In Indonesia, 80% of retail spending occurs at traditional mom-pop shops. These storefronts have a hard time trying to clear their shelves in a world where e-commerce has affected every aspect of life especially when the pandemic and subsequent lockdowns made the situation nightmarish for these small family-run shops (micro retailers) also called “warungs” in Indonesia.
Unfortunately, when the global pandemic hit it was these small retail stores that suffered the most This has been the case across most developing nations where a significant portion of retail sales is done offline.
“Small stores are deeply integrated into the economic and cultural fabric of Indonesia,” said Nipun Mehra, co-founder, and CEO of Ula. “[These entrepreneurs’] small scale, limited, upstream, product availability, high prices, poor service, and limited working capital make them the most vulnerable segment of the retail value chain.”
Ula, is a technology-based company trying to revolutionize how small and micro retailers do business with its e-commerce platform. Ula is based in Jakarta but also has offices in India’s Bangalore, and Singapore. They believe that technology can play a major role in solving retail market issues by connecting end-consumers with businesses efficiently.
“Our core mission to support traditional retailers is especially relevant during the pandemic,” said Shakti, Ula’s co-founder and Chief Commercial Officer.
Ula was founded in January 2020 just three months before COVID-19 shocked the globe. The company’s goal is to facilitate the requirements of small businesses through technical solutions so that they can sustain themselves in the rapidly changing market scenario. It is currently in the early-stage venture stage and has Nipun Mehra, ex-Amazon and ex-Flipkart, as its CEO and cofounder. Other co-founders include Alan Wong (currently the CTO), Derry Sakti (CCO), and Riky Tenggara (formerly worked with Lazada and aCommerce).
“We are deliberately strengthening our presence, selection, and services in rural areas and hard-to-reach neighborhoods, helping local retailers accelerate the recovery of their businesses.” said Sakti, Ula’s co-founder and chief commercial officer.
Nipun Mehra’s Mission and the humble beginnings of Ula -Untung Lancar Aman (profit smoothly and safely)
Born in Delhi, Nipun Mehra graduated from Stanford University, after completing undergrad at the University of Delhi. He received an MBA from the Wharton School of the University of Pennsylvania in 2010. Mehra also holds an MS in computer from Stanford (2004) and BE from Netaji Subhash Institute of Technology (2002). He then worked with companies like Amazon, BCG, Flipkart, and Sequoia.
Before joining Amazon at the beginning of his professional career, Mehra started out as the CEO of VidyaJyoti Technologies, a web-based business that offered education services to college students . He spent 4 years in one of the largest e-commerce companies, Amazon, and reached the position of manager of engineering and product. In 2009 he decided to join BCG (Boston Consultant Group) as a consultant.
In 2012 he was working with Flipkart.com as a senior director of retail before shifting to Sequoia as an investor in 2014 after which he became the chief product and strategy officer at Pine Labs. Since 2013, when he was with Flipkart, Mehra wanted to figure out a way to get low-priced goods into the hands of small shop-owners. The owners who go the extra mile to replenish their inventory by shelling out more than they can afford but cannot guarantee that each of their items would sell. He tried to find a way to sell low-priced items online without paying for shipping. Joining Pine Labs, one of the largest offline payment companies, gave Nipun Mehra an opportunity to explore potential emerging markets for e-commerce like Indonesia.
After giving it some serious thought, he flew to Indonesia from Delhi, India, in 2019 to understand how small businesses functioned. He traveled across the country for about 5 months, conversing with small shop owners everywhere with the help of a translator. Nipun was in awe at the determination that these small shop owners had but wanted to help them establish buying power that bigger businesses possessed.
Much like India, much of the Indonesian retail market is unorganized. In the food and vegetable category, for instance, there are lots of farmers who sell to agents, who then sell to markets. From these markets, the inventory goes to small wholesalers, and so on. There are lots of players in the chain.
Nipun met Alan Wong, a computer engineer who did his BASc from the University of Waterloo and spent most of his career as a part of the engineering team of Amazon and Booking.com.
The initial Ula team also includes Derry Sakti, ex-P&G who oversaw the company’s Indonesian Central Java, East Java, and east Indonesian business. Both Wong and Sakti were more than interested in figuring out a way to increase the buying power of small retailers without hurting the traditional shop system. The pandemic came as a shock to the barely 3-month-old company. But their team had to transition to fully remote work to ensure the safety of executives.
