Indonesia eB2B – Reviving the “Warungs” in a Post COVID World | Part 2

1. COVID has proven to be a headwind for GT FMCG sales

GT sales have declined because of the strong rise in FMCG sales from online B2C channel as people prefer to stay indoors in the wake of COVID. Among offline channels, Modern Trade is being preferred because they have social distancing and hygiene measures in place + customers are looking to make bulk purchases for which Modern Trade outlets are more suited (Warungs typically are for on-the-go impulse purchases).

2. However, eB2B FMCG players have reported increase in sales of physical goods (while digital goods volumes have reduced)

eB2B however witnessed a moderate growth of 10% in order volumes and 4-5% rise in Average Order Value. Frequency of orders/retailer increased due to lockdown measures – as Warungs are unable to visit their offline wholesalers to procure products.

Players have quickly adapted to the changing circumstances by increasing the supplier base for products in high demand and increasing the number of logistics partners.

Digital goods sales has dropped though, as consumers are preferring the online channel (e-wallets, e-tailers etc) for recharges, bill payments etc. The mix of digital goods has also evolved slightly with health insurance etc picking up.

3. B2B Product category mix has evolved with personal hygiene segment & staples picking up while RTE/D category has declined sharply

High demand for personal hygiene and home care driven by high awareness has led to sharp rise in non-food FMCG sales from eB2B platforms. Warungs have started to stock such products and are dependent on eB2B platforms for procurement.

Packaged snacks and beverages have seen a sharp decline as “on the go” purchase demand has reduced. Staples, however, has seen a sharp rise in sales.

4. Warungs & Brands are looking to revive the GT channel – the time is right to revisit/come up with a compelling, eB2B value proposition

While GT sales have dipped in the wake of COVID, the channel still accounts for majority of sales and is expected to be a key focus area for brands.

With many Warungs also reeling under the impact of COVID, the relevance of an eB2B solution is extremely high at this point.