Digital Grocery

8 months ago . 5 min read
Marella Putri
Writer at Forbes Indonesia
Digital Grocery
Ivan Arie, cofounder and CEO of TaniHub Group. Photo courtesy of TaniHub.

by Ulisari Eslita

As the coronavirus pandemic hit millions of people worldwide, nations enforce work-from-home and physical distancing campaigns. Consequently, some industrial sectors are toiling to stay afloat. Still, some others have accelerated growth, mainly those who comprise the online technology. For the past few months, online grocery shopping has accelerated the trend globally as shoppers have sought ways to avoid or limit their visit to stores. According to consulting firm Bain & Company, at the height of the pandemic, online grocery sales increased as much as fivefold in the US. In Indonesia, online grocery platform TaniHub booked a 30% increase in monthly demand after the large-scale social distancing applied in many cities.

“We see a meaningful change in a way people do grocery shopping, from offline to online channel. The traction also increases significantly on a weekly basis at the TaniHub platform,” says Ivan Arie, cofounder and CEO of TaniHub Group. He adds the growth is also seen in the number of farmers that supply goods to the platform.

The monthly increase was attributed to sales growth in the business-to-consumer segment, which grew more than 100% every month since March. The demand was mainly contributed by the increase in herbal products, which are believed to boost immunity, as well as assorted types of groceries. Moreover, in March and April, there were more than 100,000 new users downloaded the TaniHub platform. TaniHub’s business-to-business segment stays stable. While many hotels and restaurants are closed down due to the coronavirus pandemic, the decrease of sales in the sector is offset by the increase of sales in the modern trade and food industry. Ivan adds that this year TaniHub aims to gain 300% of sales growth.

Currently, TaniHub’s operation has covered five locations, namely Jabodetabek, Bandung, Yogyakarta, Surabaya, and Bali. During the outbreak, the firm ensures the smooth delivery of each order to its customers as the government guarantees logistic services that carry food supplies. Recently, Emil Dardak, vice governor of East Java, endorsed TaniHub to absorb and supply all the agricultural products within the province. The governor also asks TaniHub to distribute agricultural products outside the region.

To secure the supply chain, Ivan has prepared scenarios so that TaniHub is still able to serve its customers. First, farmers deliver grocery products to TaniHub’s warehouses using the usual transportation. “When they find troubles for shipment, we will pick up the goods. We apply the same scenario daily to secure the supply chain. But in regards of demand increase, we expect the pick up will be more frequent,” says Ivan.

In April, TaniHub Group raised a new investment of $17 million to expand its services to 100,000 farmers by 2021. The new investment, which is an extension round of its Series A funding, brings the total equity funding raised by the company to $29 million since 2016. Singapore-based Openspace Ventures led the round with Intudo Ventures, Golden Gate Ventures, UOB Venture Management, Vertex Ventures, BRI Ventures, and Tenaya Capital.

“With the new investment, we aim to strengthen our market position to be the market leader in the agritech industry. Enhancing our coverage to Sumatera, Kalimantan, and Sulawesi for the next 1-2 years, while adjusting on the impact of the virus outbreak,” says Ivan. He adds that some of the funds will be allocated for automation solutions in TaniHub’s new processing and packing center, as well as investing in people.

Furthermore, Ivan expects the new investment will enable the firm to gain equitable distribution of agricultural products all over the country in regards to managing a stable commodity price.

After raising Series A fund last year, TaniHub Group recorded a rapid business growth of more than 300%. More than 30,000 small-scale farmers joined the TaniHub Group ecosystem. The TaniHub ecommerce platform connects farmers with more than 5,000 B2B customers, from small and medium-sized businesses (SMEs), hotels, restaurants, catering to the food processing industry, and more than 100,000 individuals customers.

Forward-looking, Ivan is aiming to export fresh produce starting next year. “Basically, we did export our produce since 2018. We shipped fruits and vegetables to Singapore, Malaysia, UAE, India, and some European countries. Last year, we decided to stop exporting as we realize the domestic market is still huge,” says Ivan.

Since its establishment in mid-2016, TaniHub Group has transformed the supply-chain of fresh products in Indonesia by connecting farmers with a variety of customers through an integrated platform. Besides ecommerce, the platform also provides access to logistics for agricultural products and funding for farmers.

The lending platform of Tani Group, Tani Fund, connects farmers with investors. As many are aware, farmers in Indonesia always find difficulties in getting financing from banks. Founded in mid-2017, TaniFund focuses on financing farmers and ranchers with profit-sharing benefits. To date, TaniFund has a total of 2,300 lenders, which have funded 1,500 farmers. Of the total lenders, only five are institutional, while the rest are individuals.

TaniFund has disbursed a total of Rp116.35 billion of loans, with total outstanding loans of Rp 30 billion and an average yield of 14.5% per annum.

Ivan claims that TaniFund business remains sound because of the high demand for the farmers’ fresh produce. This year, TaniFund continues to set a target of $12 million, as the business performance is expected to remain stable and even improved.

“Actually, the pandemic impact is not too significant to TaniFund. It’s just that lenders are more careful in lending. Because they assume all P2P models are the same. We try to convince lenders that it is still safe to invest on our platform, since our business is end-to-end, from farmers to end consumers,” says Ivan.

Written By
Marella Putri
Writer at Forbes Indonesia