SEA startups nurturing the mom and baby care industry

In The Checkout this week, we look into startups selling mom and baby products and examine the contribution of Mitra Bukalapak to its parent firm. [Read from your browser]( The Checkout 🛒 Welcome to The Checkout! Delivered every Thursday via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and trends in ecommerce. If you’re not a subscriber, get access by [registering here](. Written by Budi Sutrisno Journalist Hello {NAME} I’m often surprised that my sisters don’t really use online resources or technology to help them raise their children. However, that is not the case for many digital-savvy parents in Indonesia and across Southeast Asia these days. The Covid-19 pandemic has opened up hidden potential within the parenting ecommerce industry. Funding to mom and baby care startups has been accelerating. Companies are rushing to meet the demand from parents in both products and parenting content. This new content-to-commerce strategy, as my colleague Jofie points out in this week’s Big Story, can be a game changer for vertical players like Orami in Indonesia to compete with the likes of Shopee or Tokopedia. Speaking of game changers, that might be the right way to describe Mitra Bukalapak, the unit that has contributed the most in terms of revenue to Indonesian ecommerce giant Bukalapak. For this week’s Hot Take, I examine the firm’s latest financial report to find out whether the numbers really reflect the whole picture. – Budi (Note: The Checkout will be on hiatus next week as we head off to a company offsite in Bali. See you the week after!) THE BIG STORY  [Baby boom: SEA's mom and baby care startups meld content with commerce]( These startups' community-centric approach banks on long-term customer loyalty. Can that fend off the ecommerce giants?  THE HOT TAKE Mitra Bukalapak remains strong, but profits are another matter Here’s what happened: - Bukalapak‘s revenue [grew 105%]( to 903 billion rupiah (US$60.7 million) in the second quarter of 2022 from a year ago. - The ecommerce firm’s online-to-offline arm, Mitra Bukalapak, contributed US$33.5 million in revenue, or 55% of the company’s top line, for Q2 2022. - However, small retailers and low-income groups are threatened by rising inflation, which could affect Bukalapak’s achievements. Here’s our take: Despite [initial skepticism]( after its launch in 2017, Mitra Bukalapak has proven resilient against Indonesia’s fast-moving consumer goods (FMCG) incumbents and fragmented retail supply chain. This is now the third straight quarter in which the O2O business was Bukalapak’s [largest revenue contributor]( beating its previously dominant marketplace segment. It seems that, after all, convincing the owners of mom and pop stores (locally known as warungs) to stock up digitally is not an impossible task. Mitra Bukalapak saw an increase from five million warung partners in 2020 to 14.2 million this year. The company is also growing the variety of products and services that it offers to its partners, now including [a feature that allows them to become shipping agents](. Being a pioneer in this model helps Bukalapak since it allows the company to get a hold of lower-tier cities quicker than others. ​​Around 75% of the company’s processing value is from outside the Tier 1 regions. See also: [Bukalapak’s financial performance in 7 chart]( Not only was Mitra Bukalapak a vital aspect of Bukalapak’s IPO last year, the unit also [benefited from a post-IPO boost]( in terms of monthly active users. The question is: What does this relative success mean for Indonesia’s other ecommerce players, many of whom are also eyeing lower-tier cities for growth opportunities? The answer is rather complicated. Despite its positive top-line numbers, it may be a stretch to expect Mitra Bukalapak to help its parent company reach profitability soon. Mitra Bukalapak is still running at a loss, although its operating margin has been stable since 2020. Another promising factor is the ecommerce firm’s investment in Allo Bank, which helped it turn a net loss of US$51.5 million last year to a net profit of US$571.7 million this year. Bukalapak officially became a shareholder of Allo Bank in January by investing around 1.2 trillion rupiah (US$79.8 million) to redeem 11.49% of ownership in the bank. Investment in Allo Bank seems to have also strengthened Bukalapak’s cash position. The company recorded over US$1.3 billion in cash and cash equivalents in the first quarter of 2022. This is only a small difference with Gojek’s US$1.8 billion in the same period despite the latter being a much bigger business. Unlike other players in the space who don’t have that much cash, Bukalapak has the choice to use its war chest to take on losses for its business units like Mitra Bukalapak. However, there is also the added hurdle of rising inflation. For Bukalapak and rivals like Warung Pintar, their main customers inevitably come from the low-income and lower-middle-income segment, which has been [hit the hardest during this crisis](. The inflation rate in Indonesia has already crossed 4.94% year on year last month, the highest since October 2015, and economists predict that it will [worsen to 6%]( by the end of the year. If inflation gets worse, warung partners at Bukalapak could also see reduced transactions as consumers resist price increases. This will subsequently hurt the firm’s top line as well as its investment case. FMCG giants like Unilever are taking steps to get ahead of soaring prices, such as by [targeting both the premium and value segments](. However, Bukalapak, which does not operate in that space, must think of other ways to dodge the trap. – Budi  NEWS YOU SHOULD KNOW Check out Tech in Asia’s coverage of Asia’s ecommerce scene [here](. 1️⃣ Carsome said it has [reached 18,000 cars sold per month]( across its four core markets, namely Malaysia, Singapore, Indonesia, and Thailand. 2️⃣ Alibaba said it will [maintain its listed status]( in the US and Hong Kong after being added to the US Securities and Exchange Commission’s list of companies at risk of delisting, CNBC reported. 3️⃣ Zilingo COO Aadi Vaidya [has resigned]( from the embattled fashion ecommerce firm, following several C-level staff departures recently. 4️⃣ Missfresh, a China-based grocery startup, is [shutting down]( its core 30-minute home delivery service and laying off staff, TechNode reported. 5️⃣ ChattyBao, an Indian shopping platform built on WhatsApp, has [secured over US$5 million]( in a seed round co-led by Info Edge Ventures and Vertex Ventures Southeast Asia and India.  That’s it for this edition - we hope you liked it! Do also check out previous issues of the newsletter [here](. Not your cup of tea? You can unsubscribe from this newsletter by going to your “edit profile” page and choosing that option in our preference center. See you next week! [ADVERTISE]( | [SUBSCRIBE]( | [HIRE]( | [FIND JOBS]( P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? Switch to a different frequency or get new content through our [preference center]( or [unsubscribe](. You can also break our hearts and remove yourself from all Tech in Asia emails over [here](  Copyright © 2022 Tech in Asia, All rights reserved. 63 Robinson Road, Singapore 068894