Capturing the online grocery market
Lim Su Lin | 26 Oct 2016 14:35
Freshness and quality are major concerns for online selling, especially when it comes to perishable items like fruits and vegetables
Online grocery shopping has existed in Malaysia for some time. Back in 2009, companies like RedTick.com, You Beli, Grocer Express, Zero Online Grocer and Presto Grocer had already begun carving a niche in digital groceries.
These early birds were largely small boutique businesses, born out of the e-commerce boom.
Then, in 2013, Tesco Malaysia made its name as the first big supermarket to launch an online grocery service.
Quoting Tesco’s (then) CEO Georg Fischer in a 2014 theSun report: “It (online grocery service) has become an important part of our business. We are getting positive feedback from our customers and it is encouraging.”
Today, online grocery is making inroads once again. Yet, with the exception of Tesco and a handful of small start-ups, few brick-and-mortar grocery retailers seem keen to take a bite of the online market share.
Among the larger players, prominent names like GCH Retail (Malaysia) Sdn Bhd and Aeon BIG have yet to venture into online selling. GCH is the local arm of Hong Kong-based Dairy Farm International Holdings Ltd and owns the local operations of Giant, Cold Storage, Mercato and Jason’s Food Hall. Aeon BIG is a foreign hypermarket chain owned and managed by Japanese retail corporate group AEON Co Ltd.
Likewise, among local supermarkets, the adoption of online selling has been lukewarm, to say the least.
One reason for this inertia could be the high cost of setting up an online store. In economic terms, selling online means taking on additional costs in labour, delivery vehicles and fuel, not to mention building the technology platform itself.
Large-scale retailers might be able to afford the additional overheads, but for others, budgeting is no trivial matter.
“Tesco is an international company. They already have a system in place so it is just a matter of replicating and bringing it down to Malaysia. For others, it is more costly,” says Sabariah Mohd, head of marketing and brand communication at Mydin, a homegrown wholesale and retail enterprise.
Last year, Mydin adopted online selling under its premium fleet of supermarkets, Sam’s Groceria (Sam’s). Out of seven outlets nationwide, five currently provide online shopping and home delivery through the online store (www.samsgroceria.com).
Setting up the system was not cheap. All in, Mydin spent about RM1 mil just to set up its website.
Cost is one of the major considerations for grocers thinking of investing online, according to other early movers in the e-food market.
“You have to spend money on programming and the software to get the platform together,” says Daniel Teng, director of operations at Jaya Grocer.
Jaya Grocer is currently testing a pilot online shopping and home delivery service, complemented by a mobile app that enables consumers to select their groceries on their smartphones. The platform is expected to be launched in December.
Turn to pages 06-07 for the full story in the latest issue of Focusweek.
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