Amazon billionaire founder Jeff Bezos made his first investment in a Southeast Asian e-commerce startup last month.
But it’s not in one of the region’s billion dollar unicorns. It’s in a mom-and-pop boutique start-up that’s been around for less than two years.
And its founders? Some of the former employees of Bezos.
“It was incredibly lucky and a great fan boy moment for me,” Ula CEO Nipun Mehra, 40, told CNBC Make It.
Company inspired by Bezos
Indonesian e-commerce startup Ula is a wholesale marketplace aimed at modernizing the country’s millions of mom-and-pop kiosks, or warungs, by providing inventory and delivery services as well as financing.
Founded in January 2020 by CEO Mehra, the company has thrived on a pandemic-induced digital switchover, raising more than $ 117 million in funding so far from big names like Tencent and Lightspeed Venture Partners. .
One of them is Bezos, whose family office Bezos Expeditions invested an undisclosed sum after one of the startup’s early backers told them about Ula.
Although Mehra never met the founding billionaire, he worked under him as a software engineer at Amazon’s headquarters in Seattle before joining e-commerce giant Flipkart in his native India.
Like Bezos, Mehra aspired to become an entrepreneur. But it wasn’t until years later, while working as an investor at Sequoia India, that he saw an opportunity to adapt the traditional e-commerce model to a new market: small food kiosks in Indonesia.
“The typical Amazon, Flipkart – or here in Southeast Asia, we have Shopee, Lazada, Tokopedia and so on – has been more on the non-food side. Food is a very different way of doing things,” Mehra said.
“Usually in emerging economies their income profile is such that they have to buy frequently and in small baskets. As soon as you step into this dynamic, the traditional way of doing e-commerce doesn’t work. -, a basket of four, five dollars at someone’s house and do it profitably … so you have to find other ways to do it. “
Adapting e-commerce for Indonesia
Indonesia, with its large population and fast growing economy, is seen as a huge opportunity for entrepreneurs and investors.
At the heart of this are the millions of neighborhood kiosks across the country, which sell fast-moving consumer goods, like packaged food and drinks, as well as household items.
They are an integral part of society, especially in small towns and provinces outside the capital Jakarta, accounting for nearly three-quarters (72%) of the country’s $ 47 billion in consumer goods sales.
Yet many still rely on traditional means of restocking by closing their stores when they visit wholesalers to stock up on merchandise.
“They’re basically run by one or two people, who act like consumers. They own the business; they have to source things for themselves to sell,” Make Abheek Anand, CEO of Sequoia India, told CNBC. , one of Ula’s investors. This.
“For them, tapping into offline supply chains is actually very inefficient. They have to go to the local market, spend hours figuring out what to buy, where to buy it. Overall, they are very limited by the physical footprint that they can access them, ”he added.
Rely on Amazon’s expertise
Mehra wanted to simplify this process by creating a business-to-business platform that would allow merchants to order inventory competitively and have it delivered to their store for a small fee.
So, he appealed to his contacts in the e-commerce space to help him achieve the vision.
His former Amazon colleague Alan Wong, Riky Tenggara of Lazada and Procter & Gamble executive Derry Sakti completed the founding team.
“We learned all of these things on Amazon, we learned all of these things in business school. How can we fit some of it into this little smartphone and help them both make more money and save money. more money? ”Mehra said.
Refueling during the pandemic
The company got off to a steady start. But a few months after its launch in January 2020, the pandemic struck, making the demand for services like Ula more urgent.
The closures have made it more difficult for traders to source from wholesalers, even as customer demand for basic necessities increased. This prompted many family owned shops to cram onto the platform.
“The need of the market has just changed completely. During the lockdown, your first priority is to get your food, it’s to get the things you eat,” Mehra said.
The founders reacted quickly, integrating tens of thousands of exhibitors and expanding their team from 15 to 400 people in Indonesia, Singapore and India. This rapid growth has caught the attention of investors, helping them to attract their first round of investment within six months.
“The most exciting addition to the company is Jeff Bezos, who has invested, which is obviously a nice validation for the company. But there are a number of other really smart people who have joined us in the process. road, ”said Sequoia India’s Anand.
An ambitious growth agenda
In October 2021, Ula closed her Series B round, raising $ 87 million. Mehra said the money will be used to expand her existing market offering, as well as launch a service called buy now, pay later to provide traders with small loans.
Over the next 18 months, the CEO hopes to quadruple the number of traders Ula works with from 70,000 today to 300,000. He also hopes to help traders grow into new categories such as clothing and clothing. technology, with the ultimate goal of doubling their income.