Tokopedia, Lazada, Shopie and other firms created an e-commerce market in Indonesia over the past decade, making it possible for consumers to shop online in the island nation. But as True in other Asian markets, The smallest retailers and mom-and-pop stores in the Southeast Asian country still face challenges in sourcing inventory and working capital, and continue to rely on an old supply chain network.
Nipun Mehra, a former Flipkart executive in India and Derry Shakti, who oversees the operations of consumer goods giant P&G in Indonesia, began exploring opportunities to address it in 2019.
“Like India, the majority of the Indonesian retail market is unorganized. For example, in the food and vegetable category, there are a lot of farmers who sell to agents, who then sell to mandis (markets). From these mandis, the inventory goes to small wholesalers, and so on. There are a lot of players in the series, ”said Mehra, whose previous allusions include working at Sequoia Capital India in an interview with TechCrunch.
Mehra and shakti Ula co-founded in January of 2020. With Eula, they are trying to streamline this sourcing and supply chain for small retailers to have a one-stop shop for everyone.
Despite the epidemic, Eula The Indonesian market was built last year and today serves more than 20,000 shops. And naturally, investors have taken note.
On Thursday, Ula announced that it had raised $ 20 million in a Series A financing round. The round was led by existing investors Quona Capital and B Capital Group. Other current investors, including Sequoia Capital India and Lightspeed – who funded Ula’s $ 10.5 million seed round in June last year – have also participated in Series A.
In an interview, Kavona Capital’s managing partner Ganesh Rengaswamy said, “If you look at the entire retail value chain, especially for essentials, FMCG, staples and fresh production, then it becomes quite different.” “While the market has moved forward in terms of being able to demand and supply more efficiently. Eula is trying to recreate the retail distribution ecosystem with an important technology overlay. It is connecting some of the biggest players in supply to smaller retailers and consumers. “
Additionally, Eula is providing these micro retailers, who usually work from small shops expanding their homes with working capital, to wait for their customers to pay to buy a new batch of inventory. Do not have to. (This is a serious challenge that micro-retailers face in Asian markets. These stores have strong bonds with their customers, so often they sell them items without paying.
“Offering unpaid and credit to retailers so that they can make their cashflow an important component of modern digital commerce,” said Rengaswamy. For Quona, which has supported many e-commerce and fintech startups in Asia, Ula checks both boxes.
Mehra said that last year was largely about expanding the Ula team and building the technology stack. The startup now plans to deploy capital to reach more small retailers and expand within the nation.
Indonesia will remain the focus market of Ula. The opportunity in the area itself is huge. “Capital expenditure is expected to cross $ 0.5 trillion in the next 4 years,” Kabir Narang, founding general partner of B Capital Group, said in a statement. According to some estimates, traditional retail stores account for about 80% of the total retail market.
Ula currently operates in FMCG and food and vegetable locations, but it intends to broaden its offerings to include apparel and eventually electronics.
Some more points from my notes:
- Like many other startups in Asia, Ula relies heavily on foot and street sales people to promote the term about its offerings and to start new shops. Mehra said that some retailers are very happy with the services and see its price and then tell their friends about it. This is a lesson he credited on the Indian business-to-business e-commerce platform Udayan Co-founder Amod Malaviya, Vaibhav Gupta and Sujeet Kumar, from whom he worked in Flipkart back in the day. Udayan’s co-founders have supported Ula.
- Electronics is a category that is very popular among B2C and B2B e-commerce platforms. Mehra said that he has always known that a startup can expand into electronics, so he has previously chosen to focus on other categories that test supply chain networks.
- Indonesia comprises more than 17,000 islands, but only a handful of islands, including Java and Sumatra, contribute to GDP.
- I asked Kengona’s Rengswamy to draw parallels between the e-commerce and payment markets of India and Indonesia. He said that India has encroached more with frictionless payments. But on the other hand, it has created the ability to solve additional challenges for startups in Indonesia.