Receive New Debt Funding, HappyFresh Back to Operations in Indonesia

Startups online groceries HappyFresh is back in operation in Indonesia after receiving fresh funds in the form of debt of Genesis, Innoven, and Mars. The amount of funds received is kept confidential by the company.

Previously, earlier this month the company decided temporarily stop operating in the context of business restructuring due to default on obligations, by appointing global firm Alvarez & Marsal.

In a statement, the company resumed operations in the Indonesian market after a strategic review. "We will work with debt funds from Genesis, Innoven, and Mars in business restructuring," said the management as quoted from Bloomberg.

In this regard, the company also announced its re-operation through an upload on Instagram yesterday (21/2). Happy Fresh is back and ready to serve shopping needs at consumers' favorite supermarkets.

As part of the reshuffle, a representative from US firm Kroll, Jason Kardachi, will replace three former directors on its board, including Lee Jung An, Kai-Kevin Gotthard Kux, and David Keller. Kardachi will lead Kroll's restructuring practices in Southeast Asia, will work closely with HappyFresh on the improvements.

Guillem Segarra (CEO) and Frederic Verin (CFO), and Christoph Krauss (COO) have been reinstated after stepping down from their day-to-day duties. Management also said that currently it will focus on Indonesia while considering options for its business in Thailand and Malaysia.

Since this year, Jakarta-based HappyFresh has struggled to raise capital after a sharp decline in the sector online groceries. In August last year, the company was in arrears on the salaries of a number of employees and laid off contract employees due to financial issues.

To save the business, the company hired Alvarez & Marsal Holdings LLC to review its financial situation.

"We've been through a lot. During the last few weeks when we ceased operations, we saw many comments from customers on various social media platforms expressing their dependence on our service offerings while asking for services to be resumed as soon as possible,” said HappyFresh Indonesia Managing Director Filippo Candrini in a statement.

Rearrange the concept online groceries

HappyFresh's business model is an intermediary between consumers and modern trades such as supermarkets. In the midst of high demand, last year they also introduced "HappyFresh Supermarket", the aim is to expand access to daily necessities products by increasing the presence of virtual stores.

This step is also used as one of HappyFresh's strategies to strengthen collaboration with national and regional supermarket chains that have so far helped provide a variety of products.

“In just a few months after launch, we saw tremendous customer interest, through 300% monthly user growth,” said HappyFresh Co-founder & CEO Guillem Segarra.

However, if you look at the data, actually the biggest grocery product sales channel in Indonesia is still in traditional retail. Although modern stores also continue to expand its coverage area.

Meanwhile, the e-Conomy SEA 2021 report said that in the midst of e-commerce penetration in Southeast Asia, the digitization of the grocery sector has only reached 2%. Obviously this is a big homework for the related industry ecosystem to be able to increase its market coverage --- including through improving supply chain infrastructure, market education, and business expansion on a national scale.

From a survey conducted by Katadata on 2022 respondents, it is stated that to fulfill their daily basic needs, the majority still rely on direct purchases at the nearest retailer, be it supermarkets, traditional markets, grocery stalls, or supermarkets. E-commerce platforms rank bottom.

At this point, it can be concluded that the habits formed during the pandemic did not fully survive post-pandemic. Especially in terms of shopping, the experience of coming to the store remains a favorite choice --- although there are some aspects that can be streamlined with online shopping.

Online grocery players need to reorganize their business model, providing a user experience that is more relevant to today's conditions. This includes rearranging the product categories on the shopping shelf, so that they are relevant to fulfill online -- at a time when speed alone is not yet a fully-fledged value proposition that entices everyone to become part of the consumer base.