Indonesian parenting platform Orami is in talks with a slew of institutional investors to raise $15 million as it carves out its expansion plans to cater to a wider consumer segment in the archipelago.
The startup last raised a similar amount in 2016 in a round backed by Indonesia’s Sinar Mas Digital Ventures (SMDV), Gobi Partners, Facebook co-founder Eduardo Saverin, Ardent Capital, and Velos Partners.
A number of these investors have evinced interest to participate in the new round, Hendrawan Kartika, president at Orami, told DealStreetAsia. Besides, the startup is also in talks with new investors to secure the funding. The transaction is likely to be closed by the end of this year.
Orami was born out of a merger between two Southeast Asian women-focused e-commerce startups Moxy and Bilna, in 2016, following which it raised 15 million to expand its operations in the mother and kids space.
Prior to the merger, Moxy, headquartered in Thailand, focused on women’s fashion, while Bilna targeted the mother and kids vertical.
Even as Orami had never publicly announced any funding after 2016, Kartika said the company has raised additional funding in the subsequent years in the form of equity and supply chain financing.
“Since our business model is a 1P model where we take inventory, we were able to raise funds from banks/financial institutions in the form of supply chain financing,” he said, adding that such financing has enabled it to facilitate its growth with minimum dilution to its equity base.
From a pure e-commerce player, Orami has diversified into a full-fledged parenting platform with commerce, content, and community under one app. The process was undertaken to create more touchpoints for its targeted audience.
Following the expansion, the company says it has increased its running GMV by close to 8x while improving its EBITDA by more than 90 per cent points.
Through its e-commerce business, the company resells products from different brands, mostly working directly with the principals through its proprietary sales channels, including its app/website and a nationwide network of niche baby shop retailers.
Its content section provides original articles and videos in Bahasa Indonesia about any parenting-related topics/ entertainment, while its community offers online support groups categorized by interest, children’s age, geographic location, and profession, as well as an offline/ online education platform with members in 75 cities across Indonesia.
Now, the company claims to be the largest parenting platform in Indonesia with a vision to “simplify parenting”.
The corpus raised from the ongoing funding round is set to help Orami expand its operations. The fresh capital, Kartika said, will be used to expand the company’s distribution network and services across Indonesia, increase product selections from private labels and overseas brands, and spruce up its platform development.
Parenting super-app: Growth prospects
A recent survey conducted by the company amidst the COVID-19 crisis shows that 76 per cent of mothers prefer to buy mother & kids products online, which is significantly higher than those who prefer to buy groceries online (35 per cent).
“There’s a marked shift in the behaviour of Orami’s target customers, which are mostly mothers, in buying online because they value health, safety/protection, and convenience above everything else when buying the daily needs of their loved ones,” Kartika said.
During the onset of the pandemic, the company faced a “short term hiccup” in the product supply chain. However, Kartika said it was mitigated by the fact that it was able to source most of its inventory directly from the brands, while having its own warehouse, hubs, and even last-mile couriers also helped it tide through the crisis.
In terms of company financials, Kartika said Orami is currently operating at negative single-digit EBITDA margin% while still maintaining solid GMV growth. In line with its previous strategy, the company will continue to focus on improving its unit economics during the years ahead.
Going forward, the company plans to increase its revenue by stepping up efforts to boost contribution of sales from outside Java through O2O initiatives with its network of niche baby shop retailers in the area, and increase social commerce sales through its community of mothers.
Other than commerce, Orami claims to also earn significant revenue from advertising opportunities on its content and community assets. To add to that, the company says it will also explore other revenue channels.
“(We plan to have) more services in our app to realize our goal to become the top-of-mind super-app for parents. Such platform opens up multiple monetization models beyond traditional eCommerce,” he said.