Amazon has been dabbling with groceries since the beta-launch of Amazon Fresh in 2007. Despite its technological prowess and deep pockets, its pure-play online grocery model has failed to garner significant traction. As estimated by GlobalData Retail, Amazon Fresh has a mere 0.2% share of the US grocery market in 2016. Last week, the web giant announced a US$14 billion acquisition of Whole Foods, giving them a physical presence in nearly 450 locations across the United States. This announcement highlights how vital physical locations are, in order to compete in the grocery segment.
Against this backdrop, Guillem Segarra, CEO of HappyFresh, commented on the potential implications this deal will have on the grocery retail ecosystem in Southeast Asia. HappyFresh is the leading online grocery marketplace in Southeast Asia. It has presence in Malaysia, Indonesia and Thailand.
On the implications of the Amazon/Whole Foods deal on the retail ecosystem in Southeast Asia
“Amazon’s acquisition of Whole Foods for US$13.7bn is a testament to the potential of the grocery retail sector, in the future of commerce. With rapid population growth and increasing urbanisation, the global outlook for the grocery sector is promising and is expected to grow exponentially. In addition, the acquisition highlights the enormous value of a new retailing model that combines both offline and online, physical and digital experiences, in an integrated way.”
On the potential of O2O grocery sector in SEA
“Grocery is the biggest category of household spend in Southeast Asia, with a growing population of 640 million people. The growing middle class and rapid urbanisation will fuel the growth of modern grocery retail formats and the adoption of online grocery retailing. Therefore, the acquisition will be a catalyst for change in the region. It is a reminder to retailers in Southeast Asia to leverage technology and stay ahead of the trend or risked being displaced.”
“HappyFresh has proven that online grocery retailing is a sustainable business. We achieved pre-marketing profitability (i.e. per order basis profitability) in December 2016 and are aiming to achieve EBITA profitability next. Being a pure play company gives us laser focus and makes us an expert in the sector. This gives us a competitive advantage as we continue our focused journey to crack that bucket of grocery spend, generating value for our retail partners, brands and customers.”
On the changing role of grocery retailers
“Our close working relationships with grocery retailers in Southeast Asia have allowed us to understand and evaluate the challenges faced by these retailers. We discovered that while retailers are embracing this digital revolution, they are largely ill-prepared for the disruption. Furthermore, the digital connectedness of consumers has set new expectations of what is considered a fulfilling customer experience. Therefore, the roles of retailers are expected to change as the digital economy expands.”
“HappyFresh is the only startup in Southeast Asia that solely focuses on the grocery sector while employing an asset-light model. We partner with brick-and-mortar grocery retailers to offer an online shopping experience that leverages off their existing physical assets and distribution networks. With our people, skills and expertise, we can help retailers navigate these choppy waters ahead, optimise their operations and develop defendable omni-channel experiences of their own.”
“We understand that we are in the business of changing a habit that is thousands of years old. Going to the supermarket is more than just doing groceries – it is a deep-seated practice that has various social and emotional implications. We want to give our customers the choice of shopping from the comforts of their own home on days when they decide to skip the congested traffic and long queues in supermarkets, to spend time with their loved ones. At the same time, we want to work with our supermarket partners to create the best experience for our customers, both offline and online. We are convinced that with our technology expertise and together with our partners, we can blend online and offline boundaries and make every step of our customer’s journey intuitive and delightful.”
Source: Media Release