Reality cheque: Indonesia's WIR plans virtual reality IPO

WIR is planning to list in Jakarta later this year. The fast-growing Indonesian startup is banking on its ability to create a virtual bridge between big brands and consumers on the populous archipelago.

As traditional shopkeepers struggle to compete with the rise of e-commerce giants, Jakarta-headquartered WIR is offering a solution: virtual stores.

Housewives across Indonesia can open a franchise with the right to sell famous brands for as little as $18. Customers can browse in 3D digital shops for products as if they were in a physical store, plucking simulated products off the shelves while they navigate between aisles.

Popular smartphone games like Pokemon Go or Snapchat's suite of filters have opened peoples' eyes to the possibilities of augmented reality (AR). In Indonesia, WIR has caught the public’s imagination by harnessing the digital world to help brands connect to the mass market in the world's fourth most populous nation.

Jeffrey Budiman, Philip Cahyono, Daniel Surya and Michael Budi co-founded the innovative company in 2009.

“Back then no one really understood what AR really is … no one really believed in us,” said WIR’s chief executive officer Surya in an interview with FinanceAsia.

Now the firm is profitable, employs about 300 people and is preparing for an initial public offering later this year.

WIR will likely IPO in Jakarta first due to technical and taxation factors, then pursue a dual listing overseas, according to people familiar with the matter. It hopes to raise about $200 million to $300 million by selling around 20% of its stock, most likely in the final three months of the year.

The firm is in the process of bringing in strategic investors that could help it to gain scale rapidly in overseas markets, including retailers with extensive offline networks.

Unlike many of Indonesia’s unicorns, where the founders have been substantially diluted, WIR’s original team are still in control of the company, so they have more flexibility when considering listing options as well as creative control over the company.

WIR started off by helping clients develop advertising campaigns: with projects ranging from presentations of luxury homes on behalf of developers to augmented reality T-shirts emblazoned with roaring tigers that leap out at passers-by.

In 2015, it also won a high-profile mandate in Nigeria to help presidential candidate Muhammadu Buhari connect with millennial voters. WIR developed an app that triggered when voters pointed a camera at any of the parties’ logos, even the opposition’s. Buhari would pop up and talk about his vision for the future.

“It was one of the very first-use cases of AR in Africa,” Surya said. Buhari went on to win the election.

Fast-forward to today and WIR has completed more than 1,000 projects around the world.

WIR’s unit MindStores began to work with Indonesian mini-market chain Alfamart in 2015 to create its 3D virtual network of stores. They are targeting housewives who want to make some extra money but who can’t gather the necessary capital to open a physical store.

“Franchises are very popular in Indonesia. A lot of Indonesian mothers open businesses to try to help their families,” Surya said. WIR makes it relatively cheap and easy to open. A physical Alfamart franchise would cost around $50,000 but a virtual reality store only costs $18 to set up.

So far, MindStores has exceeded 100,000 downloads and there are about 40,000 users operating such virtual stores on WIR’s platform, he said.

An AR store also offers the consumer more choice and the retailer more products to sell. A typical Alfamart franchise carries around 3,000 lines of products but a virtual one can house up to 30,000. Customers can pay in cash and the product is delivered by Alfamart. The housewife collects up to 15% commission on each sale.

“All these mothers and housewives don’t really need to understand that they are using augmented reality and how it works, all they need to do is use the platform to get extra money,” said chief technology officer Jeffrey Budiman.

WIR is now looking for other partners to expand Mindstores and recently signed a deal with Kimia Farma, the executives said.

Arguably WIR’s biggest assets are its five patents. “We keep trying to register new ones but it is expensive,” Budiman said.

WIR claims to be the world’s first AR company to enable retailers to better understand their customers in real-time. The firm placed 4,000 connected devices in stores across Indonesia two years ago to monitor how consumers interacted digitally with products; when customers waved the products in front of the device content, surveys would pop up.

Retailers receive reports on the interaction, ranging from consumers’ facial expressions and gender to whether they want a different colour packaging. This furnishes the sellers with key information about shopping habits, consumer preferences, what stock to place where and when.

E-commerce is increasingly popular among Indonesia’s urban middle class but the further outside the country’s big cities you go, the more the digital wave starts to break up due to the paucity of infrastructure. So, an offline presence is also crucial.

With larger screens and more features, WIR will this year roll out 10,000 next-generation DÄV devices to enable greater online-to-offline interactivity. And there’s more to come, say WIR executives.

“We are looking at penetrating all the second- and third-tier cities in the next three to five years,” Surya said.

Alfamart alone has 15,000 units all over Indonesia that could have these connected devices soon. WIR also plans to partner with other retailers such as Watson and Indomart, said Surya.

“Our target for the next few years is to cover Indonesia with IoT [internet of things] devices,” he added.

WIR founders left to right: Philip Cahyono (CCO), Daniel Surya (CEO), Michael Budi (CIO), Jeffrey Budiman (CTO)

WIR’s latest offering is a location-based AR mobile app called Minar, where the consumer collects virtual coupons conjured right before their eyes and which mingle realistically with the real world. The coupons are redeemable in stores such as McDonald’s; it’s a form of marketing that crowds people into stores and restaurants.

The app has collected 20 new clients in less than a year, including Honda Motor and Alfamart, said Surya.

WIR recently launched Minar in Malta in collaboration with a hotel and tourism association, which helped them connect with potential clients among restaurants and cafes across the island.

“We want to make Minar a global brand so that in the next three to five years we are looking at Europe and US penetration,” Surya said.

Such gimmicks to a certain degree depend on users’ tech savviness, connections and devices.

While technology giants from Google to Microsoft are striving to make AR glasses less bulky, with higher processing power to capture digital information around them, for now, people are using their mobile telephones and tablets.

“It’s all about Big Data, augmented reality; the borders between what’s real and the virtual world are becoming blurred. It will become immersive,” Budiman said.

As the walls between reality and the digital world crumble around us, companies such as Ikea are using AR to help consumers visualise furniture in their homes, others are deploying it to help consumers operate their gadgets and machinery – a kind of AR users’ manual. WIR hopes to be a part of this global shift.

“We see ourselves as a digital reality company,” Surya said.


WIR will be featured in the Spring edition of FinanceAsia's magazine in a feature called "Indonesia's Startups to Watch".  

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