As of February 2022, at 68.9% social media penetration, the total number of active social app users in Indonesia was more than 191 million.
One thing is clear: because social media permeates every nook and cranny of Indonesian society, social commerce is something that no seller can afford to ignore. However, in an extremely diverse and fragmented market like Indonesia, it can be tricky to determine the proper target audience for a given brand, as well as the right business model for selling on social channels.
KitaBeli is a social commerce startup that offers FMCG products via group buying. The app lets consumers enjoy discounted prices via a gamified and social shopping experience. The Indonesia-based company recently closed a US$20 million series A funding round led by prominent growth equity firm Glade Brook Capital Partners, with participation from existing investor AC Ventures.
On a recent episode of Indo Tekno Podcast, hosted by AC Ventures’ special advisor and venture partner Alan Hellawell, KitaBeli founder and CEO Prateek Chaturvedi unpacked a few different types of social commerce and shared insights into which model is best suited for certain audiences.
A beginner’s guide: four basic models of social commerce
Prateek believes that KitaBeli is one of the few truly original social commerce platforms in Indonesia. To date, he owes the success of the company to the fact that it runs a D2C model for fast-moving consumer goods (FMCG) – a rarity in the market, with most other FMCG players veering hard toward B2B.
“We focus a lot on referrals,” said Prateek. “This helps us leverage our existing users’ and partners’ offline networks to grow, while also keeping the costs down.”
Offering advice to brands, Prateek believes it is crucial to understand all the different social commerce models before jumping on the bandwagon blindly. According to him, there are four basic models to consider.
The first is D2C. Under this model, the customer purchases directly from the seller – a popular example from developed markets for this could be China’s Pindoduo. With D2C, the platform is built in a way that (while completing the purchasing journey) the user gets encouraging pop-ups and notifications to refer a friend.
The second model, also quite popular in China, is community group buying. With it, there is one community leader who is responsible for collecting orders from a large group of people.
“Now, this community leader could be a mom-and-pop shop owner or someone who is slightly more famous in the neighborhood. In this case, the order is placed by the community leader on the application and the end-user may or may not know what application these products are coming from. So the long-term brand recall of the app is only with the community leader,” explained Prateek.
The third model can best be explained by looking at earlier versions of an Indian social commerce platform called Meesho, said Prateek. In this model, a startup creates a platform where a community leader buys a certain product from the app and then resells it at a higher price. This is also known as the piggyback model.
Last, but definitely not least, is live commerce. This model combines instant purchasing and audience participation via real-time chatting and reaction buttons on various social platforms.
According to Prateek, KitaBeli tries to borrow the best ingredients of all models and blends them together for a distinctly rural Indonesian audience.
He added, “We are mainly D2C but we have combined some elements of community buying to cater to the country’s unique Tier-2 and Tier-3 markets.”
Enjoy the full episode on Spotify, Google, and Indo Tekno Podcast.
See also: How Indonesia’s EdenFarm runs at near 0% food waste
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AC Ventures is a leading venture capital firm investing in early-stage startups focused on Southeast Asia. We are a generational partner to founders driving positive societal change and economic impact in Indonesia and beyond.