Online grocery wars: Grab challenges Lazada for dominance

Southeast Asia’s ecommerce giants and brick-and-mortar supermarkets are accelerating their push into the online grocery space, thanks to an unexpected boost from the Covid-19 pandemic.

This means the region’s ecommerce landscape is shifting.

Photo by Devi Puspita Amartha Yahya on Unsplash

Lazada’s RedMart was a pioneer in Singapore and faced no real rival. Honestbee, in hindsight, had been set up to fail. Amazon loomed large when it entered the market, but it still trails behind regional ecommerce competitors.

But Grab is intensifying the fight for dominance in the nascent market and putting intense pressure on Lazada. Shopee, meanwhile, is on the prowl with its own take on the business.

Heating up

As an online service, grocery delivery is still in its early days. Ecommerce players were testing the waters before the pandemic, but adoption was still low. The surge in demand last year, however, is turning online groceries into a new battleground.

It’s one of the fastest-rising ecommerce categories in Southeast Asia, growing by 2x to 2.5x in 2020 compared to 2019.

Research has shown that grocery is a US$350 billion market in Southeast Asia, with only 0.3% penetration.

Photo credit: Grab

Grab, in particular, has been ramping up its efforts in grocery delivery, and its increasing interest in the space means it’s going up against Lazada. RedMart, the ecommerce platform’s grocery arm, entered the scene early in 2011 and currently dominates the Singapore market.

Beyond Singapore, however, Lazada doesn’t use the RedMart brand for its grocery service. That’s because RedMart is not a household name elsewhere in Southeast Asia, the company tells Tech in Asia. In the Philippines, for example, it offers online grocery delivery service under a brand called LazMart.

Meanwhile, Grab teamed up with Indonesia’s HappyFresh to launch GrabFresh in the country and Thailand in 2018. Grab Ventures, the super app’s accelerator unit, is an investor in HappyFresh.

Frenemies?

The relationship between the Grab and the Indonesian startup, however, isn’t so clear cut. The Southeast Asian giant recently introduced GrabSupermarket, a grocery delivery service that’s only available in Malaysia, pitting it against HappyFresh, which also operates in the country.

A profitable future?