Ecommerce site Alfacart drops third-party sellers, returns to in-store product range

Alfamart mini markets are ubiquitous in Indonesia. Photo credit: Sayamindu Dasgupta.

Alfacart, the ecommerce endeavor of major Indonesian mini market and convenience store chain Alfamart, is changing its business model. As a result, Alfacart’s entire C-level management will resign. This was confirmed in a statement by Alfamart and a separate statement by Alfacart CEO Catherine Hindra Sutjahyo and CMO Haryo Suryo Putro last week.

The change also led to a significant cut in team size, two directly affected employees have told Tech in Asia, but this has not been confirmed by Alfamart nor Alfacart’s leadership.

Dropping the marketplace

What’s certain is that Alfacart will no longer operate as a marketplace after the change. It will only sell products already available in Alfamart’s own product assortment. That’s mainly groceries and everyday household items. Currently, Alfacart offers a wide range of products, including smartphones and motorbikes, via third-party sellers. After the change, these merchants will no longer sell on the platform.

Hans Prawira, president director of Alfamart, said in a statement that the change of business model intends to “strengthen synergies with Alfamart.”

Mini markets work well in Indonesia. Growth of such retail locations is outpacing that of larger stores, according to rating agency Fitch. The format benefits from better access to consumers and focusing on products that drive consumers back for frequent purchases, the report found.

Indonesia Stock Exchange-listed Alfamart operates more than 12,000 stores (link in Indonesian) across Indonesia and the Philippines. Alfamart and Salim Group-owned Indomaret are Indonesia’s joint market leaders.

C-level to resign, possibly half the staff laid off

The new Alfacart concept will be based on Alfamart’s strength: daily needs products that are bought regularly.

“After discussing with our shareholders, we decided that Alfacart will continue to operate and serve people as a digital extension of the Alfamart group,” Sutjahyo told Tech in Asia.

In that discussion, Sutjahyo and Putro also confirmed that the executive leadership of Alfacart would resign from the operational side of the business, due to a “difference in vision.”

Catherine Hindra Sutjahyo, CEO of Alfacart, will resign after the business model change. The company was called Alfaonline when she took charge in 2016. Photo credit: Alfacart.

However, the leadership will still support several of the group’s ongoing strategic projects, Sutjahyo and Putro said. The restructuring is not based on the Alfacart team’s individual performance, but rather a consequence of a business decision, Alfamart emphasized in its statement.

The restructuring also affects a significant part of the non-management team, several Alfacart employees told Tech in Asia last week.

Course correction after one year