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Mulyono Xu, Co-Founder & CEO of Desty
East Ventures

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19 October, 2022

EVDCI

How Desty elevates MSMEs to thrive in Indonesia’s growing commerce ecosystem

EV-DCI 2022 shows an increase of 39% in the median of online platform usage in businesses, yet only a small percentage of MSMEs optimize the tools

Mulyono Xu, a local Acehnese man, had spent most of his life in China since he started studying in China almost 20 years ago. His seasoned experience in e-commerce solutions in one of China’s giant tech marketplaces, Alibaba Group, gave him a ‘time-travel advantage’, a fresh perspective on what Indonesians need as the country’s digital ecosystem matures and the solution for it. 

After witnessing and experiencing China’s digitalization process ten years ago, he realized why China would become eminent earlier than Indonesia as an emerging market. China and Indonesia share very similar macroeconomic aspects, such as a large population with a high readiness for technology.

However, as opposed to more mature markets such as the United States (US) or China, Indonesia does not yet have a supporting ecosystem for digital commerce. The challenges Indonesian merchants face in running their businesses are estimated to be 3 times higher due to the fragmented infrastructure of our e-commerce. It becomes the core problem that Desty is looking to crack.

In 2020, Mulyono and his Co-Founder, Bill Wang, were AliExpress’ executives in Indonesia and Brazil when they acted on their shared vision of advancing Indonesia’s commerce by initiating Desty. Desty secured seed and a year later, pre-series A funding from East Ventures and has grown into a social commerce website builder that provides merchants with the key tools for consolidating and executing their businesses. 

“To tackle the challenge of fragmented infrastructure, Desty is building a full stack solution for merchants to promote and sell their products. We are building an agnostic open platform which integrates into logistics, payment options, orders ー these are key fundamentals to any business,” said Mulyono Xu, CEO and Co-Founder of Desty.

Mulyono was grateful and grew more driven knowing that Desty’s solutions can help many MSMEs integrate into the economy. For instance, Syambudi Yusuf is a middle-aged man from a village up around the foot of Sidoarjo’s mountain area who has testified to the accessibility and benefits of Desty. Syambudi lives in a traditional woven roof house with a single tungsten lamp and runs a mom and pops store. 

Despite the limited connectivity in his village, Syambudi was able to leverage Desty to support and increase his livelihood. Syambudi uses the Desty Page payment feature as a digital payment for his business and offers an exchange service for villagers who need to exchange their e-wallet balance into cash. It shows that Desty has catered to sellers from 2nd tier cities such as Bantul and Tegal.

Desty supports the 1-100 of the merchant ecosystem in Indonesia

According to the e-Conomy SEA 2021 report, Indonesia’s e-commerce sector experienced significant growth of 52% to reach US$ 53 billion in 2021, and is projected to hit US$ 104 billion by 2025. This is further supported by the data from NielsenIQ that indicates a significant increase of 88% in the number of online shoppers in Indonesia from 17 million in 2020 to 32 million in 2021.

The e-commerce sector is propelled with the number of MSMEs that have gone digital. According to the East Ventures – Digital Competitiveness Index (EV-DCI) 2022, there has been an increase of 39% in the median of online platform usage in businesses from the previous year. Indonesia’s central Bank Indonesia (BI) revealed that about 17.25 million of MSMEs have gone digital as of May 2022, a 115% increase from the pre-pandemic level of 8 million. 

Despite its significance and growth, only 29% of Indonesia’s MSMEs have utilized online business platforms. The low adoption of digital technology among MSMEs in Indonesia exists as most still face various obstacles in taking the digital turn. Compared with large enterprises, MSMEs lack resources and face difficulties in adopting and adapting to new technologies due to a lack of digital literacy

Eventually, all Desty products and services are built to help the MSMEs on different layers to consolidate their digital operations from traffic, SKU, orders, chat, and all other relevant aspects. It will be hosted in one super app, and these products will make big changes for digitalization across Indonesia by attacking the different layers of SMEs’ pain points in going digital.

Today, Desty has nearly one million merchants and users across Indonesia. Mulyono is optimistic that more users, especially merchants will utilize Desty as a digital infrastructure to support their business operations and strategies.

Desty shows that it will play a significant part in the broader digital ecosystem, as it comes up with new solutions that commerce players have yet to accommodate. The EV-DCI 2022 report identified two key measures that need to be implemented to sustain the growth of e-commerce—namely, adopting consumer-first strategies and improving the inclusion of MSMEs. These two key strategies are implemented in Desty. 

However, Mulyono observed several challenges in implementing Desty’s solution in Indonesia that relate to digital infrastructure: application programming interface (API) and tech infrastructure. As the government and various stakeholders continue to grow the country’s e-commerce capabilities, Desty notes that there is still a lack of API for Ads bidding in e-commerce marketplaces, which will help merchants conduct their business more efficiently. Desty navigates this by planning out its product roadmap ahead to better prepare and maximizes synergy with the systematic upgrade of the APIs readiness.

“4G network and venture capital investment into tech mark the ‘0-1 process’ of the digitalization of Indonesia. We are now getting into the ‘1-100 process’ of digitalization where it requires heavier investment into Infrastructure and Systems. That’s what Desty is doing, developing the 1-100 of the merchants ecosystem,” concludes Mulyono. 

Download the full report of EV-DCI 2022 here.