- Indonesian startups struggle to digitalize urban warungs.
- Dagangan and Super find success in underserved rural areas.
- Unique strategies and generational changes among warung owners may sustain these businesses.
Startups struggle to compete in urban jungles
Many Indonesian startups have attempted to digitalize mom-and-pop stores, known as warungs, over the past decade.
However, several players have exited the market, while those remaining focus on B2B e-commerce in rural areas.
Startups in urban areas face challenges competing against traditional distributors, who have long dominated the market, and the entrenched habits of warung owners.
Country roads, take me home
Startups like Dagangan and Super have found success by focusing on underserved rural areas, where warungs are not covered by traditional distributors.
These startups partner directly with principal brands, securing cheaper prices and promotional support. Super has also developed private-label products and partners with local producers in East Java.
Penetrating rural areas requires unique strategies, such as offline roadshows and building efficient supply chain systems.
Dagangan and Super have achieved positive EBITDA in most of their hub operations and are on track to break even.
Despite the challenges, the potential for warung digitalization remains, and a generational change among warung owners may be the game-changer these startups need to sustain their businesses.
To read the original article: https://www.techinasia.com/digitalizing-indonesias-mom-pop-stores-hard-focus-rural-areas-helps
