Measuring the Future of “Online Grocery” Startups in Indonesia

Services online groceries allows users to order daily necessities, such as vegetables and other foodstuffs, through the application. The shape on-demand, orders are delivered directly to their homes within a specified time frame, usually also to maintain freshness. No doubt the developer of the platform also has its own delivery courier.

In Indonesia, penetration is still around big cities like Jabodetabek. However, the potential is still considered great. The Institute of Grocery Distribution (IGD) Asia stated that the market value online groceries will grow by 198% from US$99 billion in 2019 to US$295 billion in 2023. Southeast Asia is projected to experience the fastest growth, although in value it is not as big as in Japan, South Korea and China. The markets in India and Indonesia will also be increasingly important to businesses because of their scale.

Travel online groceries in Indonesia

Concept online groceries In fact, it has been around since 2013. At that time there were several players who came to the market, one of which still survives to this day SeroyaMart. While others, such as Sukamart, chose not to continue their business. In the following year other players began to appear, including newcomers from the region honestbee even though it only lasted 1,5 years in Indonesia.

HappyFresh, SayurBox, KeSupermarket, Hypermart, GoMart, up to the latest GrabFresh is now serving the community. Each also has strong business support.

First HappyFresh, present in Indonesia since 2015, now they have reached 11 major cities in 3 countries, including Malaysia and Thailand. They serve users in Jadetabek, Bandung, Surabaya and Malang. Sinar Mas Digital Ventures, vertex Ventures, Grab Ventures, LINE Ventures are some of the names of venture capitalists who have brought HappyFresh to life centaur, valued at over US$100 million.

HappyFresh partners will help shop for user needs at supermarkets and stores that have become partners, including Transmart, Giant, Lotte Mart, and Super Indo. In addition, now there is also a HappyCorporate to serve your needs Grocery in offices. Significant strategic cooperation was then built together Grab, generate services GrabFresh. Compete directly with owned GoMart Gojek that provide similar services.

SayurBox also a startup online groceries who managed to wear status centaur, through funding provided by Insignia Venture, Patamar Capital, East Ventures and Tokopedia. The approach is different, they connect directly with farmers or sales partners to distribute their wares through the application. Apart from providing fresh produce, they have a mission to break the supply chain so as to provide better income to farmers. Currently SayurBox is only operating in Jabodetabek.

Tokopedia of course also has an agenda with its involvement in this investment. Presented on a separate occasion by CEO William Tanuwijaya, corporate actions are carried out to smoothen the company's plans to realize the vision of becoming "Infrastructure as a Service" in the commercial sector. The expected impact of SayurBox, in addition to completing the product category – currently exists separate channel on the Tokopedia page—also provides feature expansion on the side on-demand and agtech. For information, Tokopedia also invests in other vertical startups that are still related to retail.

Consolidation with retail

As a transformative effort, the Ranch Market and Farmers Market retailers in 2016 finally entered the digital realm in collaboration with Kresna Graha Investama. They present the platform online groceries named KeSupermarket. Scheme online-to-offline through the “Collect in Store” feature, it allows users to pick up purchased items online in store offline, while still providing logistics services.

Likewise, other retailers such as Hypermart, they provide digital services on websites and mobile applications to make it easier for users to get their products. An O2O scheme is also implemented, to provide the option for users to pick up their own purchases at the store. Giant, Hero, Transmart, Lotte Mart also finally took a similar approach by developing digital channels.

Although these retailers have their own applications, they do not necessarily get high interest from users. For example if you view download statistics on Google Play, apps from startup online groceries get higher downloads. Meanwhile, what players like HappyFresh do is actually connecting consumers with products at retailers such as LotteMart.

Of course, there are many different variables, one of which can be analyzed is the focus of each business. Startup online groceries trying to consolidate the catalogs of various retailers for easy access on one channel. The benefit is that users can get a more complete variant by surfing in one place. The focus on accommodating the ordering process without having to think about the product supply chain directly allows them to focus more on managing the logistics system.

More service Grocery developed by (or in collaboration with) the provider ride hailing. They already have a strong foundation in the distribution system, take advantage of available driver partners in various locations. This point makes Gojek still believe in GoMart, in the midst of business efficiency through reducing features that had been done – many services Discontinued GoLife, leaving only GoClean and GoMassage.

A more open system also allows players online groceries directly connected to brand products, such as the partnerships that players are now intensifying. This will have an impact on the supply chain, thus making prices more affordable.

Not always smooth

The succession of HappyFresh CEO and the sale of RedMart Singapore to Lazada was in the spotlight at the end of 2016, as well as showing the severity of business competition online groceries in Southeast Asia at that time. In the following years some survived, but some fell. Last year Honsetbee experienced serious financial problems, and then stopped its operations in many countries, including Indonesia. At that time, there was widespread news about the prospect of selling the business to Grab and Gojek, but not sweet fruit.

Launched in 2015, Honestbee has launched a fairly aggressive growth strategy. Success in their home country, Singapore, they immediately expanded to seven neighboring countries including Hong Kong, Taiwan, Thailand, Indonesia, the Philippines, and Japan. The business system, they employ freelancer or so-called "Bees" to help purchase orders and deliver to users -- a concept that is now increasingly familiar to Indonesian consumers.

It didn't stop there, Honestbee also presented a concept food delivery in Singapore. However, the continued growth has a direct impact on their finances. Starting at the end of 2018, it was reported that the company was running out of capital, they started laying off employees and terminating several business units, including R&D centers in India and Vietnam. Granted, the loss of millions of US dollars had implications for the acquisition of a large number of users, but unfortunately it did not generate the traction that was expected.

The thing that is less considered, not all market shares are ready with these services. It was still in 2017. Users in Indonesia are new to the service E-commerce, view many surveys of the average product purchased online online is gadgets or fashion products. Unfinished logistics reliable so the main problem for fresh groceries delivery. So the services offered by Honestbee are finally less attractive.

The pandemic boosts popularity

Finally, HappyFresh and SayurBox tried to work on a local touch. They see the basic problems above, such as logistics, as a priority to be resolved early on. The service also operates in large urban areas that are subject to congestion, but it continues to strive for fast home delivery – users can view estimated delivery times and track current status.

HappyFresh CEO Guillem Segarra once said, instead of considering points on the map, their expansion strategy is always based on approach market-driven. They choose not to rush and only come to markets that really need the solutions offered. Segarra claims to have gained an advantage in the markets in which its services operate today.

2020 seems to be a business online groceries will find high user spikes. The Covid-19 pandemic has made people start to take advantage of these services, because there is an appeal not to travel outside the home. Sure enough, there are currently a lot of stock products on the empty platform. The delivery queue has also piled up – to the point that it cannot be delivered on the same day. The important point, there is awareness which is increasingly being developed among Indonesian consumers.

But can't be careless, because E-commerce also start racing category Grocery, like Lazada strategy after the RedMart acquisition. Local companies have started to show the same attitude. For example, what Blibli did by presenting Blibli Mart, present the O2O concept of selling daily necessities products. JD.id did the same thing.

Online grocery will have a bright future, in the midst of society's increasingly digital habits, as well as the consolidation of retail and better platforms. This is in the context of the market that is currently being visited, namely Jabodetabek. Apart from that, there is still a lot of homework that needs to be validated because basically what startups in this vertical have to offer is to change the culture of society, especially among housewives.