Grab Ventures Velocity press conference in Jakarta on Tuesday. (Photo Courtesy of Grab Indonesia)

Tech-Savvy Warungs to Take Major Leap Toward Digital Economy

BY :JAYANTY NADA SHOFA

MARCH 05, 2020

Jakarta. With robust digital inclusion encouraged by online-to-offline platforms, small mom-and-pop shops, or warung, can now take a major leap toward the digital economy.

Indonesia is currently Asia's largest and fast-growing digital economy, worth an expected $133 billion by 2025.

At a recent conference, President Joko "Jokowi" Widodo called on the industry to reap the full benefits of the technology revolution.

The president's call also applies to micro, small and medium enterprises (MSMEs) – the country's economic backbone with an annual GDP contribution of around 60 percent.

Warungs have remained one of the most common forms of MSMEs in Indonesia, with around 4.5 million of them found across the archipelago.

Catapulting them into the digital realm, however, presents more than a few challenges.

Commonly owned by lower or middle-income families, these traditional businesses often lack financing and skillsets. Many of them are managed by older people who are not very tech-savvy and very few have insurance.

In short, they lack the financial literacy to help them develop their business.

It's this tech and financial illiteracy among warung owners that later induced a surge in online-to-offline (O2O) platforms.

Ride-hailing giant Grab tapped into the offline market with a major acquisition of O2O platform Kudo in 2017. Kudo was soon rebranded as GrabKios.

"Grab realizes the pivotal role played by MSMEs in our economy. This is where our platform chimes in, to upscale these traditional merchants toward digital inclusion," GrabKios head Agung Nugroho said at a press conference in Jakarta on Tuesday. 

Teamwork Makes Dream Work

Like a traditional O2O platform, GrabKios gives warungs easy access to fast-moving consumer products and digital payments, among others.  

To make it an all-encompassing app for their 2.8 million micro-businesses, GrabKios partners with Grab Ventures Velocity (GVV) graduates – a training and partnership program for top-seeding startups across Southeast Asia.

One of the graduates includes insurance tech startup Qoala who provides micro-insurance starting from as low as Rp 2,000 (15 cents).

"We've noticed that many warungs are not insured. Our partnership with Qoala allows warung owners to get easy access to micro-insurance and also allows them to buy other financial products suitable for their line of business," Agung said.

In the past six months, a total of 20,000 insurance policies have been issued to GrabKios owners.

With prepaid phone credits being one of the most purchased products on GrabKios, the platform also gives away screen protectors for the warung customers.

GrabKios aims to add a million merchants in 2021 as part of their digital inclusivity campaign, GrabForGood 2025.

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