HappyFresh, an Indonesia-based online grocery delivery platform, is preparing to expand its reach to second-tier cities in Thailand to tap underserved markets amid intense competition in the segment.
The company raised US$65 million in a Series D funding round last year and said it is in talks to raise a "triple-digit" funding round in 2022.
According to the firm, online grocery accounts for only 2% of all the grocery shopping in Asean, with much more room to grow. Asean currently sees annual grocery spending of $344 billion.
"We see a massive opportunity in the sector in Southeast Asia amid an increase in digitalisation and full digital adoption in the region," David Lim, senior vice-president for marketing of HappyFresh, told the Bangkok Post.
Competition in the grocery segment has become intense over the past two years as super apps and online food delivery operators moved into the market.
Mr Lim said some second-tier cities in Thailand have posted strong economic growth.
"Provinces such as Chiang Mai and Chon Buri are examples of second-tier areas that are growing fast. Online groceries and businesses like HappyFresh are in a prime position to reach underserved families and households, solving the problem of access to freshly handpicked groceries across the region," he said.
In February the firm launched HappyFresh Supermarket, which enables online shoppers to purchase items stored in its own storage facilities, known as dark stores.
The company's four dark stores are located in the Bangkok areas of Rama IX, Phasi Charoen, Saphan Sung and Pracha Chuen.
"This allows us to offers higher-quality products at better prices and at the highest level of reliability post-Covid," said Mr Lim.
Since the launch of HappyFresh Supermarket, the company has seen 300% month-on-month growth in active customers.
"We are planning to expand the HappyFresh service to other provinces outside Bangkok," he said. "Our strategy of close collaboration with national and regional supermarket chains, offering more options to customers, will continue to expand into other provinces."
COMPETITION LANDSCAPE
According to Mr Lim, there are two levels to the competition landscape for online groceries in Thailand. One level revolves around gaining market share from leveraging the 98% of grocery expenditure in the region that is still offline, while the other is from food delivery players and super apps.
These players tend to have a bigger brand, bigger coverage and a bigger fleet, but they often vary in cost and are unable to have complete control over the quality of their products, he said.
"We position ourselves as a one-stop service for our customers' weekly shopping needs. We are looking to simplify the entire grocery shopping experience on a single platform with a focus on pre-planned weekly needs and a large basket order value," said Mr Lim. "Personal shoppers and drivers are professionally trained to ensure the quality of our customers' groceries are maintained at the highest level."
As Thailand faces higher inflation, customers are becoming more product- and price-conscious, he said.
"We might see a decrease in total spending," said Mr Lim. "However, the pandemic and economic woes could lead to consumers cooking at home instead of dining out, which increases the need for affordable groceries and promotional goods."