“Online sales increased by almost double compared to pre-pandemic sales and were even higher than during Indonesia’s number one online shopping day, Harbolnas, on 12/12,” Utoyo said.
Of course, the pandemic did bring challenges, especially when Fabelio was forced to close all its stores in Jakarta.
“As with any retail product, there is a customer’s need for touch and feel to experience the product for themselves. In addition to that, we didn’t want to lay off anyone,” he explained.
Fabelio overcame this challenge by re-training sales staff and turning them into virtual assistants, offering more personalised service via live chats with staff available on the website and mobile platforms such as WhatsApp.
“This function used to only generate 2 per cent of the sales and we are now at 20 per cent of the sales. Our virtual assistants are bridging the gap between pure online and offline purchases by giving social support for website customers. This channel’s contribution increased by almost 23 times at the peak of the pandemic and stabilised at around 11 times more in the “new normal” era.”
Fabelio set out to focus on customer experience, margins and profitability, when it launched in 2015, and at the time, it had no desire to get involved in price wars.
“We recognised a business opportunity, where we saw that the furniture category was moving from being under-served to becoming one of the hottest startup verticals. Around the world, we saw many furniture start-ups popping up, but there were no real start-ups in Indonesia,” Utoyo said.
“The other aspect was that it’s not easy to find furniture options in Indonesia. You have to take the weekend off, drive to several stores in all the traffic, and the options that you see are either extremely expensive or just very low quality.”
Utoyo couldn’t understand why, in a furniture country like Indonesia, an online retail model didn’t exist. Eighty per cent of furniture produced in Indonesia is for the export market and 80 per cent of the furniture available in Indonesia is from China, he explained.
“Our idea was to democratise good quality design, make it accessible to people, and also push the local aspect. We want to bring beautiful designer furniture at affordable prices and good quality to the Indonesian middle class.
“Back in 2015, one of the big things was the emergence of Indonesia’s middle class and till today, this remains our main segment.”
As with any startup, Fabelio faced challenges, particularly around supply chain management.
“Having many suppliers means that we cannot build close relationships with all of them, and this contributes to quality issues and late deliveries. This was especially a challenge for us in 2017 and 2018 as our demand outgrew our supply capabilities. We had to learn from that and build better relationships with our suppliers,” he said.
Without access to bank loans, Fabelio relies on investor money to grow, and fundraising hasn’t always been easy.
“Investors tend to go for what’s trending and popular. The challenge for us as founders is to stick to what we believe in and not do things as a knee-jerk reaction to trends,” Utoyo said.
Fabelio recently raised US$9 million during the first close of its ongoing Series C round, which will help boost growth acceleration and domestic expansion.
“Our combined efforts will further allow us to win a larger market share in this exciting US$6.7 billion home furniture market in Indonesia. The foundation of our market expansion plans is our branding and our customer experience,” he said.
The main focus is to improve assortment, stock availability and delivery times, Utoyo said. Warehouses and experience centres, where customers can experience the products physically through the support of the online experience, will also be opened in new locations.
“We are planning to open up 10 new experience centres this year in Indonesia and cover the whole island of Java by the end of 2020, with 30 stores by the end of the year,” he added.
A significant portion of the proceeds will be invested in technology, which includes scaling up the current team of 40 engineers.
Currently, Fabelio is on track to achieve profitability by 2022 and positive EBITDA is the immediate goal. The business is also looking at when expanding into new markets will be viable for the business.
“Overseas expansion has always been an ambition and we will look at it perhaps closer to the end of next year.
“If we do go out of Indonesia, countries like Vietnam, Malaysia, and Thailand are natural target markets because they have a strong base of furniture manufacturers and we will be able to replicate our supply chain in those countries.”
Utoyo sees many new opportunities in furniture in the new normal, particularly the work space category and the baby and kids category.
“The future of e-commerce is brighter than ever, and the simultaneous ramp-up in payments and infrastructure will support this growth trajectory,” he said.
With the exception of product manufacturing, Fabelio owns the complete value chain from product design to last-mile logistics.
“We have full control over every customer touchpoint. We always look at the holistic customer journey and don’t see us as either online or offline, and embrace the preferences of our customers.”
The retailer also sees an opportunity for the brand in the millennial market, given its ability to deliver trendy furniture, fast.
“We wanted to hit the millennial nerve, supported by selling propositions that by now, everybody’s familiar with: 24/7 customer service availability, 30 days free money-back guarantee, two year product warranty, flexible payment options and same-day deliveries for our best sellers.
“We want the experience to be not just painless, but also delightful. At Fabelio, a customer gets inspired, discovers our products, then purchases without risk. We make sure to leave the customer home with a great impression.”