Grocery delivery battle in Vietnam: David versus Goliath?



Though online grocery has been around for years in Vietnam, it’s only started to gain traction since the emergence of the novel coronavirus outbreak.

The country’s grocery space has witnessed the spike in demand for home delivery of fresh produce and staples, due to the reluctance of customers to step outside and go to crowded places.

A recent survey by Nielsen Vietnam and Infocus Mekong Mobile Panel stated that the COVID-19 pandemic had caused Vietnamese consumers to reduce the visit frequency to supermarkets and grocery stores by 50 per cent.

Back then, there was no denying that Vietnamese shopping habits were still very traditional when it comes to groceries, with most preferring to go directly to brick-and-mortar stores to purchase goods instead of browsing online platforms.

However, given the recent growth in e-commerce, consumers’ changing habits and preferences, and the advent of new technologies, the country’s penetration into online grocery shopping has become increasingly popular, especially in metro cities, particularly amongst the young, tech-savvy and time-crunched people.

To put it bluntly, with a broad base of young customers, the online grocery market in Vietnam holds high-growth potential.

COVID-19 changed the grocery delivery scene in Vietnam

Noticeably, there are different business models around grocery delivery services – be it the shopping model, warehouse model, platform-based model, or the combination of those means.

The shopping model is the easiest and fastest for businesses to deploy. It only manages in-house delivery networks; neither does it need to associate with existing grocery stores nor update the product catalogue on the platform.

Also Read: These 5 Vietnam-based agritech startups are tackling the country’s fragmented farming sector

Customers will provide the list of items they want to buy as well as preferred shopping places. Upon receiving the order, the platform transfers the details directly to its delivery personnel who will shop from stores on customers’ behalf. In fact, many existing online food delivery and e-commerce businesses in Vietnam have extended in this model.

With the warehouse model, delivery players import goods from producers and manufacturers, stock them in the warehouses and then run logistics operations to distribute them to customers. Some of the notable players following this model consist of US-based FreshDirect, Walmart Grocery, or China-based Miss Fresh.

On the other hand, the platform-based model utilises the logistics and distribution networks rather than operating independent warehouses. The drivers will pick up groceries directly from retail stores and deliver straight to customers’ doorsteps, eliminating the need for physical warehouses. Participants who have excelled in this space include Instacart, Peapod, Shipt, etc.

COVID-19 has proved to be a transformative moment for Vietnam’s grocery delivery market. Demand has surged, the industry has seen unprecedented growth, and a slew of service providers have decided to enter the sphere to cater to this overwhelming need.

That is to say, major delivery and e-commerce players such as Grab, Be, and Lazada has recently rolled out their grocery deliveries in Vietnam. Meanwhile, the country’s retail giants like VinMart, Big C, or Co.op Mart have also jumped on the bandwagon to facilitate home delivery.

These brick-and-mortar stores are now waking up to the fact that consumer behaviours are increasingly shifting towards e-commerce and that they need to evolve to stay competitive.

On the other end of the spectrum, Loship, a Vietnam-based aspiring unicorn startup in fields of e-commerce and delivery, seems to be one step ahead as it had stepped into the grocery game since 2018, and that was one year before the arrival of coronavirus.

Grocery delivery battle in Vietnam

With regional, resource-rich companies participating in the game, along with an army of local startups vying for space, who will win the grocery delivery war in Vietnam?

No doubt, major regional players have the resources and brand reputation to capitalise on yet another niche. However, when it comes to grocery delivery, local businesses are poised to have assets that give them a competitive advantage over foreign rivals.

The scenario is somewhat similar to David and Goliath’s classic story. That said, Goliath was tall, dense and powerful, but was also very slow to move and respond. In the business world, large companies represent Goliath, which may have huge budgets, countless resources, and significant market share, but often lack the speed and agility of a startup.

They can be lumbering in decision making or getting new products to market, even illy prepared to confront the smaller yet faster-moving players.

Also Read: Is Vietnam the new golden child of tech startups in SEA?

On the other hand, due to lacking in sheer size, small and nimble startups are more agile, adaptable, and responsive to changing customer needs and business environments. And that’s a distinct competitive advantage for these entrepreneurial Davids.

Take Loship as an example. The Vietnamese unicorn aspiring startup got into the grocery delivery game in 2018 by launching the Lomart service, way before other competitors stepped in vying for a slice of the pie. This exemplifies the startup’s ability to sniff out unique opportunities and execute more efficiently than their counterparts.

Loship is proof positive that the possibility of wearing the grocery delivery crown is not limited to the international resource-rich players. Lomart follows the platform-based business model that doesn’t require warehouses – its drivers will fulfill customer orders directly from store locations and get them delivered within an hour. Over two years, Lomart by Loship has served about 30,000 customers across four big cities in Vietnam, with nearly 1,000 transactions per day.

Loship’s promise of one-hour grocery delivery is capitalised on its vast network of more than 100,000 drivers. By making free delivery available, Loship is pulling the biggest lever it has in the grocery wars: the ability to offer fast, free delivery. The platform has partnered with nearly 10,000 variously-sized grocery stores and supermarkets conveniently located throughout the suburbs of the four major cities in Vietnam.

Grocery delivery war in Vietnam, in a nutshell, may witness another “David vs. Goliath” story in the foreseeable future – with Loship being natural Davids, fighting against larger and more established competitors who seemingly have all the advantages of strength, size, and resources.

In such a case, don’t think of an underdog that got lucky; instead, think of a brave competitor who knows to utilise its strengths and unique capabilities to overcome the odds against larger rivals.

Believe it or not, the world is full of business upstarts that took on industry giants and emerged victoriously.

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Image credit: Jack Young on Unsplash

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