Dissecting the e-grocery war in Indonesia

The Checkout is Tech in Asia’s free newsletter that breaks down the biggest stories and trends in ecommerce. [Read from your browser]( The Checkout 🛒 Welcome to The Checkout! Delivered every Thursday via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and trends in ecommerce. If you’re not a subscriber, get access by [registering here](. Hello {NAME} It’s been more than a year since this pandemic began, but most of us still have to rely heavily on online platforms for daily essentials. In Southeast Asia, the surge in demand for online groceries has turned this space into a battleground. A 2020 study by Facebook and Bain & Company estimates that the region’s grocery market is worth US$350 billion, with penetration at only 0.3%. Founded in 2014, HappyFresh - a pioneer in the region’s online grocery space - appears poised to seize the moment. The company recently raised US$65 million in a series D round led by Naver Financial Corporation and Gafina, which is quite surprising considering that giants like Grab, Gojek, and Lazada have all heavily invested in this arena. But while HappyFresh's investors are bullish about its prospects, the road ahead is not necessarily a smooth one. Third-party estimates show that HappyFresh's numbers lag behind other players, while industry sources say that its business model generates thinner margins compared to others. We take a closer look at these developments in Indonesia’s e-grocery scene and more in this week's ecommerce premium story. -- Jofie THE BIG STORY  [Inside Indonesia’s spicy e-groceries space]( Image credit: Timmy Loen E-grocery HappyFresh benefits from its first-mover advantage, but competitors with different strategies are on the rise. DEEP READS 1️⃣ [The rush among food delivery apps to deliver more than just food]( Photo credit: Foodpanda In recent years, companies in the food delivery industry have branched out into adjacent segments. Grab, in particular, lets users order items ranging from groceries to stationery and books through its app, while players like Foodpanda and Deliveroo have expanded into the groceries vertical as well. Underpinning this shift is the concept of quick commerce, otherwise known as q-commerce. There's a good reason why food delivery players are getting into q-commerce: The orders keep coming in throughout the day. In contrast, food orders spike during lunch and dinner, creating a lull at other times. With a consolidated offering, platforms can provide drivers with a more steady source of income. 2️⃣ [Why did Shein exit Indonesia?]( Photo credit: Shein Shein terminated its [operations]( in Indonesia on July 29, a move that has been linked to its difficulty in drawing web traffic in the country. The ultra-fast fashion brand got less than 5.000 monthly visits, trailing behind players like Zalora. ​​Some speculate it was due to Indonesia’s upcoming regulations to restrict imports and protect local ecommerce sellers. However, in an age where paid user acquisition is the norm, Shein’s low page views are likely to be the result of its unsatisfactory business in Indonesia, rather than the cause of it, according to Momentum Works. You can also check out our previous [in-depth report]( about Shein. TRENDING NEWS Check out Tech in Asia’s coverage of Asia’s ecommerce scene [here](.  1️⃣ [Shopee’s surge pushes Sea Group’s revenue to $2.3b in Q2]( Sea Group said it has more than doubled its total GAAP revenue in the second quarter of 2021 to US$2.3 billion, boosted by Shopee's upbeat performance. The ecommerce unit posted a 160.7% year-on-year growth in its GAAP revenue to stand at US$1.2 billion. Why it matters: The ecommerce titan continued to see strong growth in the second quarter of 2021, following an [impressive 2020](. The growth has led Sea to lift Shopee’s full-year revenue guidance in the range of US$4.7 billion to US$4.9 billion - slightly higher than gaming arm Garena’s. Shopee is expanding on all fronts and putting competitors on notice with its vast cash hoard. It is ramping up sales and marketing spending and investing in new avenues of growth, such as its super-app ambition and expansion into Latin America, where Brazil could beat out Indonesia to become Shopee’s largest market. Amid all that, its take rate has been improving, hitting a high of 6% in the most recent quarter. Previously, Tech in Asia explored how Brazil could become Shopee's biggest market, and you can read all about it [here](. 2️⃣ [Indonesia’s Emtek Group forges partnership with Anthoni Salim]( Photo credit: Bukalapak Two Indonesian conglomerates, Emtek Group and Anthoni Salim Group, have a forged partnership, as reported by DealStreetAsia. Salim, whose father Liem Sioe Liong was once Indonesia’s richest man, is one of the main shareholders of PT Indoritel Makmur Internasional, which is the parent firm of Indomaret, one of the largest retail chains in Indonesia. Why it matters: The partnership comes as one of Emtek's portfolio companies, Bukalapak, increasingly focuses on Mitra Bukalapak, its online-to-offline arm that empowers roadside kiosks or warungs. This opens up possibilities for Mitra Bukalapak, as it can combine its technology with Indomaret's retail reach, which includes 19,046 outlets across the country. 3️⃣ [Meesho, Shadowfax hit with legal notice over alleged “ghost orders”]( Social commerce platform Meesho and its logistics partner Shadowfax have been served a legal notice over an alleged ghost orders scam. Resellers on Meesho have been reportedly sending fraudulent orders to people who never placed them, according to Entrackr. The legal notice followed a social media outcry from Meesho users who shared their experiences of being scammed by the company’s ghost orders. Entrackr first shed light on this issue in this [report](. Why it matters: The issue could be a stumbling block for Meesho, which [raised US$300 million]( in April to achieve unicorn status, as it deals with growing competition in India's social commerce space. BananaIP, the law firm that filed the legal notice, has even called for the Meesho app to be taken down from Google Play Store. STARTUP WATCH 1️⃣ [South Korean online secondhand marketplace Danggeun Market raises $162m at a$2.7b valuation]( Photo credit: Danggeun Market Danggeun Market, the publisher of hyperlocal community app Karrot, is officially a unicorn, according to a TechCrunch report. The app also has a global version for 72 local communities in four countries: the UK, US, Canada and Japan. Founded by two former Kakao employees in 2015, Karrot allows users to buy and sell with verified locals easily.  2️⃣ [Singapore online diamond marketplace secures $3.7m finance facility]( Launched in 2019, Luxiee connects diamond buyers directly to established suppliers, removing the added costs associated with middlemen. The new funds will help Luxiee create a curated inventory that will be “immediately available” for viewing and purchase.  3️⃣ [Indian ecommerce enabler comes out of stealth mode, raises $42.5m]( UpScalio has joined the roll-up party in the country with a US$42.5 million series A round. It’s looking to acquire and scale digital-first brands that sell on Amazon, Flipkart, Myntra, and Nykaa. That’s it for this edition - we hope you liked it! Do also check out previous issues of the newsletter [here](. Not your cup of tea? You can unsubscribe from this newsletter by going to our preference center at the bottom of this email. 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