Complex supply chains mean that consumers in Tier 1 and Tier 2 Indonesian cities often end up paying more for goods than their peers in major cities like Jakarta. KitaBeli aims to change that with its own distribution network and consumer-facing social commerce application. The startup today announced that it has raised $20 million in new funding led by Glade Brook Capital Partners, as well as returning investors AC Ventures and GoVentures and new sponsor InnoVen Capital.
TechCrunch talked about KitaBeli’s latest raise. Serie A for $10 millionin March 2021
The funding will be used to expand its presence in small towns in Indonesia and add new product categories such as cosmetics, personal care products, and maternity and baby products.
The startup says it has grown more than 10x in six months and claims to be the largest consumer-facing social commerce platform in Indonesia. Now it employs more than 400 employees.
Kitabeli says Indonesia’s Tier 2 and Tier 3 cities make up a $100 billion market, with 200 million consumers that contribute more than 50% of Indonesia’s gross domestic product. But they face more challenges when ordering online compared to their peers in Tier 1 cities like Jakarta. For example, long delivery times, higher prices due to complex supply chains, and trust issues as customers don’t know who is selling the product.
To solve this problem, KitaBeli has opened warehouses in every city it operates in, allowing same-day and next-day shipping. He purchases products directly from brands and executives, resulting in savings that can then be passed on to his customers. Finally, the issue of trust is addressed through the social commerce model, in which users gather people from their social networks for group purchases.
Co-founder and CEO Prateik Chaturvedi told TechCrunch that when he moved from India (where his previous startup GetFocus was acquired by Mokapos), he was struck by the differences and similarities between the Indian and Indonesian e-commerce markets. For example, e-commerce in Tier 2 cities was underdeveloped compared to Tier 1 cities.
“In digging deeper, we found that users in these small towns are buying online for the first time and they are facing trust issues with these faceless services and need help and guidance on how to use the app,” he said. As a result, KitaBeli has experimented with social features on its app, such as agents named Mitras in each area, referrals, and group purchases.
Consumer goods were chosen as the first category of KitaBeli because they are often bought. “Because we speak directly to consumers, we want users to develop the habit of buying from us,” Chaturvedi said.
To make a purchase on KitaBeli, users open the app, place an order, and then get rewarded for sharing those purchases with their friends. KitaBeli shoppers use it to purchase staples such as rice, butter, sugar, milk, and personal care items. Chaturvedi said that each user usually spends between $5 and $10 per order, and each group usually consists of 5-25 people.
KitaBeli can expand its distribution network by opening small warehouses in each city instead of large distribution centers. “Because we are focused primarily on FMCG, we can restock our inventory very quickly,” Chaturvedi said. “Our system works to minimize the number of inventory days for each item. By reducing the amount of inventory in the warehouse, we can also reduce the space required, which reduces costs.”
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