Online Coffee

10 months ago . 5 min read
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Ardian Wibisono
Author of forbes indonesia
Online Coffee

Robin Boe and Jhoni Kusno have built Otten Coffee into Indonesia’s largest online coffee site.

By Ardian Wibisono

Otten Coffee co-founders Robin Boe, 33, and Jhoni Kusno, 34, have grown PT Otten Coffee Indonesia into one of the major online coffee purveyors in Indonesia. Unlike others who sell just coffee and tea online, Otten is also a supplier of the related equipment, thus making money off those setting coffee cafés and wanting to making specialty coffee at home. Launched at the end of 2014, Otten now offers more than 5,000 SKUs of coffee and tea products and equipment on its site, as well as tea and over 30 single origin coffees—with about half the brands exclusive to Otten. Their main markets are Medan and Jakarta.

Both Robin and Jhoni embody the philosophy of “follow your passion, money will come.” They both graduated with degrees in computer science from Sekolah Tinggi Ilmu Ekonomi Mikroskil in Medan—but they were also coffee geeks who loved trying different kinds of beans and brew. Robin is even a certified coffee grader. So both began building a business around their passion. In 2008 they started exporting green beans to Korean buyers and also buying different kinds of beans in bulk to be sold in smaller packages, in part because they wanted to try coffee that wasn’t available in small sizes. They soon realized the margins on green been sales were tiny. Jhoni says it is only about Rp 1,000 for each kilogram—so to make just Rp 1 million, they’d have to sell one tonne of coffee. They began selling roasted beans, and created a brand, to improve their margins. Thus Otten Coffee was born in 2012, but still all offline, opening a brick-and-mortars store and just doing traditional sales to hotels and other clients, with only around 20 SKUs.

“Selling offline was very challenging, not that many people came to our store. Then we tried to do it online and it worked. We have more online customer coming from other cities,” says Robin. Otten Coffee headquarters in Medan’s commercial area is itself a coffee haven, with a big working roasting machine in the front of the office while coffee equipment is displayed on the racks. Though the roasting machine makes loud noise when in operation, it fills the office with the smell of fresh roasted coffee. Customers can still buy coffee beans and goods there, while others wander in, mistaking it as a coffeeshop. Yet the main business is now online, with trucks coming daily to pick goods to be delivered nationwide.

When the online store was founded, Robin says there were already other online coffee retailers. Yet Otten Coffee claims to be the biggest online coffee seller in the country by combining the coffee, customers and technology. To increase demand, they created an online coffee community, with an online magazine, newsletter and videos that help educating people about the coffee culture. Otten now has 130,000 registered customers in its website, a mix of ordinary consumers and cafe owners. It’s Instagram account has over 249,000 followers, which Jhoni says the largest in the region in the online coffee store category. The Otten Coffee Youtube channel has 31,000 subscribers. The pair know that social media can build the company’s brand inside and outside Indonesia. “Coffee is not a commodity, it’s a community, we need to communicate to and inform people,” says Jhoni.

Otten won’t disclose total sales figures, but Jhoni says last year they grew 70% year on year, and says the company is already profitable. On average they do 6,000 shipments each month. Product prices on the site can vary from Rp 225,000 for one kilo of single origin coffee to Rp 6.5 million for one kilo of Ninety Plus Green Bean Maker Series. Ninety Plus is a brand often used by international award-winning baristas. For coffee equipment, it can also range from Rp 45,000 to special coffee machines priced above Rp 1 billion.

Doing business from Medan has its challenges. Logistics are not as well developed there as in Jakarta or other cities. The pair offer free shipping anywhere in Indonesian on any purchase above Rp 200,000 which means they lose money on some shipments, especially to remote parts of the country. On the plus side, Otten Coffee can more easily source beans from Medan. Sumatra is the country’s largest coffee producer and Sumatra beans such as Aceh gayo, lintong, and mandheling are among their bestsellers. They are also looking for series B and strategic investor to grow further.

“What’s good about doing business online is we can track customer data. From the numbers we can tell our customer behavior. We even offer discounts to offline customer to buy online so we can capture their data in our database. That is probably the thing that our competitors aren’t doing,” Robin says, adding that by analyzing the data from the site and social media they could see trends in demand.

That said, the pair still want to have an offline presence, on a selected basis. They are putting the final touches on a second offline store in the trendy Senopati area of Jakarta, as Jakarta contributes 28% to total sales. They are also looking at other big cities to put some stores. Robin says especially for the higher-end expensive items, customers still like to check them in person at a regular store before buying. Otten also offers after-sales service through third party partners.

Jhoni also says the coffee industry needs more government support to raise the profile of Indonesian coffee worldwide. He says Indonesia should follow China’s example in supporting export commodities by lowering shipping costs. “Shipping costs hundreds of thousands rupiah even to Singapore, while Aliexpress gives free shipping worldwide even if it takes a month for the delivery. The government should lower the cost if they want to boost exports, if they can do that, we already have a plan to open a marketplace for coffee where people can buy and sell coffee, and we will handle the shipping,” Jhoni says.

To grow the firm, the pair are also raising funds. Venture firm East Venture, headed by Willson Cuaca, has been particularly supportive, investing an undisclosed series A in Otten in 2015, right after the pair had opened their online store. East Venture and Willson have been active in supporting them with advice and other help—Willson likes to drink Otten coffee in the East Venture offices.

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Written By
Ardian Wibisono
Author of forbes indonesia
Topics
Entrepreneurs