Like other tech companies, it was a hard time for Ula that they started to doubt its efficacy. But with distributed teams, over-communication, and the adaptive nature of their working model, Ula managed to rise against the odds. Now, Ula’s multinational team includes talents from Indonesia, Canada, India, the US, and Europe.
What Ula Offers to Its Clients?
Ula offers three distinct and useful approaches to improve small business margins and overall growth. In the following, we shall discuss what each of these approaches represents.
- Sobat Ula
This is a B2B marketplace created by Ula, especially for small retailers. Upon registering for Sobat Ula, one can find numerous assorted items and products at competitive prices (no minimum order) which are delivered conveniently. A marketplace is a great option for those shop owners who have a hard time getting good deals when they are looking to replenish the store’s inventory.
- Teman Ula
In addition to Ula’s B2B marketplace, there is also a community-based selling program where entrepreneurs could add their communities and help them earn additional income with the help of Teman Ula that is meant to shape the future of retail.
- Titik Ula
Ula also offers those who own unused space whether they are shop owners or normal citizens to turn it into Ula’s pick-up point and earn cash. All you have to do is register for the Titik Ula program to start with the procedure.
“A typical [small traditional] store has an 8 to 10 percent cost advantage over modern retailers given that they are usually tax-exempt, employ their own family and operate out of their homes,” said Ula’s cofounder Derry Sakti “Yet they are not competitive because of a lack of access to wholesalers and have limited working capital.”
Things that make Sobat Ula, the company’s most popular service at Ula are:
- Convenient delivery
As a registered Sobat Ula, shop owners do not have to wait for their orders a long time because it is shipped quickly and delivered to the store safely. They sell and deliver FMCG, fresh food & staples, and apparel.
- Range of products
In order to meet the demand of various types of small and micro retailers, the B2B marketplace of Ula ensures that they have a wide variety of selections when it comes to products available for buying directly from Ula. They keep their own inventory updated and replenished to keep the client’s business running. This way it is much more convenient to buy every single product required from a one-stop shop.
- Distinguished prices
Ula is also known for its competitive pricing which adds to savings for small business owners to whom it means a lot. Slashed prices for products collected from the best suppliers are another reason why many traditional shops are turning into Sobat Ula.
- Flexible payments
Being an online service, there are several payment options available for users of the Ula app like cash on delivery, bank transfers, and Alfamart. There is also an option to “pay later” in case someone does not have cash available upfront to pay for their items bought. Easy payment options make the whole experience with Ula pleasant.
- Quick registration
The Ula app is available on the Google play store. Once installed, sign-up requires a valid phone number. A one-time password is sent to the number for verification. After the number has been verified, shop owners can create and complete profiles and use their account as registered Sobat Ula.
“Reflecting on the past year since launching Ula in Indonesia, it has been an immensely rewarding journey to digitize Indonesia’s offline SMEs, bringing the world of online e-commerce to their fingertips.”- Alan Wong
Market Growth, Competitors, and Partners
Indonesia is a booming retail market that includes both big and small-sized retail businesses worth approximately $300 billion and it is expected to grow by US$37.3 billion over the next four years. But surprisingly, more than 70% of this retail market functions through small offline stores.
“The mom-and-pop stores aren’t going to go away and get replaced by a Target or Walmart in emerging economies,” said Mehra. “But here the small retailer is still the most vulnerable. They are not like a Walmart with lots of buying muscle. These are the little guys.”
The multinational team of Ula consists of 300 members, across 3 countries. Steadily the business has grown to around 70,000 stores and almost 6,000 SKUs, according to the Ula website. After a year and a half, the Jakarta-based company’s total benchmark valuation reached $640 million by 5th October 2021. The last valuation came out at $550 million after Ula wrapped out its series B funding round. According to an estimate, the company has been generating between $5 million and $25 million per year.
"Indonesia's retail spend is expected to surpass $0.5 trillion over the next 4 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,” said Kabir Narang, founding general partner at B Capital Group.
Some of the direct competitors of Ula are:
- GudangAda: The $135.9 million worth Indonesian company led by Steven Sang is an online B2B marketplace that works similar to Ula to connect manufacturers and retailers. The company raised an undisclosed amount during its venture round led by Falcon Edge Capital.
