HappyFresh Malaysia’s own warehouses are its latest strategy toward a path of profitability

Admittedly, I’ve yet to see the value of online grocery apps, since I still prefer to see and feel products in person before purchasing.

But surely, with the existence of GrabMart, pandamart, MyGroser, and more, there has to be some merit to the concept.

HappyFresh is another online grocery player that’s been delivering fresh groceries in Malaysia since 2015, and it recently officially introduced HappyFresh Supermarket, a line of cloud warehouses.

Cloud warehouses are inventory stores that are purpose-built only for deliveries, not walk-ins.

In an interview with Vulcan Post at the introductory event, Chief Growth Officer, Johan Antlov, shared how this was HappyFresh Malaysia’s latest strategy to cement its position in the industry.

The path to profitability

First, he explained their vision:

For us, it was really about building our own paths and how we envision a supermarket to be. We wanted to have end-to-end control over the whole experience, which means from the products that are shown to the customers, to the prices that we have decided [on], to the fulfilment experience.

Hence, their first move toward this was to invest in their own warehouses, since Johan and his team knew that that was necessary to really build [customer] trust and reliability.

They looked into the economic landscape and tried to figure out what users wanted when it came to not just online grocery shopping, but grocery shopping in general.

“And it’s been clear over the past couple of years that people want to make a saving but they don’t want to have the cheapest product all the time,” Johan said.

Clearly, HappyFresh Supermarket is a very different model from what HappyFresh has done in the past—that is, working with retailers (which they will continue to do).

With their own warehouses, they will do direct sourcing with different brands, and have different cost structures in place.

“That means our margin structure is very different, so we can offer these low prices now, along with free delivery. And when we do the economics of this in the long term, this has a clear path to profitability,” Johan added.

“Finding the balance between what’s interesting for the users but makes sense for the business is something that looks very good on an Excel sheet, and we’ll continue to tweak it.”

Getting a slice of the pie

Leveraging the data and knowledge acquired over the past few years of purchasing and delivering groceries to Malaysians, HappyFresh is confident that it is able to address the exact needs of customers.

Thus, with HappyFresh Supermarket, users can expect free delivery and no out-of-stock moments, since HappyFresh will have full control of the supply chain.

Currently, HappyFresh Supermarket provides coverage across Batu Caves, Setia Alam, Petaling Jaya, Klang, Bangsar, Ampang, and Kajang, with over 15,000 stock-keeping units (SKUs) of fresh, dry, and frozen products in its inventory.

From what I could see on the HappyFresh app, there’s a decent selection of fresh, dry (packaged), and frozen foods.

However, the overall inventory is still lacking compared to what HappyFresh can acquire from third-party grocery stores like Village Grocer, Jaya Grocer, Lotus’s, and more.

Understandably though, HappyFresh Supermarket is still incrementally ramping up its operations, so perhaps in due time, we’ll be able to see more SKUs.

What I did like about the HappyFresh Supermarket experience is that when I was unable to find a product, the app would present me with several variations of the product and ask me which one I was actually looking for.

This is not a feature currently made available for the inventories of other third-party grocery stores.

It’s likely that this is one way HappyFresh Supermarket is continuing to fine-tune its offerings based on actual demand.

All this falls into place in HappyFresh’s plan to make a mark on Malaysia’s “heavily-underpenetrated” grocery industry, which Johan believes will see significant growth in the next five years.

As the industry grows, so will HappyFresh, determined to get a slice of the pie.