rara delivery Secures $3.25M Funding for Indonesia Expansion

RaRa Delivery Secures Seed Funding for Same-Day Delivery in Indonesia

RaRa Delivery is pursuing a strategy of providing same-day delivery services throughout Indonesia, aiming to avoid the substantial financial losses often seen by other on-demand logistics companies. The company recently announced a $3.25 million seed funding round, spearheaded by Sequoia Capital India’s Surge program and East Ventures.

Investment Details and Participants

The funding round also saw participation from 500 Startups, Angel Central, GK Plug and Play, and angel investors Royston Tay and Yang Bin Kwok. This investment will fuel the company’s expansion plans.

Leveraging Technology for Efficient Deliveries

Established in 2019, RaRa Delivery utilizes a unique, internally developed engine. This engine efficiently groups orders and optimizes delivery routes by incorporating real-time data, such as current traffic conditions.

Currently, the company’s services are available in the Greater Jakarta area. Plans are in place to extend operations to five additional cities within Indonesia this year.

Integration with Major Marketplaces

RaRa Delivery intends to integrate its services with leading marketplaces across Indonesia. This integration will allow sellers to offer customers a convenient delivery option.

The company also collaborates with various brands, small e-commerce businesses, and seller aggregators. Notable clients include Blibli, Kopi Kenangan, Grab Merchant, Alodokter, and Sayurbox.

RaRa Delivery reports a fifteen-fold increase in daily order volume over the past year. This growth is partially attributed to the heightened demand for grocery and medical supplies during the pandemic.

The Vision Behind RaRa Delivery

Prior to founding RaRa Delivery, co-founder and CEO Karan Bhardwaj held a position at Unilever. There, he oversaw the e-commerce supply chain for Southeast Asia and Australasia.

His experience involved managing diverse distribution channels, including marketplaces, e-commerce aggregators, and last-mile delivery services.

Evolving Customer Expectations

Bhardwaj observed a significant shift in customer expectations regarding delivery timelines. Increasingly, customers demand same-day delivery, often within a few hours, rather than being content with next-day service.

“What begins as a positive experience eventually becomes an expectation,” Bhardwaj stated. While the United States has Amazon Prime, China has SF Express, and South Korea has Coupang, “Indonesia hasn’t fully embraced same-day delivery due to a lack of appropriate logistical solutions, and that’s the challenge we’re addressing.”

He further noted that customers are prepared to pay a premium – two to three times more – for same-day delivery, and even higher fees for deliveries completed within an hour.

Addressing the Limitations of Existing Logistics Models

Many established logistics companies, with their traditional hub-and-spoke systems, are ill-equipped to handle on-demand deliveries. Conversely, on-demand providers often face high operational costs due to drivers completing only one delivery per trip.

“With ten orders, a typical business would dispatch ten drivers, each handling a single order,” Bhardwaj explained. “While three-hour delivery is achievable, the lack of consolidation and optimization results in high per-order costs, distance restrictions, weight limitations, and an inability to offer cash on delivery.”

A Scalable and Sustainable Solution

RaRa Delivery’s real-time batching engine was developed as a more scalable and financially sustainable alternative. The company’s driver network handles orders for a wide range of businesses – including food and beverage, grocery, healthcare, and e-commerce – each with varying delivery time requirements.

For instance, restaurants require deliveries within an hour, while grocery stores can accommodate a three-hour timeframe, and e-commerce businesses may accept deliveries within eight hours.

Optimizing Routes and Driver Efficiency

Upon order placement, RaRa Delivery’s system groups them into optimized batches. This process considers capacity, distance, time slots, and real-time traffic data to determine the most efficient driving routes.

Batches can range from two to fifteen orders, with flexible compositions. Some batches may involve a series of pickups followed by deliveries, while others may intersperse pickups and deliveries for maximum efficiency.

This approach increases driver earnings by enabling multiple deliveries per trip and minimizing downtime. Each RaRa Delivery batch typically takes between two and six hours to complete.

“In a standard on-demand model, a driver completes an order and then waits for the next one. This waiting time reduces potential earnings,” Bhardwaj pointed out.

Facilitating Cash on Delivery

RaRa Delivery also supports cash on delivery (COD). Traditionally, COD requires drivers to return to a hub to deposit the collected funds.

RaRa Delivery’s reconciliation system provides drivers with a clear understanding of the cash amount to collect for each order. Upon completion, the system generates a code that drivers can use at a convenience store to deposit the cash, eliminating the need to return to a central hub.

Future Plans and Expansion

The seed funding will be used to expand the company’s product ecosystem, which currently includes the batching engine, a seller portal, real-time order tracking, a customer chatbot, and the COD reconciliation system.

The initial focus is on Tier 1 cities in Indonesia, with plans to expand to smaller cities and achieve nationwide coverage within a few years. Subsequently, RaRa Delivery intends to expand its operations to other countries.

Bhardwaj emphasized that the batching engine is adaptable to different geographies, requiring minimal localization for new markets.