Going rural: The playbook for Indonesia’s B2B ecommerce startups

IN FOCUS

In today’s newsletter, we look at:

• Why startups helping Indonesia’s warungs digitalize should focus on rural areas
• What Google’s investment in India’s Flipkart says about tech investment today
• How Lazada is helping its retrenched employees

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Hi there,

My neighborhood has a number of mama shops – small mom and pop stores that sell groceries and daily necessities.

Frankly, I hardly patronize them. If I need something quick, I usually visit a convenience store like 7-Eleven or Cheers instead, even though the latter sells items at higher prices. I’m not alone, which is why the number of such mama shops in Singapore is dwindling.

Warungs are the equivalent of mama shops in Indonesia, and over the last decade, many startups have tried to digitalize their operations.

However, the going has been tough. As my colleague Jofie notes in this week’s featured story, several startups like Ula and GoToko – the joint venture between GoTo and Unilever – have given up and left the market, while those that remain are still not profitable.

Players that focus on rural areas have tended to do better – fast-moving consumer goods brands, which are already established in urban areas, are more likely to partner with these startups in rural areas where they have yet to penetrate.

Even then, education among small-business owners remains a challenge, and outreach to warung owners often involve on-site events in villages to be effective.

Jofie’s story is a sobering reminder of just how hard it is to be an entrepreneur and how funding alone isn’t enough to turn what might seem like a great idea on paper into a successful reality.

This week’s Hot Take looks at the other end of the scale, analyzing US tech giant Google’s investment in Flipkart, India’s largest ecommerce platform. I take a closer look at what this deal says about big tech investments in today’s world.

— Simon

THE BIG STORY

Digitalizing Indonesia’s warungs is hard, but focus on rural areas helps

THE HOT TAKE

NEWS YOU SHOULD KNOW

FYI