Original Post by Deal Street Asia
Localisation is critical for the growth of consumer-oriented sectors in Indonesia, where each city presents a different set of opportunities and challenges, according to panelists at DEALSTREETASIA’s Indonesia PE-VC Summit 2019 held in Jakarta on January 24.
“Localisation is a big word. At Grab, we put localisation as one of the highest principals. We need to be hyperlocal. We really need to understand customer needs and what problems need to be solved at the local level. We also put people incharge that understand the ecosystem,” said Ridzki Kramadibrata, Managing Director, Grab Indonesia,.
The Singapore-headquartered ride hailing major is currently available in 222 cities across Indonesia, offering a wide range of Grab services like GrabFood, GrabExpress and GrabFresh.
Adding to the theme, budget hotel chain RedDoorz founder & CEO Amit Saberwal said, the perception that southeast Asia is a single region is not true as each city within the region behaves differently. RedDoorz is currently present in 23 cities in Indonesia, according to its website.
“The way we look at it is that 70 per cent of the play book can be played across the region, but 30 per cent of it is super hyper local. Jakarta and other Indonesian cities don’t behave the same way. So to think from the outside that southeast Asia is a single region, it’s not true. Metro Manila and Cebu, for example, are completely different markets,” he said.
“Hyper-localisation for that 30 per cent is critical, a lot of business intelligence is required on ground,” added Saberwal.
Bringing in the investors’ point of view, Eight Roads Ventures managing partner Raj Dugar said, the level of localisation will end up differentiating the winners from those that are not able to scale up.
“There are very different sub-markets within Indonesia, Jakarta might be different from some of the other cities. What demographics are you catering to, are you catering to the younger population, they might be more digitally savvy but don’t have spending power, and then there might be a part of the population that may not be as digitally savvy but has spending power,” said Dugar.
“How do you find your target segment, the product market fit becomes incredibly important. While you are trying to figure all these things out, it becomes very easy to burn a lot of money in customer acquisition,” he added.
Healthcare-focused investor Quadria Capital, which has backed Indonesian firm SOHO, stressed on the need to rope in local partners to grow.
“Indonesia is a focus market for us with its huge opportunity. Southeast Asian markets are generally different when it comes to healthcare but there are common challenges of lack of infrastructure, technology and access to specialised doctors. There is a hyperlocalisation element which is very true and very important for us to be working with strong local partners, we don’t assume to know these markets better than local partners,” said Ewan Davis, Director, South East Asia, Quadria Capital.
His sentiments were echoed by Kramadibrata, who said that Grab had also partnered with local companies in Indonesia to help build a startup ecosystem. Grab has partnered with Indonesian e-wallet firm Ovo to offer financial services.
Talking about the possibility of having too many ‘copycat’ startups that try to ape business models from developed markets like China, Adrian Li, Founding & Managing Partner, Convergence Ventures said that there was nothing wrong with copying.
“I agree that a lot of it is localisation and offline execution. With venture investing and with all the risks that are entailed with it, if you can be smart about it, essentially minimise your innovation risk perhaps reduce it to market and timing risk that’s a smart thing to do, then you can get more done with less capital,” Li said.