Kudo Grabbing the Online Market
Start-up aims to generate more Indonesian entrepreneurs doing business through its platform
By Ismira Lutfia Tisnadibrata
Monday, July 24, 2017
Kudo began by launching an app in December 2014 for 10-inch tablets and a Kudobox was installed in a number of public places such as malls, office buildings and minimarkets as it introduced its service as an online-to-offline (O2O) e-commerce platform to create more Indonesian digital entrepreneurs.
Kudo, which is a shortened play on kios untuk dagang online, or kiosks for online trading, now has developed mobile and web platforms where online merchants and e-commerce players can connect with their offline customers through a network of Kudo’s 450,000 agents nationwide.
In April, it was acquired by Grab, Southeast Asia’s ride-hailing and mobile payments platform, in a deal which media reported to be more than $100 million, and is part of Grab’s $700 million investment plan in Indonesia, which was unveiled in February.
Kudo CEO Albert Lucius said working with Grab is exactly what the company had hoped for because it meant joining forces with a company that shares the same passion for helping Indonesians benefit from the digital economy through innovations made in Indonesia.
The joining of Kudo as a local startup and Grab as a regional tech company, which resulted in the establishment of a research and development center in Kudo’s offices in South Jakarta, is a model that Rudiantara, the Minister of Communication and Informatics, has said he encourages because it creates economic progress and jobs for Indonesians and could help to make the government’s Digital Economy 2020 vision a reality.
AmCham Indonesia spoke with Agung Nugroho, the chief operating officer of Kudo, on its progress so far.
AmCham Indonesia: Can you tell us about Kudo? How did it start and what is the progress so far?
Agung Nugroho: Albert and I came up with the idea to establish Kudo. We were aware that Indonesians were not productive enough so we thought of how to make them more productive with technology. It’s always advancing, so how can we use technology to make people more productive? I can’t reveal the amount of capital we raised to invest in the business, but it was essentially very low. Now it has been two and a half years and growth continues to be positive and very good, but I can’t reveal the figures.
What’s the story behind Kudo being acquired by Grab?
Grab acquired Kudo because the founders of both companies share similar visions in building the excellent model of business that Kudo runs for the underserved Southeast Asian people. The achievements that Kudo has made so far caught Grab’s attention and it was the first local start-up that Grab paid attention to. We are part of the Grab family now and we are working together with Grab to conquer the Indonesian market; we will bring five million rice bowls to every Indonesian’s home.
What is it exactly that you are trying to produce after being acquired by Grab?
We are trying to produce some products that will absolutely help lower-to-middle class people to be entrepreneurs by giving them a business opportunity. We will reveal more products soon, at the right time. In general, business remains the same, except the shareholder composition has changed. But we have more activities, such as driver onboarding and we try to get more agents, more drivers on board.
Can you tell us what dividends Kudo’s integration by Grab has generated?
During the integration time both the engineering teams of Kudo and Grab have been working hard to create features for drivers onboard the Kudo platform. Now their hard work has paid dividends, and 450,000 Kudo agents nationwide now can use the app.
What is your target market? Are millennials included?
A major proportion of Indonesia’s population are middle class and more importantly, there are many who are below 30 and they are fast adopters of technology. Our concern is how to make them more productive. There is a portion of our agent base who are below 30 and even below 20, some are even students and they essentially use our platform to earn additional income, which is our main objective; how to generate economic activities for those who can adopt certain technology and have the will to become entrepreneurs.
I would say there is a big captive market for millennials, but we aim for not just those who are in the city but also those who are in rural areas. A lot of millennials are using technology for consumption or merely for entertainment. We want to switch that into something more productive by selling something, facilitating something, helping wider financial inclusion or financial penetration. I think they have great potential to become agents by using the technology for productive results.
How do you attract users to come and shop on your platform?
We don’t sell products but we empower agents to sell. We don’t empower customers to buy but we empower agents to trade. We target millennials as well but as agents, never as customers.
How do you attract them to become agents?
We develop products that are in line with their needs. The reason we have local e-commerce partners is because we want to relate it to their needs. In general, our partners (Lazada, Bukalapak, etc) cater to the needs of that segment. Kudo’s agent composition is similar to Indonesia’s population. Most of them are in Java and there also some in other islands, but not so much the eastern part of the country.
How do you develop your business?
We never develop our business on our own. We have local partners. They are people who have local networks such as distributors, from whom we build networks and one of their activities is to engage the below 30 market segment.
What’s next for Kudo?
We hope to increase our speed in participating in building economic activities in Indonesia so we create products that serve local markets and how we provide business to [Grab] drivers and our agents. We might expand to Southeast Asia but we can’t disclose more details – of course every company has plans to expand – and we plan to recruit more agents.
How do you measure the impact of Kudo?
We measure the impact by the number of agents or drivers that have signed up with us. We can also measure it from their sales and we can estimate how much they earn every day using our platform. We can see the number of transactions that happened through our platform and how much commission they get as agents. The figures are doing very well, in line with our general mission to make them become entrepreneurs and earn money. A lot of users say they are happy to be part of Kudo.