The direction it is heading in Malaysia
Online grocery shopping is a common sight in the UK and South Korea. Their superior buying power and encouraging customer demand drives this sector of their online market to a considerable success. This is not so in other parts of the world, even in the US. While the pioneer of online grocery shopping originated from the United States, this particular online shopping trend has never caught on. Much that has started in the mid 90’s during the dot-com bubble overestimated the market potential and failed miserably within 5 years of their inception. While others that have survived and continue to run to this day experiences slow growth. In Malaysia meanwhile it is showing some potential for growth in the Western part of the country, while in the East it is still largely unavailable but has been attempted by a few small businesses and independent entrepreneurs.
Historically online grocery shopping is not filled with success stories. Quite the opposite, many have failed. Homegrocer.com was the biggest name and the biggest earning online grocery shopping company in the world yet it filed for bankruptcy only 3 years after its launch. The difficulty in making it work is down to economics. Grocery stores and supermarkets are high revenue businesses but with very low profit margins. They require vast amounts of investments in marketing and logistics, and of course maintaining a market-cum-warehouse is also slashes a good chunk of the profit.
Time and time again people have tried to make online grocery shopping work. International supermarket brands have their own online grocery buying and delivery service in their respective home countries, and for some of their branches in Malaysia they deemed that it is worth the investment to try and run the same services here. Overall the idea has a positive reception by Malaysian shoppers, but the number of actual online purchases are still somewhat low. Parking lots are still packed, and surrounding traffic are still congested with their patrons.
A few local names too have entered the scene with varying levels of success. In Kota Kinabalu there are two notable newcomers in the scene. Notable because not only are they the first in the state to offer an online delivery service, but they are also set up from the get-go to be online grocery stores. Both started in 2017 and are fully independent, thus such a move is a bold one especially since Kota Kinabalu is an untested market.The customer reviews for both companies are largely positive, however their levels of success are quite dissimilar. One has found modest success and are actively updating their product catalogue. Plus they continue to operate with competitively priced products 3 years later. Understandably their range of delivery is limited, but they offer self pickup at their physical store at any time. Literally. While their delivery times are from 8 am to 6 pm, their physical branch is open 24 hours. Perhaps this is an ingredient to their success?
Meanwhile its competition — the pioneer of this service in Sabah — seems to be experiencing issues a year after its launch. It is the more “flashy” of the two, but admittedly the more convenient one as this store also has a mobile app and a better delivery coverage. In January 2018 their website and mobile app were both “under maintenance”, and continued to be in this state for over a year with no word as to when the will restart their operation. Both did eventually become accessible, but you know something is not right when a pair of scissors cost RM153 and is in the fresh produce section. And it seems traffic in all their social media has ceased. The last public customer inquiry in Facebook was in 2019, and their last update was in January 2018 for announcing the maintenance. No word has come out officially as to what went wrong or if they have even began operating again. They may have underwent a re-branding and abandoned the original concept altogether.
The two examples mentioned shows how challenging it is to run an online grocery shop. Not only do you have to convince people to shop for groceries without any physical contact with the products — a monumental challenge in itself — but you also have a myriad of technical challenges to overcome. Being online puts further pressure on sellers as expectations are that everything has to be smooth no matter the circumstance. A small hitch in your website or ordering system and you can lose business from hundreds of customers a day. Remember the small margins that these stores are running at? It could spell disaster in the long run.
Still that doesn’t stop our local entrepreneurs from taking a bite. You can find these small independent online grocery stores popping up all over the country, and most are less than 5 years old. It’s not just grocery stores, small farms too are getting in on the action. It seems just selling at the local farmers markets are not enough, they decide to expand their customer reach by going online and offering to deliver directly to their customers.
So the question as to where online grocery shopping is headed in Malaysia has a clear answer. It’s starting to gain momentum. As our internet speeds and coverage starts to improve and rates have become more affordable more Malaysians are shopping online than ever before. The easy user interface of online shopping platforms and the ease and security of internet banking also contributes to this growing trend. Admittedly it is ever so slow in gaining traction. It may be a long time before we get to see grocery delivery mopeds and trucks as commonly as a Foodpanda, but it looks promising. Despite the modest success rates and some failures the online grocery shopping trend iin Malaysia does not look to be heading south.