Indonesian astro raises $60 million to work on 15-minute grocery delivery

Indonesia’s sprawling archipelago has long been a headache for logistics companies, but there is no shortage of brave challengers. Jarkata-based Astro, which offers 15-minute grocery delivery, recently closed a $60 million Series B funding round, bringing its total funding to $90 million since launching the business just nine months ago. The Series B round was led by Accel, Citius and Tiger Global, with participation from existing investors AC Ventures, Global Founders Capital, Lightspeed and Sequoia Capital India. The company declined to disclose its post-money valuation. The speed at which Astro is attracting investment demonstrates the need for heavy upfront investment in the grocery delivery race, which is about setting up logistics infrastructure quickly and securing loyal customers before rivals do. Founded by Tokopedia veteran Vincent Tjendra, Astro plans to spend the proceeds of its funding on user acquisition, product development, and hiring more staff to add to its current team of 200. As in many countries around the world, the On-demand delivery got a boost during the COVID-19 pandemic in Indonesia. But e-grocery store penetration in the country remains low and is estimated to be just 0.5% by 2022, compared to 6% in China and 34% in South Korea in 2020. That means that there is a huge opportunity for companies like Astro that are trying to demonstrate the convenience of online grocery ordering instead of physical visits. The Indonesian e-grocery delivery market is projected to reach $6 billion by 2025. Astro offers 15-minute delivery within a 2-3 km range through its network of rented “dark stores”, which are distribution centers set up for online shopping only. . The company has opted for a cash-intensive model, as it owns the entire user journey, from inventory stocking, supply chain, mid-mile to last-mile delivery. The benefit of this weighted approach is that it manages to monitor the quality of the customer experience. Astro currently operates around 50 locations in Greater Jakarta, an area with 30 million residents, through a fleet of roughly 1,000 delivery drivers. Revenue grew more than 10-fold in recent months and downloads hit 1 million, the company said. The startup is competing with incumbents like Sayurbox, HappyFresh and TaniHub to win over users. His clients range from working professionals to young at-home parents “looking for comfort,” Tjendra said. Grocery delivery is notoriously a drain on cash, but Tjendra reckoned margins will improve as the business grows. The company’s main source of income is the gross margin it earned on goods sold and delivery fees paid by customers. A large portion of the company’s costs come from delivery, which the founder believed “will come down over time as we roll out hubs and subsequently reduce delivery distance areas.”