Complicated supply chains mean that consumers in Indonesia’s Tier 1 and Tier 2 cities often pay more for goods than their counterparts in major cities like Jakarta. KitaBeli is on a mission to change that with its own distribution network and direct-to-consumer social commerce app. Today, the startup announced it has raised $20 million in new funding led by Glade Brook Capital Partners along with participation from returning investors AC Ventures and GoVentures, and new financier InnoVen Capital.
TechCrunch reported KitaBeli’s latest raise, a $10 million Series A, in March 2021.
The funding will be used to expand into other small towns in Indonesia and add new product categories such as beauty, personal care, and maternal and baby products.
The startup says it has grown more than 10-fold in six months and claims to be the largest direct-to-consumer social commerce platform in Indonesia. It now has more than 400 employees.
According to KitaBeli, Indonesia’s Tier 2 and Tier 3 cities make up a $100 billion market with 200 million consumers who account for more than 50% of Indonesia’s gross domestic product. But they face greater challenges when ordering online than their counterparts in Tier 1 cities like Jakarta. For example, long delivery times, higher prices due to complicated supply chains, and trust issues because customers don’t know who is selling a product.
To address these, KitaBeli has opened a warehouse in each city where it operates, allowing for same-day and next-day deliveries. It sources products directly from brands and principals, resulting in savings that can then be passed on to their customers. Finally, the trust issue is addressed by the social commerce model, where users bring people together from their social networks for group purchases.
Co-founder and CEO Prateek Chaturvedi tells TechCrunch that when he relocated 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 was underdeveloped in Tier 2 cities compared to Tier 1 cities.
“Upon further investigation, we found that users in these smaller towns are shopping online for the first time and are encountering trust issues with these faceless services and need help and guidance on how to use the app,” he said. As a result, KitaBeli experimented with social features in its app, e.g. B. with agents named Mitras in each neighborhood, recommendations and group purchases.
Fast-moving consumer goods were selected as KitaBeli’s first category because they are bought frequently. “Because we are targeting consumers directly, we want users to make a habit of shopping with us,” Chaturvedi said.
To shop at KitaBeli, users open the app, place an order, and then receive incentives when they share those purchases with their friends. KitaBeli’s customers use it to buy basic groceries such as rice, oil, sugar, milk and personal care items. According to Chaturvedi, each user generally spends $5 to $10 on each order, and each group usually consists of 5 to 25 people.
KitaBeli is able to increase its distribution network by opening small warehouses in each city instead of having large distribution centers. “Because we are primarily focused on FMCG, we can change our inventory very quickly,” Chaturvedi said. “Our system works to minimize inventory days for each item. By reducing inventory levels, we can also reduce footprint, which reduces costs.”