How tech is reshaping Indonesia’s B2B food supply chain
Published on August 1, 2022
In countries like Indonesia, the B2B food supply chain is rife with systemic problems that need to be solved. As more tech startups with novel business models join the fray, the nation’s 33 million local farmers are seeing a domino effect for the better, namely in the form of multiplied earnings and less wastage from operations.
But because the market is such a highly fragmented one, the industry’s challenges are not easily solved. Currently, the B2B food supply chain in the archipelago is so disorganized — locked into a tradition of four or more middlemen between buyers and sellers — that most farmers live in poverty.
This is where startups like EdenFarm aim to deliver a real impact. The company is running a unique marketplace that helps Indonesian farmers sell directly to restaurants, shops, and grocery outlets of all kinds across the nation.
In a recent episode of Indonesia Digital Deconstructed, hosted by Adrian Li of AC Ventures, EdenFarm’s founder and CEO David Gunawan discussed how his B2B food supply chain company is sorting out big, fat, hairy problems in the country’s farming industry.
Using tech to disrupt Indonesia’s B2B food supply chain
The transcript below has been condensed and edited for focus and clarity.
Adrian: So David, I understand you have a lot of entrepreneurial experience and you’ve also taught international business in academia. Can you share more about your background?
David: I have launched multiple businesses in the past and seen many of them fail. However, I have zero regrets because I believe that I have learned so much from those mistakes and I am now able to leverage that practical experience at EdenFarm. Meanwhile, having the opportunity to teach international business also helped me hone a theoretical mindset that I can apply toward problem-solving with EdenFarm in real life.
Adrian: Can you share an important lesson you learned from your experiences before EdenFarm?
David: Right before starting EdenFarm, I was in a logistics business where we handled last mile delivery for F&B and other sectors. That opportunity exposed me to the local scene. I learned that people here in Indonesia uphold relationships above almost everything else. So, if you know how to develop the right connections, you can survive.
Adrian: You and your co-founders have actually been farmers here. Can you share how that helps you with EdenFarm today?
David: For me and my co-founders, being in the farming industry, which is arguably one of the most traditional sectors in Indonesia, expedited our product-market fit research process. Back then, we did everything – from producing to processing, as well as selling, invoicing, mingling with other farmers, and speaking with industry stakeholders. This gave us a lot of clarity on understanding the minute details, like what kind of person would be the best to sell products to a certain demographic and so on.
Adrian: What were some of the biggest obstacles you faced during your initial scale-up with EdenFarm?
David: One of the most fundamental challenges that we faced early on was that not every farmer in Indonesia had a basic education, and it would have been extremely difficult to teach them to scale a company. In the end, we actually came to understand that we had to convince the farmers to agree to follow our precise instructions in return for us solving their problem of consistent demand. Fortunately for us, they happily oblige because, with EdenFarm, they get more buyers and more sales.
Adrian: What drives you and your co-founders to dedicate your lives to building a solution for these farmers?
David: First, the honest business goal: this is a profitable model that works. We make money by helping farmers sell to restaurants and cafes. Next, the cause that actually keeps us going: our goal is to feed the nation.
We truly believe that if farmers are well-connected to the demand side, we can build an efficient food supply chain in Indonesia. This will allow everybody to have equal access to food. I will go out on a limb and say that this kind of model on a global level can even address the issue of world hunger.
Adrian: What are some specific ways that EdenFarm is making the B2B food supply chain more efficient?
David: We connect small businesses and farmers across the country, ensuring a smooth demand-driven supply chain. B2B food demands can be quite predictable owing to the similarities in the characteristics of restaurants and cafes. Small and medium-sized F&B businesses often order the same sets of products and we leverage this consistency to provide farmers with a sellable list of ingredients, along with a tentative quantity target.
Adrian: While some other startups in Indonesia have gone into B2C, what has made you stick to your B2B guns?
David: Quite simply, B2B is where the biggest problems need to be solved. By focusing on the nation’s underserved farmers, EdenFarm can help bolster their livelihoods, and help them provide better futures for their families. B2B is also less crowded with competitors, simply due to its high barrier to entry.
Yes, it’s true that B2B is less shiny and it takes a lot of digging to build an understanding of the economics. It is vital to understand what variables trigger what results. For example, if you understand the soil conditions of Indonesia, you can turn what is normally a seasonal harvest into a weekly harvest. This not only increases the farmer’s income but also fixes the inconsistency in supply and demand. That’s why we do it.
So, in the end, a lot of groundwork, extensive research, and speaking with real people to understand real pain points is crucial for any B2B business to succeed, especially in a fragmented market like Indonesia.