Ula: making inventory reliable for Indonesia’s small retailers
Published on August 11, 2022
If you’ve never visited Indonesia, here’s the rub: a warung is a type of small, family-owned business — a compact retail shop, eatery, or café. Often, they take the form of open-air food stalls. Warungs are all but essential to daily life in the world’s largest archipelago. For replenishing inventory, they largely rely on personal relationships with middlemen in the supply chain.
Indonesia’s informal warung economy currently comprises 168 million people who transact US$252 billion each year. As the country continues its accelerated path toward economic modernity, digitization is crucial to addressing core problems faced by these little neighborhood stores and vendors.
Ula was born in 2019. The team came together when former Flipkart India executive Nipun Mehra, along with ex-Amazon operator Alan Wong, P&G Indonesia alumni Derry Sakti, and former Lazada and aCommerce executive Riky Tenggara, began exploring new ways to bring the nation’s offline warungs into the digital fold.
Ula is a wholesale marketplace that is modernizing Indonesia’s millions of warungs by providing inventory and delivery services, as well as financing. With AC Ventures as an early investor, the startup recently raised US$87 million in its series B funding round co-led by Tencent, Prosus Ventures, and B Capital, with participation from Bezos Expeditions, the investment firm of Amazon founder Jeff Bezos, and others. With a mission to transform the archipelago’s landscape of 63 million MSMEs, Ula has raised a total of US$117.5 million in less than two years.
In a recent episode of Indonesia Digital Deconstructed, hosted by Adrian Li of AC Ventures, Ula founder and CEO Nipun Mehra highlighted inventory as arguably the biggest challenge faced by warungs in the country. He unpacked how tech-enabled, reliable platforms can help address the gap.
Making retail inventory more reliable with a keen focus on the customer
According to Nipun, Ula places an acute focus on the customer – the small store owner on the village corner.
After research and closely examining the target customer’s core problems, the startup came to realize that in the current supply chain status quo (a highly fragmented and disorganized paradigm), there is just never any sort of fulfillment guarantee for warungs.
For example: If a store owner in Bandung needs 100 items on a given day, there is no promise as to if and when he will get those things, despite having the selling capacity and high demand.
Commonly, it is assumed that price is the biggest supply chain problem faced by warung owners. But after deeper probing, Ula came to understand that for small stores in Indonesia, price is most definitely not the only challenge, and certainly not the biggest.
Nipun believes that having access to a reliable supply chain that consistently fills orders on a day-to-day basis is the biggest hurdle for local small retailers.
“Imagine this. Let’s say you run a store and a customer comes looking for a certain product. You don’t have it in stock, and the customer leaves disappointed and moves on to the next store. If this happens more than once, word-of-mouth spreads and your footfall drops,” explained Nipun. “Now, the reason why you did not have said product in the first place was not that you didn’t go looking for it. It was because you were not provided with the item when you needed it.”
This is where Ula comes in as a tech-enabled intermediary, providing a wide assortment of products to warungs across Indonesia.
Nipun added, “As long as the pricing is not wildly off, service trumps price, at least in the case of neighborhood stores in the archipelago. We understand this and probably that’s the reason why our customers keep coming back to us – for reliable inventory.”
Enjoy the full episode on Spotify, Google, and Apple.
See also: The rise of social commerce in rural Indonesia