- Anchanto: Singapore headquartered Anchanto is known for developing SaaS-based platforms to provide product information, management, inventory, and warehouse solutions for different brands and retailers. The company generates $85,000 per annum and has MDI ventures as an existing investor.
- Dropee: Based in Western Malaysia, the eProcurement B2B platform provides product sourcing, communication, etc. to retailers, wholesalers, and brands. With a team of 25 members, Dropee generates about $3.5 million each year as revenue. It has recently raised $1.3 million from Y Combinator in the seed round.
$117.5 Million and 3 Funding Rounds
Though it has hardly been two years since Ula was established, the company has successfully made its impact on several small retailers and their businesses in and around Jakarta. Ula secured three funding rounds including a seed round which paved the way towards mainstream attention from multinational companies, venture funds, and angel investors around the globe.
“COVID-19 as a catalyst for fully remote work was a fundamental shift for all companies. No one could have predicted the change and unique challenges it brought. For us at Ula, we’ve adapted and have come out stronger. While we still value and miss in-person collaboration, we have managed to leverage the best of both worlds now.”- Alan Wong, CTO of Ula
Perhaps the most significant Ula investor of all is Amazon ex-CEO Jeff Bezos himself who made his interest known in Ula’s series B funding round. Indonesia and other southeast Asian countries represent a great opportunity for Amazon where the giant is almost non-existent or maintains a limited presence.
According to Oddup’s expert background research the current health score given to Ula is about 75.91. This score serves as an estimate for any company's capacity and future performance using numerous factors. Following is a detailed overview of each of Ula’s funding rounds is as follows:
Seed - $10.5 Million
The Indonesian wholesale marketplace received around $10.5 million from several investors during the seed funding round led by Sequoia India. It was announced back on June 10, 2020. Other participating investors include Lightspeed India, Alter Global, Sinar Mas-backed SMDV, and several other angel investors like Patrick Walujo. The funds raised were utilized in expanding Ula’s influence across Java. The product range was also expanded after successfully raising funds in the seed round. Ula introduced apparel and electronics categories.
“With more and more Indonesian SMEs becoming open to adopting technology, platforms like Ula are an easy, affordable and scalable solution to help these retailers streamline their businesses,” Abheek Anand, Sequoia Capital Singapore managing director said.
Series A - $20 Million
On January 28, 2021, Ula announced a series A funding round which was joined by 5 investors and raised $20 million. It was led by B Capital Group founded by Raj Ganguly and Eduardo Severin and Quona Capital. The other existing investors during the series A round of Ula were Lightspeed India and Sequoia Capital India. Funds raised helped the company to increase its geographical footprint, adding to the suite of products and services. New investors were impressed with Ula’s growth that reached 10x its initial estimate since launch.
Series B - $87 Million
During the series B funding round, Ula shocked both competitors and partners alike when Jeff Bezos, billionaire businessman and ex-CEO of Amazon joined the list of investors through his Bezos Expedition on October 2, 2021. A total of $87 million were raised through 11 interested participants including the existing investors namely: B Capital Group. The Series B round was led by Tencent and Prosus Ventures. Post-funding round, it was evident that investors see Indonesian tech companies, especially those which focus on the retail sector, as a worthwhile opportunity.
“With more and more Indonesian SMEs becoming open to adopting technology, platforms like Ula are an easy, affordable and scalable solution to help these retailers streamline their businesses,” Derry Sakti said.
What’s next for Ula?
Ula intends to help warungs as well as their owners who are small-time retailers For this, Ula has simple tools and technology to offer so that businesses can operate efficiently in the post-COVID era.
Now with sufficient funding, valuation, status, and annual revenue, the co-founders are looking to expand all over the globe with their one-of-a-kind app for easy B2B interactions, to empower small retail owners to do big things.
Starting with the Indonesian retail market, Ula is slowly bringing tech innovation to the forefront of all businesses in the country. The first thing for Ula to do right now is:
- Expanding its team by hiring global talents
- Building innovative technical solutions that solve major pain points affecting small retailers
- Improving their supply chain to reach urban as well as rural clients.
"We launched in 2020, with a single-minded mission to empower small, neighborhood retailers with technology to increase their income. We take a long-term approach to solve the underlying problems of traditional retailers by investing in technology, supply chain, and data-enabled credit offering," said Nipun Mehra, Ula's co-founder, and CEO.