Jakarta-based grocery delivery startup, Astro, has reportedly raised $60 million in a Series B financing round, bringing its total value of raised capital to $90 million since it was established nine months ago.
The round was led by Tiger Global, Citius, and Accel, and also saw the participation of existing investors such as Sequoia Capital India, Global Founders Capital, AC Ventures, and Lightspeed.
The startup plans to utilize the fresh capital for product development, user acquisition, and adding more staff.
On-demand delivery services have gained immense popularity throughout the world, including Indonesia, during the pandemic. However, the country has had a relatively slow and low e-grocery penetration, which is estimated to reach just 0.5% by 2022, as compared to South Korea’s 34% and China’s 6% in 2020.
Platforms like Astro have a huge opportunity to try and prove the convenience of ordering online groceries over visiting physical stores, with the Indonesian e-grocery delivery market forecasted to reach $6 billion by 2025.
Astro provides 15-minute delivery within a range of 2-3 km, with the help of a network of rented ‘dark stores’ that act as distribution hubs solely for online shopping.
The firm operates a cash-intensive model, managing the complete user journey ranging from supply chain, inventory sourcing, mid-mile, to last-mile delivery. Although a heavyweight approach, Astro is able to monitor the quality of its customer experience.
Currently, the startup operates in almost 50 locations across the metropolitan area of Jakarta having 30 million residents, with a fleet of around 1,000 delivery drivers.
The company said that its revenues have grown over ten times in the past few months and that its app has reached 1 million downloads.
The startup’s primary source of revenue comes from the gross margin earned via the delivery fees and the goods sold.
Astro founder, Vincent Tjendra, stated that although grocery delivery is a cash-burning sector, the firm’s margins will improve as its business scales further. He also believes that the costs will come down subsequently as the firm reduces delivery distance areas and deploys more hubs.