomerate Emtek. KMK CEO Adi Sariaatmadja said there was no discussion with Tokopedia about a possible acquisition.

“It’s not true,” Adi told Tech in Asia. He also insists Bukalapak is doing fine. It’s growing in team size and “revenue is climbing.” Toward the end of last year, a new COO was brought in to help Bukalapak gain efficiency.

But funds might’ve been running low. A separate source familiar with the company told Tech in Asia that Bukalapak has tried, but failed, to raise additional venture capital from sources outside of its main investor Emtek.

The media company last injected roughly US$20 million into Bukalapak in November 2015, according to its financial statements. According to our sources, it’s reluctant to pour in more at this point.

Not the only one struggling

This year is going to be tough – not just for Bukalapak – but for most mid-sized ecommerce players in Indonesia.

This view is backed by multiple sources in the industry, and it’s easy to see why pressure on these startups is mounting.

With mighty Alibaba now backing Lazada, Sequoia and Softbank behind Tokopedia, and Amazon’s plans for Southeast Asia becoming more concrete, whoever wants to stay relevant must be prepared to continue spending millions of dollars on winning market share.

Companies like Matahari Mall, Blibli, or BerryBenka won’t have access to capital at the scale of what Alibaba or Amazon can afford to spend.

It’s possible we’ll see mergers of some of the mid-size ecommerce players still in the field as investors get antsy and look for exits.

Or, companies could slim down significantly, and pivot their way into new business models where they no longer fight on the same front as the general ecommerce players.

Update 11:26pm Jakarta time: We’ve changed the title to this story. Also added statements from Bukalapak’s and Tokopedia’s CEOs.

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