Alfacart, the ecommerce endeavor of major Indonesian mini market and convenience store chain Alfamart, is changing its business model. As a result, Alfacart’s entire C-level management will resign. This was confirmed in a statement by Alfamart and a separate statement by Alfacart CEO Catherine Hindra Sutjahyo and CMO Haryo Suryo Putro last week.
The change also led to a significant cut in team size, two directly affected employees have told Tech in Asia, but this has not been confirmed by Alfamart nor Alfacart’s leadership.
Dropping the marketplace
What’s certain is that Alfacart will no longer operate as a marketplace after the change. It will only sell products already available in Alfamart’s own product assortment. That’s mainly groceries and everyday household items. Currently, Alfacart offers a wide range of products, including smartphones and motorbikes, via third-party sellers. After the change, these merchants will no longer sell on the platform.
Hans Prawira, president director of Alfamart, said in a statement that the change of business model intends to “strengthen synergies with Alfamart.”
Mini markets work well in Indonesia. Growth of such retail locations is outpacing that of larger stores, according to rating agency Fitch. The format benefits from better access to consumers and focusing on products that drive consumers back for frequent purchases, the report found.
Indonesia Stock Exchange-listed Alfamart operates more than 12,000 stores (link in Indonesian) across Indonesia and the Philippines. Alfamart and Salim Group-owned Indomaret are Indonesia’s joint market leaders.
C-level to resign, possibly half the staff laid off
The new Alfacart concept will be based on Alfamart’s strength: daily needs products that are bought regularly.
“After discussing with our shareholders, we decided that Alfacart will continue to operate and serve people as a digital extension of the Alfamart group,” Sutjahyo told Tech in Asia.
In that discussion, Sutjahyo and Putro also confirmed that the executive leadership of Alfacart would resign from the operational side of the business, due to a “difference in vision.”
However, the leadership will still support several of the group’s ongoing strategic projects, Sutjahyo and Putro said. The restructuring is not based on the Alfacart team’s individual performance, but rather a consequence of a business decision, Alfamart emphasized in its statement.
The restructuring also affects a significant part of the non-management team, several Alfacart employees told Tech in Asia last week.
Our sources said about 100 Alfacart staff left the company. This includes the top management, which resigned, and employees who were laid off. The figure represents about half the team, and most of those let go are non-technical staff, our sources reported. They said they were given severance packages.
Alfamart did not mention the total number of employees that resigned or were let go in its statement, and it declined to answer our question regarding this point. Sutjahyo and Putro didn’t respond to our request to clarify how the change affected other employees and how many people were laid off.
Course correction after one year
Alfamart began exploring business opportunities online in 2013 with the launch of AlfaOnline.
Just over a year ago, the site switched to a marketplace model and rebranded itself Alfacart. Sutjahyo, who was brought on as new CEO at the time, (link in Indonesian) was leading that effort. She was formerly the managing director of Zalora Indonesia.
In her interview (link in Indonesian) with Tech in Asia in April, Alfacart CEO Catherine Hindra Sutjahyo said the online store offered 500,000 products and counted between 15,000 and 20,000 daily transactions. Customers can place an order online and pick it up at an Alfamart store.
While we don’t know how many third-party sellers are active on Alfacart, Sutjahyo said in the same interview that “daily needs products” represent roughly 60 percent of transactions.
Alfacart did not respond to Tech in Asia’s requests to clarify how many third party sellers are active on the marketplace today, or how much of the transaction volume they represent.
With reporting by Aditya Hadi Pratama.
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