With a population of 270 million, Indonesia has one of the biggest grocery markets in Asia. The value of its grocery sector is expected to reach USD 169.4 billion in 2022, up from USD 140.2 billion in 2019, according to a report by the Institute of Grocery Distribution. Indonesia is also projected to be the fourth-biggest grocery market in Asia in 2022 after China, India, and Japan.
As Indonesia’s e-commerce space matures, dozens of online grocers have raised significant investments in recent years, including Segari’s USD 18 million in September, USD 65 million for HappyFresh in July, and USD 65.5 million raised by TaniHub in May.
Several tech companies have staked their claim in app-based grocery orders as well. They have launched their own on-demand grocery features, such as GoMart by Gojek and GrabFresh by Grab, in collaboration with HappyFresh. Now, major tech firms are partnering with conventional grocery retailers.
Last week, e-commerce firm Blibli reportedly acquired 51% of IDX-listed retail company Supra Boga Lestari, which operates premium grocery chains Ranch Markets and Farmer’s Market. Founded in 1997, Supra Boga Lestari has 48 brick-and-mortar stores in nine cities. Before this development, GoTo had already acquired a 4.76% stake in Matahari Putra Prima through Gojek subsidiary Pradipa Darpa Bangsa. Matahari Putra Prima is the retail arm of conglomerate Lippo Group, which operates several retail chains, including Hypermart, Foodmart, and Boston.
Aside from a share of the profits from transactions, tech companies will gain access to grocery retail’s ecosystem through these acquisitions. They will get their hands on shopping data and insights on consumer behavior. If processed soundly, this will help Blibli and GoTo strengthen their e-grocery offerings.
“The grocery supply chain is complex and challenging, especially in Indonesia, with its unique geographical and weather conditions. Fresh produce needs to be stored at certain temperatures for a certain period. Errors in this process could cause food waste and revenue losses,” Steven Wongsoredjo, CEO of social commerce firm Super, told KrASIA.
Supermarket chains like Ranch Market and Hypermarket have been around for decades, so they already have loyal customers, strong standard operating procedures, and reliable suppliers. With these conditions in place, these chains can offer good prices for customers while retaining good margins, Wongsoredjo said.
“E-groceries is a supply chain game. Through acquisitions and investments in grocery chains, tech companies can absorb retail and logistics expertise. It would be easier for BliBli and GoTo to enter the existing ecosystem this way, rather than build [their supply chains] from scratch,” Wongsoredjo continued.
BliBli is the fifth most visited e-commerce site in Indonesia. It has around 18 million monthly visits, according to iPrice. In 2018, it became one of the first Indonesian e-commerce platforms to wade into the grocery segment when it launched BliBli Mart, which the firm claims is one of its best-selling categories. Last year, transactions on BliBli Mart tripled during the pandemic.
For the same reason, GoMart’s transactions increased 800% from February to December 2020. Recognizing surging demand in this segment, Tokopedia launched an online grocery service called TokoMart in March. It uses geotagging technology to allow users to buy groceries from the closest seller.
Another e-commerce company with a strong online and offline grocery retail presence is JD.id. In September, the firm opened its third grocery store outlet, JD Hub, in Jakarta. Customers can complete transactions on the JD.id app and pick up their order in-store or arrange for delivery.
“The penetration of online groceries in Indonesia is still very small and currently focuses on Greater Jakarta, but I believe this sector will continue to grow in the near future,” Wongsoredjo said. In metro areas, end consumers are comfortable ordering fresh produce and FMCG items through their mobile apps. However, in tier-2 and tier-3 cities, including rural areas, group buying with an agent-based model will gain more traction, he added.
“Grocery retail is not a ‘winner takes all’ market, so there’s plenty of room for several companies with different business models,” Wongsoredjo said.