KitaBeli is a social commerce platform that offers FMCG products via ‘group buying.’ The app allows consumers to enjoy discounted prices through a gamified and social shopping experience. The Indonesia-based startup recently closed a US$20 million Series A funding round led by prominent growth equity firm Glade Brook Capital Partners, with participation from existing backer AC Ventures.
KitaBeli has grown more than 10x over the last six months. The firm is now the largest direct-to-consumer social commerce platform in the nation.
According to a recent report, social commerce in Indonesia is set to grow by around 55% in 2022, with estimates predicting its value will surpass US$8.6 billion. From there, the sector is expected to continue on a massive trajectory, recording a CAGR of nearly 48% through 2028.
Studies also suggest that in rural parts of Indonesia, social commerce is becoming particularly popular, as traditional e-commerce adoption is still low due to factors like expensive shipping costs and lower internet penetration.
In smaller towns, most shoppers start their online retail journeys on social platforms. This could be through a WhatsApp group, for example, or a Facebook Marketplace, where they can easily reach out to sellers living nearby, who offer hyperlocal product selections.
On a recent episode of Indo Tekno Podcast, KitaBeli founder and CEO Prateek Chaturvedi spoke with AC Ventures’ senior advisor and venture partner Alan Hellawell about the current state and future of social commerce in Indonesia.
KitaBeli on the nuances of social commerce in rural Indonesia
Consumers in Tier-2 and Tier-3 Indonesian cities (which is nearly all cities outside of the Jakarta Metro area) often end up paying more for goods bought online than their peers in urban hubs.
This is mainly due to complicated supply chain processes across the country. With its own distribution network and a direct-to-consumer social commerce model, KitaBeli aims to change the status quo.
When asked how e-shoppers in these cities behave on social commerce platforms, compared to those in big cities, Prateek said that there are three major differences:
1. Level of trust
“In urban markets, people have been exposed to the internet for more than a decade. They have successfully completed thousands of online shopping transactions and do not need a lot of convincing. But this is not yet the case in rural markets,” explained the entrepreneur.
Prateek recalled the first time he went to Malong in the Philippines and tried to convince people to buy things online. For the most part, locals outright declined because they were scared they’d get fake items or the company would simply run away with their money.
“These are the exact same problems I faced in India around 2010 and in Tier-2 and Tier-3 cities of Indonesia from 2018 to 2019,” he added.
2. Logistics and delivery
According to Prateek, logistics and delivery are easy to manage in Tier-1 cities because most of the suppliers are located in the same city. Once you get out into the remote and rural areas of Indonesia, however, the shipping and delivery process becomes more difficult to handle. This is why it’s critical for companies like KitaBeli to establish their own distribution networks and facilities in or around each city they target.
3. Ease of use
Lastly, the final puzzle piece is the user interface. By and large, online shoppers in big cities are okay with a slightly more complicated user experience (UX), claims Prateek. They are able to handle surfing through dense apps. However, new e-commerce users tend to get confused. As such, Prateek believes the UX has to be modified with simplicity in mind.
KitaBeli is also addressing these challenges by educating the collective market of Indonesia’s smaller cities via simple word-of-mouth. The startup has also opened its own warehouses in every city it serves. This allows the team to run same-day, next-day, and two-day deliveries at much lower costs than other e-commerce players.
The founder added, “We have built a large network of community leaders who are nano influencers on their blocks, and have a lot of sway over the 5,200 houses in their neighborhood.”
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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.