Despite challenges such as slow internet speed, online grocery platform HappyFresh remains confident that it has a winning recipe for its expansion into the Philippines.
The grocery delivery start-up announced on Mar 3 that it would be venturing into the Philippines, a move to expand its footprint in a burgeoning e-grocery retail market in Southeast Asia. Apart from its home market Indonesia, HappyFresh has previously rolled out its services in Malaysia and Thailand.
Analysts told Channel NewsAsia that it is not surprising to see the online grocer moving into the Philippines, where the number of internet users is poised for double-digit growth in 2016 and set to become one of the fastest-growing e-commerce markets in the region.
However, problems such as lagging internet infrastructure may serve up challenges for the new kid on the block, according to industry analyst Ng Zhi Ying from research firm Forrester. “The Philippines has one of the slowest internet speeds in Asia, and this might result in cart abandonment if it takes too long for the customer to add their product to the cart or to make a payment.”
Despite that, CEO Markus Bihler believes that HappyFresh – a platform that allows customers to make grocery orders online and receive them within an hour – is a “lightweight” application that is designed to work well even in areas with slower networks and limited bandwidth.
“Given the various infrastructural developments in the countries that we operate in, we have chosen an app that works across the region. I can imagine (slow internet) to be a problem for heavyweight programs such as music-streaming apps, but we are very lightweight and works perfectly with the existing speed of wifi in Manila,” he told Channel NewsAsia.
Mr Bihler, who co-founded HappyFresh in Oct 2014, also noted that the company’s usage of mobile technology to pair up drivers and shoppers will ensure that orders are delivered on time. In fact, the CEO said that Manila’s traffic woes may be a booster for the start-up, instead of an obstacle.
“Ironically, we benefit from the existence of traffic jams because the convenience factor increases for customers who previously have to endure the traffic when out for grocery shopping.”
RISING COMPETITION NOT AN ISSUE
According to research firm Euromonitor International, the Southeast Asian market is increasingly sought after due to factors including a booming population and impressive economic growth rates. The rapid take-up of connected devices amid developments in internet infrastructure have also fuelled interest among online grocery retailers.
“Emerging markets like Thailand, Philippines and Indonesia are among key countries of new online grocery services thanks to huge populations. Total population of these three countries reached over 400 million in 2015, nearly 70 per cent of the total population in ASEAN,” said Euromonitor’s research analyst Anisa Ngandee. “Meanwhile, forecasted internet users (in these countries) will reach nearly 150 million within 2020.”
As such, it is unsurprising to see regional players such as Singapore’s grocery giant RedMart, stepping up efforts to position themselves for dominance. Foreign firms such as Japan-based messaging app company Line have also joined in the battle by unveiling its first-ever online grocery delivery service “Cheap Sure Sure” in Thailand last year.
Despite the threat from competitors, Mr Bihler said that rising competition could act as a positive factor for a market which remains in the nascent stages.
“We are attempting to change a decade-old consumer behaviour that involves visiting one’s favourite supermarkets into shopping via a mobile device. Currently, only less than 1 per cent of grocery spending is spent online. A higher online penetration rate will involve a multi-year joint effort by all players in the market to educate consumers about the convenience of ordering groceries online,” the boss of HappyFresh said.
