Astro and a metrics-driven plan for growing beyond Jakarta Metro
Published on April 18, 2023
As e-commerce in Indonesia continues to grow rapidly, companies like Lazada and Astro are taking different approaches to achieve sustainability and profitability. While Lazada has been focusing on long-term impact and sustainable growth, Astro is addressing the market’s new demand for the convenience of quick commerce while simultaneously optimizing its promotion spending to find true product-market fit.
The industry is facing challenges to achieve profitability and higher attention to economic metrics, but companies are finding ways to adapt and grow. Expansion to other areas outside of Jakarta is a goal for companies like Astro, but the focus on achieving positive contribution margins remains a priority.
Lazada Indonesia’s ex-COO Jacopo Mor and Astro’s Co-founder and CEO Vincent Tjendra recently joined Leighton Cosseboom of AC Ventures on an episode of Indonesia Digital Deconstructed to unpack their views on the industry. Below are a few key takeaways from the conversation.
Astro CEO and ex-Lazada COO on proving and sustaining e-commerce models
The transcript below has been condensed and edited for focus and clarity.
Leighton: How has the e-commerce landscape changed in Indonesia over the past decade, and what are the current challenges in the industry?
Jacopo: The priority of Lazada has changed significantly, and of course, the way that customers want to purchase. When I came to Indonesia, the app was not a priority, and the majority of the business was not happening through mobile. The priority for the company itself was gaining market share. The challenges are completely different now, in terms of the macroeconomy, due to what is happening around the world. But for sure, there is high pressure for a sustainable business, for profitability, and for higher attention to the main key success metrics.
Vincent: Back then at Tokopedia, where I used to work, it was a matter of how we can grow as fast as possible. At Astro, we have always been very mindful of how we can improve our profitability. We’ve been talking about take rates and how we improve our revenue and profit since 2019. Indeed, there may be a bit more pressure and more push to become profitable faster during this climate, but actually, as an institution, the committee has been looking into it since 2019.
Leighton: What is the plan for Astro to expand outside of Jakarta, and is there any timeline for when we can expect to see it in other areas?
Vincent: We are working as fast and hard as possible to make sure that our unit economics deliver a positive contribution margin, which is what we’re aiming for this year. Once we achieve that with our existing stores, it will allow us to expand more because the existing stores will generate cash flow for us to finance the next stores.
Leighton: Jacopo, can you tell us about how Lazada’s parent company Alibaba views Indonesian e-commerce in the long run?
Jacopo: The mindset of Alibaba and Lazada has always been to think deeply about the actions they are taking and to consider the long-term impact. This mindset has been shared and brought to all the other companies of the group. I think this has been the main reason why Lazada has always shown quite sustainable and shown solid growth across the decades, especially in Indonesia.
Leighton: Vincent, what is Astro doing differently from other players in the e-grocery space, and how exactly are you making quick-commerce a sustainable model?
Vincent: We offer customers a wide selection of products, which can be delivered safely as a combination of chilled, frozen, and dry goods. Customers can order all their desired products in a single checkout experience and have them delivered to their homes within 15 minutes.
Unlike some of our peers who’ve been forced to close down, our company strives to reduce and optimize promotion spending at every turn. Whenever we find ways to improve the user experience, we actually reduce our promotion budget to accurately assess whether we’re hitting a true product-market fit.
Get the full episode for free on Spotify, Apple, and Google.
