Ula cuts jobs, exits FMCG distribution for ‘long-term economic sustainability’

Ula co-founder and CEO Nipun Mehra / Photo credit: Ula

Indonesia-based Ula announced that it is laying off employees and will “transition out” of its inventory-led FMCG distribution business. While its efforts “bore fruit initially” even during the pandemic, it has had to refocus towards “long-term economic sustainability,” the B2B ecommerce firm said in a statement.

“The scale and complexity of an inventory-led distribution model requires a level of investment that has proved challenging especially amidst a sluggish digital economy,” Ula said.

The job cuts affected a “large number”of staff, but the company did not give an exact figure. While unable to share specific details, Ula also said it will redirect efforts towards ventures that scale better with “higher margins and greater capital efficiency.”

In 2022, Ula had logged US$121 million in revenue, marking an over 6x increase compared to 2021, according to VentureCap Insights (VCI), which tracks regulatory filings in Singapore.

The firm’s earnings before interest and taxes, meanwhile, widened by over 2x to negative US$43 million. Ula also conducted layoffs in end-2022, which affected 23% of its workforce.

The company was founded in 2020 by Nipun Mehra, a Flipkart and Amazon alumnus, along with three other co-founders. Apart from its B2B ecommerce marketplace Sobat Ula, the company has two other business units: Teman Ula, which focuses on social commerce, and Titik Ula, which lets users rent out unused space in their homes and businesses as an Ula pick-up point.

Ula, which primarily targets mom and pop shops called warungs, also began offering financing options to its users in late 2021.

Indonesia’s warung digitalization space has enabled brands to reach mass consumers in and out of top-tier cities, attracting tech giants and startups.

Ecommerce unicorn Bukalapak is a notable early mover in the space with its Mitra Bukalapak offering, though growth has slowed in recent quarters.

Tokopedia has also launched a competing service called Mitra Tokopedia, though the company has deprioritized what it called a “non-core” offering that “did not represent the most efficient use of capital and personnel.”

Ecommerce enabler Sirclo has also entered the space following its Warung Pintar acquisition, but Ula’s closest competitor is perhaps GudangAda.

For 2021, GudangAda posted a 9x increase in revenue, but losses widened to over 5x its entire revenue.

Ula has raised US$140.6 million in disclosed funding from investors like Peak XV, Lightspeed Venture Partners, and Bezos Expeditions.