TaniHub Selects Focus on B2B Segments to Increase Harvest Uptake [UPDATED]

TaniHub carried out a business overhaul by ceasing operational activities in two warehouses (warehouse) his in Bandung and Bali as first reported Dataword. This agritech startup has also stopped buying and selling food products in the Business-to-Consumer (B2C) segment that serves the household segment.

TaniHub's Corporate Communication Manager Bhisma Adinaya said the closure was part of the company's business line sharpening strategy. TaniHub Group has business lines of e-commerce (TaniHub), supply chain (TaniSupply), and agricultural venture capital (TaniFund).

"We want to sharpen our focus and increase [business] growth in the B2B segment (Horeca, MSME, MT, and strategic partners). That way, the absorption of farmers' crops will increase," said Bhisma to DailySocial.

Due to this operational cessation, a number of employees were affected. It is not known how many employees were laid off by TaniHub. Based on monitoring DailySocial on LinkedIn page, a number of former TaniHub employees are seen looking for new job vacancies.

"We can ensure that all employee rights are properly fulfilled. Even our CEO, Pamitra Wineka, follows this employee rights fulfillment process," he added.

However, Tanihub has not responded to our further questions regarding the background of this strategy change.

Last year, TaniHub said that transactions for food products for households experienced a two to three-fold increase per day. To meet this demand, the company admits that this situation is a challenge to balance the supply and availability of food for consumers during the pandemic.

TaniHub Group claims to be first agritech company in Indonesia, which scored GMV above Rp1 trillion with growth big income by 639% on an annual basis (YoY).

Since the last few years, TaniHub has also made efforts to strengthen distribution network so that the distribution of agricultural products can be more evenly distributed. That way, the commodity supply floor will be more efficient and prices can be controlled.

According to the latest records, TaniHub has five distribution centers in Bogor, Bandung, Yogyakarta, Surabaya and Bali. The plan is that TaniHub will add more in Sumatra, Kalimantan and Sulawesi.

B2C market challenges

Managing Partner Tunnelerate Ivan Arie Sustiawan considers that the competition for agritech/e-grocery in the B2C segment is generally very tight. This situation will be difficult for platforms that have limited capital for subsidies in price wars and logistics. According to Ivan, these two things are important elements to maintain customer loyalty considering that Indonesian consumers tend to like promos/discounts.

He considered, to win the agritech market in B2, startups need to build and implement models supply chain leaders the most sustainable and efficient from upstream to downstream. They also need to think about profitable assortment strategy for his business. "Don't sell everything to everyone for the instant or quick commerce where you do the self-fulfillment," he told DailySocial.

In the context of TaniHub, the company said that sharpening business focus in the B2B segment can help increase crop uptake from local farmers. It is assumed that there are issues around logistics and the imbalance of demand and supply in B2C that drives pivot this.

In contrast to B2C, the B2B model is considered more stable because there is certainty demand and supply with large orders and periodic requests. For example, the demand for fresh staples to the restaurant or hotel industry.

In the B2C segment, especially fresh products such as fruit and vegetables, Indonesians are still accustomed to shopping at supermarkets or traditional markets so that they can choose the desired goods themselves. Another major challenge is how platform providers can meet delivery expectations quickly to maintain product quality.

In our previous posts, online groceries Indeed, it is predicted to have a bright future amid growing digital adoption and improving inter-platform and retail consolidation. However, this refers to the market in the Greater Jakarta area. While outside this area, there is still a lot of homework that needs to be validated because it is difficult to change shopping behavior to online, especially for housewives.

Regardless of the market potential, the agritech sector in Indonesia is indeed quite risky, be it the potential for crop failure, access to capital, distribution, and the supply chain. Based on our records, there are several P2P startups lending for farmers who stumble in cases due to failure of business payments. Then, recently, startup social commerceChilibeli It was also reported that it had temporarily closed its operational activities.

Previously, the Ministry of Trade asked stakeholders (stakeholder) to optimize the uptake of local crops. According to the government, currently agricultural productivity has improved despite the weakening economic situation. However, this increase in productivity must be balanced with market access and synergies.