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Ula targets micro-retailers in Indonesia and will use the current funding to expand its product portfolio and enter new product categories.
Ula, an Indonesian B2B ecommerce marketplace for small retailers, has raised US$20 million in its Series A funding round led by Quona Capital and B Capital Group, the startup announced in a press release yesterday.
Existing investors Lightspeed India and Sequoia Capital India also participated in the current funding round, the statement said. The startup had previously raised $10.5 million in June last year. The latest financing, therefore, brings Ula’s total capital haul to $30.5 million.
Ula will use the latest funding to grow its expand its geographical presence, grow its suite of products and services, and move into new product categories, the statement noted. The startup currently focuses on fast moving consumer goods (FMCG) and essential items.
The problem Ula is trying to solve
Founded in 2019, Ula launched its platform in January 2020, and currently has offices in Indonesia, India, and Singapore. The startup’s platform provides micro-retailers with tools and technologies to help them digitalize their supply chain, inventory, and working capital management.
Emerging economies like Indonesia have highly fragmented retail sectors that are mostly dominated by mom-and-pop stores. Traditional brick-and-mortar retail stores account for nearly 80% of the total retail market in such economies, the statement noted. For example, grocery retail sales in Indonesia reached $115 billion in 2019, with traditional grocery retailers accounting for 82% of sales.
These small traditional retail stores are often run by family members and many of them operate out of their homes, the statement noted. These small retailers have deep, personalized insights into their customers’ behavior.
According to the press release, small retailers have an operating cost advantage of 8-10% over modern retailers. However, inefficient product sourcing, limited access to technology solutions, and working capital crunch affects their ability to compete and grow, the startup claims.
Ula Co-founder and CEO Nipun Mehra noted in the statement, “Small stores are deeply integrated into the economic and cultural fabric of Indonesia. They are micro-entrepreneurs with highly cost efficient operations compared to their modern retail counterparts.”
However, these retailers are crippled by limited product availability, high prices, and poor service. And these problems are common across product catergories like FMCG, apparels, and electronics, Mehra continued.
“Ula’s founders came together because we wanted to solve these pain points in the industry. We take a retailer-first approach to address these pain points,” he said.
Using Ula’s ecommerce platform, small retailers can order their inventory online and get doorstep delivery. The startup claims that this helps free up retailers’ working capital since they have the option to purchase lower quantities with greater frequency. This extra working capital can then be utilized by the retailers to purchase a wider assortment of products, thus expanding their offerings.
According to the statement, a key benefit to retailers is being able to keep their stores open more consistently. Since the retailers get doorstep delivery service, they have no need to close their shops and travel to markets to source products. The company says that some of Ula’s customers have witnessed a 15% increase in daily profit due to longer operating hours, fewer out-of-stock items, and competitive sourcing prices.
The startup currently serves over 20,000 retail stores, primarily in East Java.
Quona Capital Managing Partner Ganesh Rengaswamy said, “Ula is transforming the entire retail value chain with its retailer-first approach, empowering the small retailers by offering them a wide range of products, competitive prices and doorstep delivery.”
According to B Capital Group’s Founding General Partner Kabir Narang, “Indonesia’s retail spend is expected to surpass [$500 billion] over the next four years driven by millions of small retail stores.”
“Ula is at the forefront of transforming Indonesia’s SME supply chain by democratizing access to merchandise and driving financial inclusion through technology,” Narang added.
Images courtesy of Ula