Online Grocery Startups in Thailand (HappyFresh, Grab, LINEMAN, FoodPanda) and The Future of Retail Stores
By: Montawan, Nae Nae
Tags: Ecommerce, Thailand, Startup, Retail, Online Grocery Shopping

Thailand is currently hit with the second wave of COVID-19: schools are closed until the end of January and businesses are encouraged to implement work-from-home policies for their employees.

As a result, people are spending more time at home, learning and working. With the current COVID-19 situation, people are disincentivized to leave their houses; nevertheless, the demand for food and groceries has increased, leading to the emerging market of online grocery shopping in Thailand’s E-Commerce industry.

E-commerce has grown significantly since the start of the pandemic. Statista has estimated the revenue of US$8,900 for the E-Commerce market in Thailand, where Food and Personal Care deliveries have the highest market volume.

Bangkok Online Grocery Landscape

In Thailand, the most popular applications for food deliveries are Grab, LINEMAN, FoodPanda and Gojek. As the rise of demand for grocery shopping surges, a few of these applications have started to launch a new feature for online grocery service in addition to their food-delivery services.

Currently, there are two major players in the online grocery industry in Thailand: HappyFresh and Pandamart.

*Photo reference: HappyFresh and Pandamart website

1. HappyFresh

*Photo reference: https://www.happyfresh.co.th/en/

HappyFresh is an online supermarket platform, originally started in Indonesia and Malaysia before entering Thailand’s market in 2015. HappyFresh operates by partnering with local retail stores in Thailand, including The Mall Group, BigC and Tesco. Currently HappyFresh has partnered with over 700 supermarkets and retail stores in Thailand and promises to deliver groceries within one hour after the order is recieved.

Moreover, many Thais are familiar with other food delivery applications, such as Grab and LINEMAN. Both also offer online grocery delivery service, operated by HappyFresh.

In 2018, HappyFresh partnered with Grab, launching GrabFresh, an online grocery delivery service via the Grab application. Following the partnership, in 2019, HappyFresh successfully raised funds from Grab Ventures and Line Ventures, leading to LINEMAN joining the online grocery delivery market, partnering with HappyFresh to run its operations.

Evidently, the key food delivery players in Thailand, Grab and LINEMAN, that already has a very large base of users (i.e. LINEMAN has over 3 million users per month) enable HappyFresh to expand its reach within a few months after its partnership with both companies.

2. Pandamart by FoodPanda

Another player that has recently entered Thailand’s online grocery market is Pandamart by FoodPanda. Pandamart entered the online grocery market, differentiating itself from HappyFresh by highlighting its focus on Quick-Commerce, promising to deliver its ordered groceries within 25 minutes.

Its business model also distinguishes itself from its competitor. Pandamart has two operating business models: 1) revenue from its selling groceries from its own warehouse 2) commissions from its partner retail stores. While the second business model is the same as HappyFresh’s, Pandamart’s first business model makes it unique: by having its own warehouse, Pandamart’s revenue also comes from selling its own groceries from its warehouses.

Currently, Pandamart has 7 warehouses around bangkok, enabling it to meet its mission of providing Quick-Commerce, promising to deliver the ordered groceries within 25 minutes.

Looking Forward: 2021 Online Grocery Trends & Future of Physical Retail Stores

Even though there are currently only two major startups in Thailand’s online grocery market, it is expected that there will be more players entering the online grocery market in the near future, as the market value continues to increase.

As a result of this growing industry, it is crucial to examine the fate of physical retail stores, as consumers are shifting towards E-Commerce. Will this lead to a restructure of the current physical retails? How can we prepare for such changes?

Here are some examples of how traditional retail stores can become stores of the future

Discover and Create Awareness: A shift from television marketing to social media marketing is crucial for traditional retail stores. In the past, many retails promoted and created their awareness through television ads; nowadays, it is crucial to use data and social media profiles to target your customers, creating a more personalized advertisements. Social media marketing through Facebook or Instagram can help retailers reach a wider and more targeted audience.

A shift from television marketing to social media marketing is crucial for traditional retail stores. In the past, many retails promoted and created their awareness through television ads; nowadays, it is crucial to use data and social media profiles to target your customers, creating a more personalized advertisements. Social media marketing through Facebook or Instagram can help retailers reach a wider and more targeted audience. Purchase: Evidently, consumers are now customized to purchasing goods online: retail stores have to adapt to this change in behavior. This can be done through creating multi-nodal purchase options, creating an easier access to payments (mobile banking and digital wallets), etc.

Evidently, consumers are now customized to purchasing goods online: retail stores have to adapt to this change in behavior. This can be done through creating multi-nodal purchase options, creating an easier access to payments (mobile banking and digital wallets), etc. Supply Chain, Logistic and Warehousing: Lastly, Digitized Supply Chain Network is crucial for retail stores of the future. By using real-time data, it will help retailers increase agility within its organization. Data and RFID systems can help with logistics and warehousing of the supply chain. Moreover, using IoT will help retailers monitor their shipments and deliveries of their products, reducing its delivery costs and increasing its efficiency.

It is evident that food delivery and grocery delivery via motorcycles are fast-growing and prominent in Thailand and southeast asia. However, it is also crucial to take into account the rising technology of autonomous vehicles and drones that could potentially disrupt the logistics industry.

For example, Amazon has already started piloting its drone delivery in the U.S., and soon enough these logistics companies will have to adapt to this digital disruption that is currently emerging in the market.

Regardless of what the mode of transportation for these goods will be in the near future, retail stores must adapt to the changes and prepare for the digital disruptions of the 21st century.

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