Indonesia e-grocery battle escalates as more players enter the fray

As e-groceries continue to grow amid the Covid-19 pandemic, HappyFresh – an early mover in Southeast Asia – appears poised to seize the advantage.

The company, which operates in Indonesia, Malaysia, and Thailand, recently raised US$65 million in a series D round led by Naver Financial Corporation and Gafina. It’s a surprisingly sizable amount, considering that regional super apps Grab and Gojek are active in this arena.

This brings HappyFresh’s total disclosed fundraise to US$96 million, which is the most out of similar startups in the space.

But while HappyFresh’s investors are bullish about the company’s prospects, the road ahead may be bumpy. Third-party estimates show that HappyFresh’s numbers lag behind its rivals’, while industry sources say that its business model generates thinner margins compared to others.

Tech in Asia reached out to HappyFresh for this story, but the company declined to comment. However, Jongik Kwon – principal at HappyFresh backer STIC Investments – points out that the e-grocer’s first-mover edge and roster of partners puts it in a prime position.

A sophisticated approach is needed “to meet the customer needs in the e-grocery market,” Kwon tells Tech in Asia. He believes that HappyFresh’s advantages are difficult for its competitors to match.

Different models, different strategies

In Indonesia and Thailand, HappyFresh’s number of monthly active users (MAUs) trails other players’. It has been generally no. 1 in Malaysia, but an app from UK supermarket chain Tesco has been gaining ground and took over the top spot.

Of the three countries, Indonesia appears to be HappyFresh’s biggest market, clocking the highest number of MAUs – in the hundreds of thousands – compared to Malaysia or Thailand.

But Indonesia’s e-grocery space, which is estimated to be worth US$5 billion to US$6 billion by 2025, is also rife with contenders that use different strategies.

HappyFresh runs a partnership model with hypermarkets and supermarkets, opting for what’s typically called “modern retail.” Consumers can place their orders via the app, then a HappyFresh-trained personal shopper will pick out and gather the goods. After that, the items will be delivered by HappyFresh riders or logistics partners Grab Express and Lalamove.

On the other hand, players like TaniHub and Sayurbox hold their own inventory: They primarily source directly from farmers and other producers instead of a retailer. Fresh produce from farmers or traditional markets are collected and sorted at the companies’ respective hubs. The goods are then picked up at the hub and sent straight to consumers.

Unlike HappyFresh, TaniHub has focused on the business-to-business segment, although it also serves end consumers. Smaller players like Chilibeli and Segari operate similarly, delivering goods to community leaders within neighborhoods, who function as collection points.

Smaller margins?

No one is no. 1 yet