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News - September 23, 2021

Indonesian e-grocery startup raises $2.5m to deliver orders in 20 minutes

Chandni Chainani and Nitesh Chellaram – who have experience in the ecommerce and groceries space, respectively – were troubled by the inefficiencies of on-demand services in Indonesia.

“We often got messages from drivers or couriers that inform us that the product we ordered is not available,” Chellaram told Tech in Asia.

That drove the duo to launch on-demand service Dropezy in 2019. The company began by offering grocery products, which households in Indonesia usually buy daily.

At the beginning, the team experimented by buying products from supermarkets and delivering these to customers. The next year, they tried directly sourcing products from farmers – none of these models were up to their expectations.

“We realized that average Indonesian customers don’t need the product to be organic or have high quality. But the product must be delivered as soon as they need them or in fresh condition,” Chellaram explained.

Now, Dropezy plans to develop what it calls “dark stores,” a network of micro-fulfillment hubs across Jakarta that allows the company to deliver products to customers in 20 minutes. The concept is similar to cloud kitchens in the food delivery sector, where customers’ orders will be fulfilled by the nearest stores.

In order to fuel the new business model, Dropezy has raised a US$2.5 million pre-series A funding round led by Forge Ventures, a venture capital firm that was launched in partnership with Singapore-based Alto Partners. Tekton Ventures, Next Billion Ventures, Nordstar, and founders of Indonesian startups Kopi Kenangan and BukuKas also participated in the round.

Aims to make every dark store profitable

Compared to the small warehouses or distribution hubs that other e-grocery platforms or supply chain players use, dark stores will be smaller in size. This allows them to be placed near neighborhood areas.

Dropezy will rent out locations and place its own operations team in these spaces, so the company can control the entire process and keep its 20-minute delivery promise.

Chellaram wants these dark stores to be profitable. He admitted that this idea was inspired by coffee chain Kopi Kenangan, which also insisted on making each of its outlets profitable.

“Some companies may allow one outlet to register losses as long as there are other outlets that are profitable, so they can subsidize each other. However, I think it’s a wrong mindset. If there is an outlet that’s making a loss, we have to check the cause and turn it into a profitable business,” Chellaram explained.

Dropezy will open its first dark store next month, but the company refused to reveal exactly how many it wants to build in Jakarta overall. Chellaram only shared that it plans to open more than a dozen stores located in “strategic locations.”

If the playbook works in Jakarta, the company will expand the strategy to Greater Jakarta by next year, and then scale it to other big cities in Indonesia.

For now, eggs are the most popular product on the Dropezy platform, but Chellaram said he plans to add more non-grocery products in the future, such as over-the-counter medicines and smartphone chargers.

The company currently has 100 employees, with most of them on the operations team, such as drivers and packers.

Source: https://www.techinasia.com/dropezy-pre-series-a-funding