Dagangan Pockets Series A Funding of 163.7 Billion Rupiah
Social commerce startup Dagangan announced that it has received series A funding of $11.5 million or equivalent to 163.7 billion Rupiah. The round was led by Monk’s Hill Ventures with involvement from K3 Ventures, MMS Group, Plug and Play and Spiral Ventures.
To DailySocial.id, Co-Founder & CEO of Dagangan Ryan Manafe revealed, the company recorded record revenue in mid-2020, the trend continues to this day.
It is suspected that there were various restrictions during the pandemic, making the option of fulfilling daily needs online more and more in demand.
Unlike people who live in urban areas, people in rural areas have their own challenges in getting their daily needs fulfilled online.
These conditions are exacerbated by accessibility problems that persist in rural areas, where retailers have to bear the cost of inefficient logistics for round trips to the city.
“Trading is trying to overcome these problems and is now on the right track,” said Ryan. He continued, “Our vision is to enable 100 million people in underserved rural areas to have easy access to quality daily necessities at affordable prices.”
The fresh funds obtained are planned to be used to develop private-label local products such as frozen foods, groceries, and household appliances. In addition they will continue product development and add new features including paylater.
Access to logistics services will also be sharpened, while talent acquisition efforts and partnership expansion will be enhanced. Merchandise will expand its expansion in tier 3-4 cities and villages in Java, Sumatra, and Kalimantan.
Business Challenges Faced by the Company
Until now, there are still some challenges faced by the company when it started to reach tier 3-4 cities and villages. Among them is user acquisition with low technology adaptation.
Education is needed so that they are accustomed to using applications and making purchases online. The next effort was to intensify user acquisition activities offline.
“But indirectly we are helped by social distancing awareness and the willingness of users to learn and adapt. In the future we plan to reduce the portion of offline acquisitions by gradually switching to digital acquisitions,” said Ryan.
Another challenge that is still being faced is the dependence on local approaches. Therefore, companies need to build strong local teams in each area and establish partnerships.
Another problem is the limited logistics infrastructure. With limited infrastructure in rural areas, both suppliers and consumers face the challenge of selling and buying products.
Even as e-commerce services increase, the magnitude of logistics costs is difficult to avoid. Dagangan implements Hub-and-Spoke to help solve this problem.
Developing Private Label Products
One of the focuses of this year’s Dagangan business that they want to develop is private-label products. There are many local products with great potential, but they are usually only available for the region or focused on tourists.
Some of these products are then exported, but are not widely available even on the island of Java. For people in big cities, they may be able to easily buy these products through e-commerce services, but rural markets remain underserved due to expensive logistics costs.
Various social commerce startups focus on working on markets in rural areas. The concept offered is considered more relevant, because in general social commerce also empowers the surrounding community as part of the business, for example becoming a reseller.
Another startup that plays in the vertical is Super. Having just received series B funding of IDR 405 billion in April 2021, they have operated in 17 cities in East Java.
The company utilizes a hyperlocal logistics platform to distribute consumer goods to agents in less than 24 hours after ordering.
Super works with thousands of agents to distribute thousands to millions of necessities every month. Most of these agents are women.