Shaken by the severe headwinds of the COVID-19 pandemic, Indonesian B2B marketplace Ralali is now looking to raise $50 million in a Series D round to shore up its business.
The company, which connects suppliers and wholesalers to micro, small, and medium enterprises (MSMEs) via its app and website, is currently in talks with potential investors, its CEO Joseph Aditya told DealStreetAsia in an exclusive chat.
“We’re [working] on the fundraising and target to close it by the end of this year. We want to be profitable before ultimately going public. We need more funding for growth,” said Aditya.
The company had applied the brakes on its overseas operations last year. While it shut down its India operations, Ralali divested a part of its stake in Big Thailand — its JV with Siam Cement Group in the country. “The performance of the [Thailand] business was great. However, we couldn’t travel to the country [due to COVID-19 restrictions], and it was difficult for us to monitor the business. Thus, we thought it was best to divest,” said Aditya.
Ralali had landed $13 million in a Series C funding in July 2019 in a round led by Arbor Ventures, TNB Aura and Jo Hirao, the founder of life media platform ZIGExN. Existing investors AddVentures and Qualgro also participated in the round.
In 2018, the company raised $7 million in a Series B round led by Japan’s SBI Group, Thailand’s Addventures, and global incubator Digital Garage.
Since its inception in 2013, Ralali has raised $22.5 million from investors.
The company was last valued at $98.6 million, according to DealStreetAsia DATA VANTAGE. The biggest institutional shareholders in the firm are Beenext Pte Ltd with an over 10% share and the SBI Group which has an 8% share, show DATA VANTAGE data.
Unlike other B2B ecommerce startups in Indonesia such as Warung Pintar, Gudang Ada and Ula that cater to mom-and-pop stores, Ralali is more like China’s Alibaba — a marketplace connecting suppliers, and wholesalers, with buyers in many categories, including agriculture, automotive, building materials, and other sectors.
Having operated as a B2B marketplace since 2013, Ralali has invaluable data that helps connect wholesalers and suppliers to buyers.
The company also operates Ralali Financial and Ralali Logistics. These services offer financing and logistics solutions, through partnerships with fintechs, banks, and transporters.
Currently, Ralali has 1.5 million users, including suppliers, buyers, and wholesalers.
Before the coronavirus outbreak, the users’ retention rate was about 60%, said Aditya. The pandemic has cut this by half as many SME clients have been hit.
Ralali also has 10,000 active agents, or offline partners who help to connect suppliers and buyers. Before the pandemic, though, it had 300,000 active agents working for it.
New revenue streams
The coronavirus pandemic has changed the way Ralali does business.
The company realised that it cannot rely on the marketplace model alone. Last year, Ralali established a private label called PRIMERO. So far, the company has launched PRIMERO-branded daily masks, gloves, and goods that can be used in restaurants, hotels, pharmacies etc.
The idea is to target consumers who are brand agnostic, said Aditya. “The key is to make a substitute for those common products, where people don’t really care for the brand.”
Ralali hopes to tap its wide network of manufacturers and suppliers to sell the products. It also hopes to expand the product range of its PRIMERO brand, and offer more services to customers after it clinches the Series D funding.
Aditya said the company has distributed PRIMERO products to 50,000 offline stores across Indonesia. By having its own label, he claimed the company gains more customer stickiness and makes bigger margins than in the marketplace model. Besides, there is a sustained revenue source.
“We know we can’t always rely on investor money. Hence, we are looking for a strategy toward profitability. This is our preparation before we go for an IPO in 2023,” he explained.
Besides the private label, Ralali plans to launch “Connecto”, a Shopify model that allows merchants to set up an online store and sell their products. The service will still be within the Ralali ecosystem and will integrate merchants, digital payment providers, Point of Sales (POS), and Ralali’s suppliers, said Aditya.