Lightspeed’s Investment in Cosmart

Lightspeed’s investment in Cosmart

At Lightspeed, we want to work with founders who are, through their vision and execution, building companies of the future. We also understand that it takes a lot more than just a revolutionary idea to scale a business. When we met Cosmart’s co-founders, Alvin Kumarga and Robert Tan, it was hard to miss their infectious energy and passion for building a product that is truly meaningful for Indonesia. Both of them were well aware of the gaps in the e-commerce experience today and built Cosmart to serve a very real need that is already finding many takers.

Robert and Alvin have a deep understanding of the Indonesian market. Alvin has built payments and technology infrastructure in the past, along with a stint at the Boston Consulting Group. Earlier, he co-founded a hospitality startup and is no stranger to the challenges of building for the Indonesian market. What is truly inspiring is his focus on first principles and ambitious outlook.

Robert helped build investing platform Pluang and travel tech unicorn Traveloka in the past. His can-do attitude is compelling. A passion to learn and the wisdom to unlearn is the mix founders often work towards for years. With Robert, it is the starting point. His passion to learn new things is unmissable, and he will be the first one on the drawing board, ideating and testing out new ideas to make Cosmart better.

The opportunity

Southeast Asia has become a large emerging market for e-commerce. There seems to be a permanent shift in buying behaviour. Shoppers are moving from physical retail stores to websites, catalysed, in part, by Covid-19. The Gross Merchandise Value (GMV) of online shopping is expected to grow at an annual rate of 17%, from $129 billion in 2022 to $280 billion in 2027.

Indonesia, in particular, has seen a substantial change in spending patterns. The country’s e-commerce market was over $30 billion in GMV in 2020 and is expected to reach $83 billion in 2025, with newer models likely to emerge to serve unmet needs. One such category is high-frequency essential purchases. Around 40% of the current urban grocery transactions are for stocking up or buying for the week or month.

The business

Cosmart, founded as Joybox in February, was born out of the founders’ experiences with the lack of credible options for buying everyday essentials in Indonesia. Despite a thriving e-commerce industry, there are few platforms that provide a seamless shopping experience for recurring purchases. For the few that do, prices are neither transparent nor competitive, and the customer experience is often clunky. So Alvin and Robert took matters into their own hands.

Cosmart is a membership-driven business-to-consumer (B2C) platform, where members can make recurring purchases in large quantities at competitive prices. Its unique user experience and business model help users save time, money, and the mental burden of making these recurring expenditures. Members transact at a much higher frequency than general e-commerce customers. The platform gives users access to competitive prices for products from over 80 principals, over 500 brands, and thousands of stock-keeping units (SKUs) across ten core categories.

Since its inception, Cosmart has delivered over 100,000 products. Its discovery-driven platform enables customers to come across and purchase new brands that they originally may not have had access to.

What makes it a value proposition for customers is that Cosmart partners directly with hundreds of suppliers that provide thousands of products across categories. This enables them to offer competitive pricing for larger quantities of orders. What impressed us was the high interest in its membership sign-ups. Each transaction also has a higher average order value (AOV) which makes the unit economics attractive.

There has been a growing shift in online buying behaviour across categories in Indonesia post-pandemic, according to consulting firm McKinsey & Co. This includes household essentials and discretionary spending.

The area of mass market e-commerce in Indonesia is still relatively untouched, with no large player catering to the recurring product demands of customers. For predictable and repeatable buying, like monthly soap requirements, cooking oil, or staples like sugar and salt, Cosmart will offer better value deals when consumers buy in larger quantities.

Cosmart’s direct access to principals ensures consumers get more value for their money. Even when customers order numerous products, they reach their doorsteps all at once and in a timely manner. Their extensive knowledge of the local market, and their way of solving customer pain points as their own, are also things that excite us about the team.

With these things in mind, we’ve decided to back Cosmart. We welcome them to the Lightspeed family. Check them out here and you can reach them here: alvin@joybox.co.id.

If you are building something exciting in South East Asia. We would love to talk; DM me!

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