Technology is transforming the way the consumer packaged goods (CPG) industry operates, and although this change has been more evolutionary than revolutionary, there is no doubt that digital is redefining what it means to go shopping; the lines between the physical and digital worlds are blurring.
FoodTech Company, HappyFresh has chosen to capitalise on this developing online fresh grocery ecommerce trend, as the first and fastest-growing online grocery platform delivering foods across Southeast Asia. Asia Outlook spoke to Group CEO and Co-Founder of HappyFresh, Markus Bihler on the popularity of online shopping and its plans to change the future of online shopping.
Asia Outlook (AsO): Talk me through the initial premise when starting HappyFresh?
Markus Bihler (MB): Imagine a grocery store where you can receive personal recommendations and offers the moment you step in the store, where checkout takes seconds and you can pay for groceries without ever taking out your wallet.
I still remember flying into Jakarta for the first time, only to be stuck in traffic for three hours on my way into town. You combine this infrastructural challenge with my very heartfelt dislike for the activity of shopping and love of cooking and you have the core of HappyFresh’s ecommerce service offering: fresh groceries to your doorstep; picked for you by a professional shopper and delivered to your doorstep within one hour. The name was chosen to function as a matter of fact label that states what’s in the box, and HappyFresh, I would argue, is a name that does exactly that.
AsO: How did you know that an ecommerce grocery store would be a success?
MB: Online grocery shopping is particularly popular in Asia, where the continued increase in mobile adoption and broadband penetration, particularly in the developing regions, has also helped boost online grocery sales. Regionally, Asia-Pacific consistently exceeds the global average for adoption of all online retailing options. Ordering online for home delivery is the most commonly preferred flexible retailing option in the region.
Moreover, customers are also becoming very selective when it comes to quality foods. A Nielsen study shows that today’s shoppers are seeking fresh, natural and minimally processed foods with beneficial ingredients that help fight disease and promote good health. This presents tremendous opportunity among niche consumer segments, especially in the healthy eating space and other categories that may be more difficult to find on in-store shelves. As a result, a number of specialty retailers have emerged in the health and wellness space, from national online grocery delivery services with extensive fresh sections to local produce delivery services.
From here, we looked at the basics. With the growing number of smartphone users, we had to make sure that enough of these potential customers were motivated enough to utilise our service. Internally, we had to make sure that we partnered with enough high quality and popular retailers with a broad assortment of produce.
AsO: Why did you choose to locate the HappyFresh headquarters in Indonesia?
MB: Southeast Asia is a wonderful region that is full of exciting metropolitan cities with very rich culinary traditions and an interesting culture. Indonesia and the rest of Southeast Asia is a very exciting market for us. We have encountered a great community of start-ups and pool of local and international talent.
The outlook for the retail industry in Southeast Asia has never been more promising, with online retail now beginning to emerge. There are opportunities abound in this region with its sophisticated food-loving consumers, growing populations and steady economies.
In Indonesia for example, middle and upper income consumers will continue to drive the growth of modern, online retailers. Customers are increasingly quality-conscious, demanding higher levels of service and demand for processed foods and dairy is growing, particularly in urban areas, driven by changing lifestyles as people work longer hours and seek greater convenience.
AsO: In what countries is the HappyFresh service now available?
MB: We are now active in Indonesia (Jakarta), Malaysia (Kuala Lumpur), Thailand (Bangkok) and soon in Taiwan (Taipei). Our plan is to become Southeast Asia’s leading food marketplace company, and we want to operate in all major, traffic-congested mega cities in the region.
Kuala Lumpur and Jakarta are very interesting markets for us. Spending power and credit card penetration are higher in Kuala Lumpur than in Jakarta, and in general people are more used to buying things online there. Jakarta, on the other hand, is interesting because we really feel we can solve a huge problem here. We all know about the infrastructure challenges this city faces and the traffic problems this often leads to.
That’s why we think HappyFresh will have a big impact here; it’s one less trip you need to make, which often translates into several hours saved that you can now spend on things you would rather be doing.
For retailers who already have an online shopping platform, we can provide an additional sales channel to reach a whole new demographic of customers that they may not have been able to reach before.
AsO: How does HappyFresh differentiate itself from regional competition?
MB: We are aware that many countries in which we operate already have local online grocery shopping sites, such as redmart.com in Singapore and Presto Grocer in Malaysia. However, we work hard to be the partner of choice for the best and most established offline grocery retailers in order to bring more of them online. We strongly believe in our dedicated professional shoppers who receive in-house training in order to pick the best fresh products for customers to make our partners shine.
And the message to our partners is simple: Focus on what you are really good at, which is running grocery stores, then let us help you bring your brand and your products to an incremental set of customer groups. In addition, let us help you reach customers that are normally outside your catchment area or would have otherwise ordered a pizza rather than ingredients for home cooking delivered within an hour.
For all of this, we provide a ready-to-use solution to our retail partners, at no upfront cost, with a great tech product, fleet of drivers, shoppers and customer service agents ready to bring our partners’ products out to shine. In short: we help supermarkets increase their business through a new revenue steam and help them move into the growing digital world.
In support of this, we run an in-house customer insights team that is solely focused on analysing the behaviour and preferences of customers to help our partners make better choices, improve promotions, decrease out of stock and inventory write-offs and increase a supermarket’s marketing efficiency.
AsO: What do you think the future holds for online shopping and in-store digital technology and what will this mean for retail in Asia?
MB: In the past, home delivery of milk and other daily necessities became a staple for many families. In some markets, the milkman never really went out of fashion; the concept of a merchant delivering groceries and household staples or ready cooked meals to a home is very much alive and well.
We are seeing a resurgence of the home delivery model, with a twist. Consumers aren’t just picking up the phone to order; they’re increasingly going to the retailer’s webpage or using their mobile app. The milkman is back, but this time, he’s gone digital.
Increasingly, retailers are introducing ecommerce models that make it even easier for tech-savvy, time-crunched consumers to get the items they need. Therefore, it is critical that retailers and manufacturers understand how these consumers are using technology.
Click here for October's issue of Asia Outlook, where you can see the illustrated HappyFresh article.
About the CEO
Markus is Group CEO and Co-Founder of HappyFresh, Southeast Asia’s leading grocery delivery Company. Founded by a group of passionate entrepreneurs and backed by great investors HappyFresh is headquartered in Jakarta and operates across the region.
Prior to re-locating to Asia, Markus ran online retailer Tirendo in Europe (sold to Frankfurt-listed Delticom AG in 2013), was a private equity investor with The Blackstone Group and EQT Partners, and a consultant with BCG.
Markus is a graduate of Balliol College, University of Oxford with a double-degree in Economics & Management and a fellow of the German National Academic Foundation.