After a short three-week trial, GrabSupermarket officially opened in the high traffic area of Klang Valley last week to meet the increasing demand for online grocery and has plans to expand to more capital cities across the country.
Unlike many grocery delivery efforts from transport companies in the past, the grocery offer is vast. Over 2500 products are available for order through the app including a growing selection of household goods, pantry essentials, beauty and health products and freshly sourced produce direct from its warehouse and farms.
“The next-day delivery model enables us to ensure the produce is delivered from our variety of partnering farms and suppliers directly to us, and from us to the customers, all within 24 hours,” Sean Goh, managing director of Grab Malaysia said in a statement.
“We saw an incredible take up of GrabSupermarket among consumers during the pilot phase, with fresh produce such as fresh vegetables, fruits and poultry making up almost 50% of our orders.”
The speed and affordability of the service will be a major draw card for consumers, and Grab is also investing further in its in-app supermarket browsing experience to provide a better shopping experience.
Threat of transporters
The latest offer from Grab is an extension of its popular GrabMart service, which offers grocery delivery in partnership with over 12,000 retail stores across over 70 cities in Southeast Asia.
Similarly, transport platforms like Uber in Australia are facilitating the delivery of a small selection of groceries through partnerships with supermarkets and convenience retailers. In this case, however, Grab is managing the whole process under its own roof.
Dr. Seshan Ramaswami, associate professor of Marketing Education, Singapore Management University, told Inside Retail that it was just a matter of time before transport companies moved in on the grocery delivery market.
“This is a concept that was just waiting to turn into reality – for a transport company to integrate backwards into retailing operations – and it appears that the Covid crisis served as a catalyst,” he said.
“There are of course, online-only supermarkets around the world, and Redmart is one very successful company in Singapore. But this backwards integration and of a peer-peer transportation platform into retailing of groceries is a relative rarity.”
Ramaswami pointed to Grab’s efforts to integrate food delivery into the business such as its shared kitchen initiative in Singapore which houses multiple restaurants under the one roof.
Can it work?
The success of GrabSupermarket depends critically on whether Malaysian consumers can be persuaded to shop online for groceries regularly, beyond the Covid crisis.
“That persuasion depends critically on the delivery of the retail promise – of fresh, well-chosen products delivered hygienically to the consumer’s door with reliable and punctual delivery, and a competitive price,” he said.
“This business model has a chance of working well in sprawling urban areas across Asia, where public transportation and parking are problematic, where there are many nuclear families with two working adults in the family.”
While Grab may have the luxury of having thousands of customers at its fingertips, the major challenge will be mastering the specifics of a retail business, particularly in terms of supply.
“It is not going to be easy for a transport brand to become a retail brand overnight,” Ramaswami said.
“The challenge will be on the supply side and ensuring that it matches the demand well – knowing what and when to buy, negotiating good terms with suppliers, pricing competitively, running the right promotions and executing the creation and maintenance of a user friendly shopping app. But years of honing analytic skills with their taxi application make Grab a good candidate to make a success of this venture.”
Beyond Southeast Asia
While there have been some big moves in digital retail internationally in recent years, including Amazon’s contactless grocery stores, Instacart’s rapid expansion and Woolworth’s quick conversions to dark stores, Nathan Bush, director at eSuite, is not convinced that pureplay grocery is profitable just yet.
“High volume picks, low unit costs and variable storage requirements make it a tricky game,” Bush told Inside Retail.
“If it is going to succeed it will likely require a tightened range, a greater reliance on home brand and automated pick processes. And of course, a loyal customer base.”