Fresh Factory Builds Micro Chiller Warehouse Network, Handles “Cold Chain” Solutions

Presence E-commerce helped change the logistics distribution infrastructure that can reach many areas with fast delivery. Distribution with the traditional approach is no longer relevant because digitalization makes many entrepreneurs adopt it D2C strategy (direct-to-consumer).

Adjustment of distribution patterns with D2C patterns is a must, it just requires service last mile and infrastructure to support it. This solution is still minimally present in Indonesia and is an opportunity for Fresh Factory to work on it.

"We like to solve big problems, and this is greatbecause the big problem that we're trying to solve is our own problems,” said Fresh Factory Co-founder & CEO Larry Ridwan when contacted DailySocial.id.

Larry Ridwan with Andre Septiano and Widijastoro Nugroho pioneered FreshFactory since 2020. All three have the same background, both are business people who sell products related to cold warehouses. "We are experiencing difficulties because there is no infrastructure that is efficient and effective in distributing our products," he continued.

Talking about market potential, this refrigerated warehouse is experiencing increasing demand in Indonesia. This industry contributes more than 15% of GDP in Indonesia. Industrially, in 2018, the fishing industry recorded an increase in production of up to 25 million tons.

In the same year, the agricultural industry also increased to 49 million tons. As for processed food, consumption increased by 7 million tons with business potential reaching $13,8 billion. The presence of a refrigerated warehouse is also needed by the pharmaceutical industry.

Meanwhile, reports Forrester Research revealed that the food and grocery business experienced significant growth in 2020 triggered by the pandemic, accounting for 11% of the market E-commerce globally, a significant increase from only 5% in 2015. The food and grocery industry is expected to grow further to 15% by 2025.

“However, the solution last mile Inadequate ones limit the adoption of cost (time & money) services last mile alternative is still high compared to the size of consumer transactions.”

Based on these needs, Fresh Factory is a startup that focuses on offering solutions cold chains, which consists of cold product storage management and procurement services (order selection, product packaging, and delivery to customers via shipping carriers).

This startup takes the approach hyperlocal by creating a network of micro refrigeration warehouses with affordable distances from each other, thereby creating an efficiency impact.

Fresh Factory Solution

According to Larry, the solution cold chains those in the industry are mostly here to serve large corporate consumers, so the infrastructure is more centralized. The system used is more directed at warehouse management system (WMS), not fulfillment management system (FMS). That is, WMS only provides the system warehouse tracking only, precisely when the goods enter and exit.

Fresh Factory Co-Founder & CMO Widijastoro Nugroho added, meanwhile fulfillment management system added features pick and pack. Thus, entrepreneurs can make products bundling, special packaging, promotional inserts, costume packaging and so on. "So, Fresh Factory has an FMS in it as well as a WMS," he said.

Larry continued, not only refrigeration warehouse networks that can be rented by entrepreneurs, there are also procurement solutions. For the flow, business people can have a Fresh Factory branch warehouse location according to the business expansion area online-his. Then, the products to be sold are sent to the warehouse using the delivery provided by Fresh Factory's logistics partners to be stored in the warehouse.

When an order occurs, through the Fresh Factory system, the tenant will enter order info such as product, quantity, and other info. The Fresh Factory will process the procurement until it is sent to the buyer. “Thus, the process will be much better, faster and more efficient than before.”

As of now, Fresh Factory has 15 micro warehouses spread across Greater Jakarta, Java and Bali. Each of these warehouses is 8 km away from each other, so the procurement process will be much more efficient. Also equipped with FMS to help the integration process end-to-end entrepreneurs in order to scale up faster.

The company implements two monetization strategies, the first is FIFO (First in first out) with a locker rental system per day starting from IDR 200 per unit. Second, No Setup Fees with calculations based on sales, starting from IDR 2.100 per fulfillment. It is claimed, Fresh Factory currently has more than 100 tenants, including small businesses. Throughout 2020, the total transaction value of Fresh Factory reached $1,8 million or Rp. 26 billion.

It is targeted that this year, the company can upgrade its infrastructure by 100 fulfillment center, covering all over Java, Bali, and nationally, and 10 refrigerated warehouses. “We are also planning to add a variety of services fulfillment, starting from retail fulfillment, cross docking, cross border, and other more efficient logistics solutions for cold chains. "

The company has secured initial funding of $1,5 million (more than 21 billion Rupiah) from a number of investors, such as Prasetia Dwidharma, Numbers Capital, and Y Combinator. This funding was obtained in January 2021. Wiji, Widijastoro's nickname, said that the company is currently one of the participants in YCW22. Currently in progress bootcampher for three months.

"Bootcamp with YC lasts until the end of March 2022. We start slowly looking for funding, targets Closeit was on demoday at YC around April 15," he added.

Not only Fresh Factory, a number of local startups are also focused on working on micro-warehousing networks and their procurement solutions to create an efficiency impact. They are Crewdible, Shipper, TokoTalk and platforms E-commerce, such as Shopee, and Branch Store (Tokopedia).