Dark stores: the missing link in q-commerce

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} , I got into a baking frenzy a year or so ago, so my friends received surprise cakes for a good while. It was easy to send them the cakes since I had my “own” delivery fleet: Google-backed Dunzo does a good job of picking up and dropping off stuff in its home turf, Bengaluru. But when I opened the Dunzo app one day, it suddenly looked more like an online grocery store than a delivery platform. Apparently, the grocery service has become the app’s focal point. The rest of its features – food and medicine delivery, courier services, etc. – were lined up at the bottom instead. There’s a good reason for this change. Grocery delivery might just be the most promising – and underserved – market yet, and companies in India and Southeast Asia are looking at “dark stores” as an indispensable part of quick commerce. This edition’s premium feature dives into how Indian companies like Flipkart, Dunzo, and Zepto as well as Indonesia’s Dropezy are banking on the dark-store model, and why they think it will light up the hyperlocal delivery market. It also talks about what dark stores really are, and how not everyone is a fan of the name. We’re also introducing a new format where we analyze the hottest ecommerce development of the week. To kick off this segment, my colleague Tian Wen looks at how China’s ecommerce giants are riding on the NFT (or non-fungible token) boom, and how their Southeast Asian counterpart, Sea Group, can also join the ride. -- Nikita THE BIG STORY  [Dark stores light the up red-hot grocery delivery market]( Image credit: Timmy Loen While dark stores are relatively newer to India and Southeast Asia, their adoption has been swift in the competitive hyperlocal delivery market. HOT TAKE  How can Sea Group jump on the NFT bandwagon? Here’s what happened: Sea Capital, the investment unit of Singapore’s Sea Group, [co-led]( a US$732 million series B round into US-based blockchain gaming startup Forte. Other high-profile investors that joined in include Andreessen Horowitz, Tiger Global, Warner Music Group, and Animoca Brands. Forte allows game publishers to embed token wallets, provide NFT mining and sell services to users.  Here’s our take: Sea Capital’s investment into Forte marks Sea Group’s [second foray]( into crypto, and it isn’t the only Asian tech giant closely watching this space. In China, ecommerce powerhouse [JD.com]( [created and gave away free NFTs]( to participants of its annual tech conference. [NFT mooncakes]( created by Alipay’s blockchain platform AntChain, were also sold on Taobao last month. But Sea Group’s recent crypto bets suggest a different take. China’s [crackdown on crypto]( has [completely divorced]( NFTs from cryptocurrencies in the country, denying its tech titans a slew of financial use cases that Sea Group can still freely explore. The firm doesn’t appear to be developing in-house blockchain technology for now. While Chinese companies are rolling out their own NFT tech, Sea Group may integrate existing platforms into its products - and then perhaps acquire them later. Its NFT play could take familiar cues from its expansion playbook. For one, Sea Group has always looked to models tried and tested by market leaders before taking the leap. Blockchain gaming is on the rise worldwide, and [Axie Infinity]( is already finding mainstream success. The game has nearly 2 million daily active users as of October, when it announced its $US152 million series B. With close to 20 million daily active users, Sea Group’s popular Free Fire shooter game can certainly generate far bigger dollars. Even though we know that the company’s Shopee business is an ecommerce giant that ships physical goods, we forget that its gaming arm Garena is one of the largest sellers of virtual goods in the world, thanks to Free Fire. Sea Group’s expansion strategies tend to be asset-light. On the ecommerce front, the firm has traditionally relied on third-party logistics providers instead of building its own logistics capabilities. To make its app stickier, Shopee is also fleshing out its [ads]( and [Tik Tok-like]( features. Where will Sea Group’s crypto play go from here? For Chinese tech heavyweights, NFTs are just the tip of the iceberg in a [grander scheme]( of creating a metaverse. It’s not clear if Sea Group has similar designs, but it’s well-placed to ride the metaverse wave, given its presence in both ecommerce and gaming. -- Tian Wen FYI  1️⃣ [Sea Group’s financial health in 9 charts]( We put our finger on the pulse of Sea Group, Southeast Asia’s largest internet company.  2️⃣ [Can Tiki light up the overseas IPO torch for Vietnam?]( Considered the “Amazon of Vietnam,” Tiki’s valuation is nearing US$1 billion. Can it stay in the ring with regional powerhouses Shopee and Lazada?  NEWS YOU SHOULD KNOW Check out Tech in Asia’s coverage of Asia’s ecommerce scene [here](.  1️⃣ JD.com loses its chief for Southeast Asia. As [reported]( by Bloomberg, Soon Sze Meng will join cloud kitchen startup [TiffinLabs]( starting Jan. 1, 2022. JD.com is scheduled to report its earnings for the third quarter today.  2️⃣ Shopee CEO Chris Feng [has been appointed]( as Sea’s group president, effective Jan.1, 2022. While he will remain chief executive of Shopee, he will also work closely with Sea Group CEO Forrest Li to drive “long-term strategic initiatives.”  3️⃣ Bezos-backed B2B ecommerce marketplace Ula adds Tiger Global and Flipkart co-founder Binny Bansal to the long list of star investors in its [latest US$23.1 million funding]( round.  4️⃣ Ecommerce aggregator Mensa Brands went from being a six-month-old newbie to the [fastest startup to join India’s unicorn club](.  5️⃣ Shopee has [rolled out a TikTok-like feature]( called Shopee Video, which is now available to some users in Indonesia. That’s it for this edition - we hope you liked it! Do also check out previous issues of the newsletter [here](. 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