The rise of quick commerce in Indonesia

After gaining popularity in the US, Europe, and India, quick commerce is finally taking off in Indonesia. In the past six months, quick commerce startups Astro, Bananas, and Dropezy have all raised funding.

This is perhaps the next evolution of Indonesia’s burgeoning e-grocery space, which in turn is a subset of a US$97 billion retail grocery market. Investors including the likes of East Ventures, Global Founders Capital, and Forge Ventures are bullish.

“We firmly believe that quick commerce will be the game-changer in the consumer retail business,” says Adrian Li, founder and managing partner at AC Ventures. His VC firm backed Astro as he saw an increase in transaction frequency and average order value in the months since the startup was established.

In many ways, quick commerce players are aggregating the best parts of multiple models. Through their network of dark stores, they aim to be as omnipresent as minimarkets are in Indonesia, while offering a wider variety of goods (including fruits and vegetables) at healthier margins and much faster delivery times than other e-grocery companies.

But all of that requires a delicate balancing act, with an emphasis on operational excellence. While ecommerce giants are perhaps too busy with pursuing IPOs and profitability to meaningfully invest in this burgeoning space, it’s likely that more new contenders will pop up, and funding may ultimately make the difference.

Execution is key

As its name implies, quick commerce promises a delivery time of up to 15 minutes, faster than traditional ecommerce or e-groceries. This is made possible via a hyperlocal approach, underpinned by a network of dark stores located close to consumers’ homes.

Astro and Dropezy, for instance, both guarantee 15-minute deliveries in selected areas of Jakarta and its suburbs. Bananas is perhaps more ambitious, promising to bring orders to doorsteps in 10 minutes.

By leveraging a large network of dark stores, quick commerce will significantly improve inventory turnover across all layers up to households. This means purchases will become more frequent and parcels will be less bulky, AC Ventures’ Li tells Tech in Asia.

He explains that when compared to the current retailing model, quick commerce generates more productive sales and incurs more efficient costs. For example, dark stores utilize space better as the store design does not have to take into account customer visits.

“With focus on delivery service, quick commerce also expands the coverage area to customers within 2 to 3 kilometers, which then contributes to improved sales per fixed assets along with courier productivity,” Li adds.

That aside, these players operate similarly to their peers in the e-grocery and retail sectors. Mario Gaw, founder and CEO of Bananas, notes that the company works with farms, principals, and distributors to source inventory and sell them at retail prices, which is how it earns margins. While it offers free delivery in its introductory phase, Bananas plans to charge a flat delivery fee to cover logistics costs.

Striking the right balance

Focus on Tier 1 cities