SINGAPORE -- Indonesian e-commerce platform Bukalapak will target Muslims living across the Middle East as it strives to become the Islamic world's answer to Amazon and Alibaba.
Indonesia's first cross-border e-commerce platform to appeal specifically to the world's 1.8 billion Muslims, Bukalapak co-founder and president Fajrin Rasyid said the company's Middle East expansion would hopefully "start as soon as possible" and focus first on countries such as Saudi Arabia and the United Arab Emirates.
"If we just sell common products, then probably people will just buy from Amazon or Alibaba," Rasyid told the Nikkei Asian Review in an interview. "So we want to provide differentiated products."
Muslims currently rank as the world's fastest-growing population -- as well as its youngest -- accounting for one quarter of the world's population, with the total Muslim population set to reach 3 billion by 2060, providing huge opportunities for Muslim-related businesses.
While Muslim-focused business have typically focused on the finance sector, with local and international financial institutions offering products such as "sukuk" Islamic bonds, the rise of e-commerce is set to drive the rapid expansion of the Islamic economy.
According to latest State of the Global Islamic Economy report by Thomson Reuters, the world's Islamic economy is forecast to grow to just over $3 trillion by 2023. Food and fashion are currently the Islamic economy's leading sectors, with the market for halal food set to expand from $1.3 trillion in 2017 to $1.8 trillion in 2023, and the market for clothing and apparel expected to grow from $270 billion to $361 billion during the same period.
"We have a lot of Islamic fashion and halal food," Rasyid said. "That is quite popular among the Middle East or Islamic countries."
According Rasyid, Bukalapak's Middle East expansion will not require a large investment as the company will start cross-border sales first by building local partnerships with logistics companies, just as the company has done with the launch of BukaGlobal across Asia in May.
Founded in 2010 and headquartered in Jakarta, Bukalapak is currently valued at $1 billion, according to CB Insights. Among its major investors are 500 Startups, Ant Financial as well as Singaporean sovereign wealth fund GIC. It has some 4 million merchant partners in Indonesia -- the world's most populous Muslim nation -- enabling them to sell products across the archipelago nation through the platform.
BukaGlobal is currently targeting Indonesians living in Singapore, Malaysia, Brunei, Hong Kong and Taiwan who want to buy products from home.
Rasyid said the company decided to move early to exploit rising global demand for Muslim products by bringing goods produced by small to medium Indonesian businesses to the global market.
Bukalapak's cross-border expansion is in line with Indonesian President Joko Widodo's initiatives to export more Indonesian products, and the company enjoys the strong of the Indonesian government.
Fajrin said Widodo's recent re-election as president was also good move for Bukalapak as it already has a "good connection" with many of Widodo's ministers.
"The foreign ministry of Indonesia said to me that 'if you want the launch in any country, just let me know. We will let the embassy there know so that we can help you'," Rasyid said.
Widodo's victory was good for Bukalapak "because we already know him," Rasyid said. "Obviously the ministers can change but hopefully some ministers will still remain because we already have a good connection with some of them."
Still, Bukalapak's cross-border expansion will face challenges as well. Selling local products in other markets could result in higher prices due to customs and shipping procedures, and Indonesian products may not be competitive enough to convince overseas consumers to make a purchase.
Back in its home market, competition in Indonesia's e-commerce market is also intensifying, with other platforms such as homegrown giant Tokopedia and Singapore-based Lazada investing a lot to acquire new merchants and customers.
While the company is focused on expanding abroad, Rasyid said the Indonesian market continues to be its main source of revenue.
"We don't shift away the focus from Indonesia," he said.