As Honestbee halts operations in the Philippines, a local competitor scales up

Photo credit: MetroMart

The Philippines’ online grocery delivery market presents a huge opportunity. The country’s total grocery sales amounted to US$10.2 billion in 2016, while ecommerce revenue has been on the rise, growing 22% year-on-year.

So it was unexpected when regional grocery and food delivery startup Honestbee temporarily paused its local operations in April.

According to notices the company sent to partner merchants, contract workers, and customers, the move came as a way to bring the “total business to a healthy and sustainable level.” This is despite the Philippines being Honestbee’s best-performing market.

While the developments at Honestbee cast questions about the viability of the business model, one local player is forging ahead. Homegrown grocery delivery startup MetroMart plans to scale up in a bid to transform into a “super app.”

In addition to expanding its portfolio of services, MetroMart is in the middle of raising a US$2 million series A round. A local investor has already committed 30% of the amount, and the startup is in talks with two other strategic investors, CEO Stefano Fazzini tells Tech in Asia.

The beginning

MetroMart was launched in 2016 by Fazzini and his older brother Christian. It’s mainly a grocery delivery app, but it also delivers for other partner-stores like pharmacies as well as toy and pet shops.

MetroMart, however, wasn’t the Fazzini brothers’ first startup venture. In 2012, the Italian-Filipino entrepreneurs founded TwitMusic, a platform that allowed artists to create marketing campaigns on Twitter. It received investments from notable firms, and registered renowned artists like Ariana Grande, Jason Mraz, and Enrique Iglesias as clients.

TwitMusic failed mostly because of monetization problems, so Stefano says their goal now with MetroMart is to build a sustainable business.

Branching out

While MetroMart is growing steadily, there are still many pitfalls associated with this kind of business.

For example, marketing spend and discounts to lure new users supposedly drove up Honestbee’s costs regionally, and its retention rates were low due to “outrageous use of coupons to hit short-term revenue goals,” reported TechCrunch. In December 2018, Honestbee’s Philippine business posted a net loss of US$1 million.

One way MetroMart plans to get around these challenges is to diversify into other verticals.

Five months ago, the team launched restaurant-booking service MetroTable. It allows customers to reserve tables and avail of discounts at restaurants during off-peak hours. The service can be accessed through the MetroMart app.

According to Stefano, MetroTable has become profitable since its launch, but he didn’t divulge concrete figures. He says the company has tie-ups with roughly 100 restaurants and achieved 57% month-on-month growth in the number of completed bookings.

Competition

Future plans