Complicated supply chains mean that consumers in Tier 1 and Tier 2 Indonesian cities often pay more for goods than their peers in major cities, such as Jakarta. KitaBelic is on a mission to change that, with its own distribution network and direct-to-consumer social commerce app. Today, the startup announced that it has raised $20 million in new funding led by Glade Brook Capital Partners, along with the participation of recurring investors AC Ventures and GoVentures, and new lender InnoVen Capital.
australiabusinessblog.com covered KitaBeli’s latest raise, a $10 million Series A, in March 2021.
The funding will be used to expand to more small towns in Indonesia and to add new product categories such as beauty products, personal care and mother and baby products.
The startup says it has grown more than 10x in six months and claims to be the largest direct-to-consumer social commerce platform in Indonesia. It now has more than 400 employees.
KitaBeli says Indonesia’s Tier 2 and Tier 3 cities make up a $100 billion market, with 200 million consumers representing more than 50% of Indonesia’s gross domestic product. But they face more challenges 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 problems because customers do not know who is selling a product.
To accommodate this, KitaBeli has opened a warehouse in every city where it operates, allowing for same-day and next-day deliveries. It purchases products directly from brands and clients, resulting in savings that can then be passed on to their customers. Finally, the trust issue is addressed through the social commerce model, in which users gather people from their social networks for group purchases.
Co-founder and CEO Prateek Chaturvedi tells australiabusinessblog.com 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 was underdeveloped in Tier 2 cities compared to Tier 1 cities.
“Digning deeper, we found that users in these smaller cities 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 experimented with social features in his app, such as having agents, called Mitras, in every neighborhood, referrals, and group purchases.
Fast-moving consumer goods were chosen as KitaBeli’s first category because they are often purchased. “Being direct to consumers, we want users to develop a habit of buying from us,” Chaturvedi said.
To purchase on KitaBeli, users open the app, place an order and receive rewards for sharing these purchases with their friends. KitaBeli’s shoppers use it to buy staples such as rice, oil, sugar, milk and personal care products. Chaturvedi said that generally each user spends $5 to $10 on each order, and each group usually consists of 5 to 25 people.
KitaBeli can scale its distribution network by opening small warehouses in each city instead of having large distribution centers. “Because we mainly focus on FMCG, we are able to churn our stock very quickly,” said Chaturvedi. “Our system works to minimize the stock days for each item. By reducing the amount of inventory in the warehouse, we can also reduce the space required, which lowers costs.”