While FMCG (fast-moving consumer goods) distribution in Tier 1 and 2 cities across Indonesia has seen tremendous growth over the past decade due to large-scale infrastructural improvements, consumers in Tier 3 and tier 4 villages have traditionally been left out, and this has led to a large disparity in economic growth opportunities between these two segments of the Indonesian population. Even though more than 80% of Indonesians still reside in tier 3 cities and tier 4 villages across the archipelago, access to essential consumer goods and services is still extremely inefficient due to a sub-optimal supply chain.
To provide greater access to these areas, we are seeing a rise in new distribution models to help create a more efficient ecosystem. Models that we’re excited about are the hub-and-spoke partnership model which provides local entrepreneurs the opportunity to leverage their network to create a more streamlined distribution infrastructure and the group-buying aggregation model which helps remove the need for antiquated and fragmented layers of distribution. Today, we’re excited to announce our investment in Dagangan, a pioneer of the two aforementioned models in Tier 3 and tier 4 villages across Indonesia.
Dagangan, an Indonesian word for “trading,” was founded in 2019 to create the largest hyperlocal social commerce distribution platform in rural Indonesia. They identify key stakeholders in the ecosystem and empower them with the help of access, technology, and education. They provide warungs (mom and pop shops) and end-consumers with cheaper access to a wider range of FMCG products from frozen foods to everyday groceries, empower local producers by giving them more distribution channels to sell their high-quality local products, and enable local entrepreneurs to leverage their network to build a sustainable local distribution infrastructure.
We’ve known founders Ryan Manafe and Wilson Yanaprasetya for the better part of the past two years, and have been impressed with the progress they have made in villages across Central and Eastern Java. They both share a burning passion for creating sustainable growth in these areas, and their efforts have resulted in tremendous impact for various stakeholders in these communities. They have increased sales of partnered warungs by over 100%, assisted in distributing more than 25 local products to other areas, and created over 20 distribution hubs in Tier 3 cities and tier-4 villages to facilitate savings in logistic costs of over 80%.
Dagangan currently has a presence in over 5,000 villages across 50 regencies in Java, has over 20,000 active users on their platform, and manages over 3,000 SKUs and they are just getting started. With this new round of funding, they are looking to expand their reach and continue on their mission of building long-lasting value in villages and communities across Indonesia. They will be looking to expand their coverage to the entire island of Java, as well as enter into Sumatra and Kalimantan. Additionally, they will be partnering with more local producers to expand their distribution reach, while also expanding into other product categories such as frozen food and home appliances.
As more and more of these local communities gain access to a more efficient distribution ecosystem, Dagangan aims to become a one-stop digital service solution provider for all their household needs, and we are extremely excited to embark on this journey with Ryan, Wilson, and the Dagangan team!
To read the press release for Dagangan's Series A funding, click here.