How Ula simplifies the supply chain for Indonesia’s MSMEs
Published on August 9, 2022
There are more than 64 million MSMEs in Indonesia, providing employment to around 97% of the total workforce. Through the eyes of small business enablers like Ula, while the pandemic has accelerated the nation’s digital economy, it has also compounded the digital divide.
As such, there is an urgent need for Indonesia’s micro-enterprises to harness digital tools that create new opportunities for them, while also helping to build a sustainable economy. This is where Ula is helping modernize small businesses and local neighborhood retailers — think street kiosks (warungs in Indonesian). The startup does this by leveraging novel tech.
Last year, as the country’s top B2B e-commerce marketplace, Ula raised a whopping US$87 million in series B funding co-led by Prosus Ventures, Tencent, and B-Capital. The trio was joined by Amazon founder Jeff Bezos’s Bezos Expeditions, and leading Southeast Asian funds AC Ventures, Northstar Group, and Citius. Existing investors Lightspeed India, Sequoia Capital India, Quona Capital, and Alter Global also threw their hats into the round.
With a mission to boldly transform Indonesia’s landscape of ubiquitous mom-and-pop shops, Ula has raised a total of US$117.5 million in less than two years.
On a recent episode of Indonesia Digital Deconstructed by AC Ventures, Ula founder and CEO Nipun Mehra spoke with the investment firm’s founder and managing partner Adrian Li about the country’s vast (mostly informal) MSME sector. The founder discussed how tech has the power to disrupt and modernize the very backbone of Indonesia’s economy.
Ula simplifies the MSME supply chain in Indonesia
Speaking on the topic of retail modernization worldwide, Nipun explained that in the US, when retail was modernized in its first wave, large outlets like Target and Walmart were born. In China, it happened in the presence of the internet but smartphones hadn’t yet arrived, so players like Alibaba emerged.
In Indonesia, retail hasn’t undergone any comparable waves of modernization yet, but things are starting to percolate. According to Nipun, it’s happening now, in the presence of smartphones. In this sense, Indonesia has skipped the Target- and Alibaba-style evolutions that took place in developed markets.
Nipun elaborated, “The average Indonesian, and by that, I mean locals living in Tier-2 and Tier-3 markets, have very unique income profiles. A lot of them are living off of daily wages. As such, their purchasing capacitors are unique too – mostly small baskets and high frequencies. Hence, there is a real need to develop a model that serves this untapped demographic.”
This is where warungs come into play. As it stands, one of the main pain points for these millions of local neighborhood stores is Indonesia’s inefficient supply chain at large. How do they source high-selling products without losing money to intermediaries? How do they address black box questions related to consistent supply, pricing, and more? This is where Ula is stepping up and helping micro-entrepreneurs source products more easily and efficiently.
Enjoy the full episode on Spotify, Google, and Apple.
See also: The rise of social commerce in rural Indonesia