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Brand aggregators are making a splash with SME roll-ups
Roll-ups are a big deal for Indonesian SMEs, but many won't benefit since brand aggregators tend to target mature businesses with a certain level of annual earnings.
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Nurohmad, 45, poses with coronavirus-themed batik fabrics on Oct. 11, 2020 in at Panggungharjo village, Bantul regency, Yogyakarta. (JP/Donny Fernando)
Brand aggregators may be the next big thing to help local small businesses sell their products at home and abroad.
At least four such firms have announced their commitments in the last year to roll up small and medium enterprises (SMEs), particularly those with a strong e-commerce presence, providing an alternative to the government’s SME programs.
Indonesia’s Tjufoo and Open Labs have respectively committed Rp 1.8 trillion (US$125.18 million) and $100 million, while Hypefast announced it had 25 brands under its belt. Meanwhile, Singapore’s Una Brands has committed $35 million for Indonesian acquisitions.
Brand aggregators work by acquiring small businesses in exchange for supporting the business, including brand development and market expansion. Some aggregators allow founders to remain in charge of operations.
“With brand aggregators, it’s very possible that SMEs will get a greater chance at punching through overseas markets,” Bambang Brodjonegoro, head of people’s economic empowerment at the Indonesian Chamber of Commerce and Industry (Kadin), said on Feb. 2.
Brand aggregators around the globe saw strong growth last year, with the United States’ Thrasio attaining decacorn status after raising $1 billion, benefiting from the rise of e-commerce and reduced borrowing costs amid the COVID-19 pandemic.
Riding the same favorable current, Indonesian brand aggregators also started upping their game last year, promising to address limitations in capital, technology, market access and skilled workers hindering SME growth.
