Indonesian Marketplace App Ula Raises $20 Mn In Series A Round Led By Quona Capital And B Capital Group

The company plans to transform Indonesia's $250 billion retail industry

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Indonesia-based e-commerce startup Ula, which plans to transform traditional retail and empowering small retailers through technology, announced on Thursday to have raised $20 million in a Series A funding round led by Quona Capital and B Capital Group.

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Quona Capital was also a key participant in Ula’s seed round. Existing investors Lightspeed India and Sequoia Capital India also participated in the Series A round.

The new funding allows the company to grow its geographical footprint, expand its suite of products and services and move into new categories.

“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, their small scale, limited upstream product availability, high prices, poor service, and limited working capital makes them the most vulnerable segment of the retail value chain. These problems are not restricted to one category – fast-moving consumer goods (FMCG) and other consumables, apparel, electronics, etc. all encounter common problems. 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,” said Nipun Mehra, co-founder, and chief executive officer, Ula.

Since launching in January 2020 with teams in Indonesia, India, and Singapore, the company has said to have grown to serve over 20,000 stores, primarily in East Java. The platform provides micro retailers with simple-to-use tools and technology that digitizes their supply chain, inventory, and working capital management.

“Quona Capital has been deeply engaged with us over the past year and has observed our business growth firsthand. We have benefited from their sector expertise in emerging economies, in addition to the deep expertise of our other existing investors,” Mehra added.

The small retailers operate with an 8-10 per cent cost advantage over modern retailers, often employ family members and operate out of their homes. They also have deep, personalized insights into consumer behavior in their location that can be invaluable for a business. However, inefficient product sourcing, limited access to affordable technology solutions, and the high cost of available working capital hurt their ability to compete and grow.

“Ula is transforming the entire retail value chain with its retailer-first approach, empowering the small retailer by offering them a wide range of products, competitive prices, and doorstep delivery,” explained Ganesh Rengaswamy, managing partner, Quona Capital.

In order to support those small retailers, Ula completely owns the core customer experience. It provides a full basket of products via an e-commerce application and doorstep service that allows them to carry lesser inventory, thereby freeing up capital to buy a wider assortment of products. They no longer need to close their stores to visit crowded markets, where they would otherwise stand in long lines—instead, they can order their daily stock needs in a few clicks. Some of its customers have seen a daily profit increase of 15 per cent, merely from keeping their store open for longer hours, with fewer out of stock items and competitive sourcing prices.

“Ula’s comprehensive approach and rapid product innovation is enabled by a truly distinctive team that combines deep experiences from e-commerce and fintech,” added Dan Bertoli, venture partner, Quona Capital.

The establishment’s current focus is on ‘daily needs’ consumer goods, items considered to be FMCG and staples, like rice—essential items for every Indonesian household. During the pandemic, supporting these stores has become more important than ever, especially as many of them have faced uncertainty over their income. Ula’s impact has been seen in multiple aspects—with safe distancing measures in place, getting delivery at the store relieves the need to travel to crowded local markets for sourcing. Store owners’ income is protected as well by eliminating the need for them to step away from their stores. Additionally, the opportunity to order less but more frequently allows them to better manage their cash flow, with customers ordering on average 6-7 times a month.

"Indonesia's retail spend is expected to surpass $0.5 trillion 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,” shared Kabir Narang, founding general partner, B Capital Group. “We are excited to partner with Ula’s exceptional founders and management team in driving this innovation and empowering millions of businesses."

In many emerging markets, traditional in-store retail accounts for nearly 80 per cent of the total retail market. In Indonesia, it is estimated to be a $200-$250 billion market, growing over $15 billion a year.