Some analysts see traditional grocers building a strategic alliance with Grab whilst some see an eventual tail-wagging-dog syndrome, whereby the partner eventually gets absorbed by Grab .
During Grab’s unveiling of its plans for a superapp, the ride-hailing firm also announced that it would launch a grocery delivery service will also be rolled out soon in Jakarta from this month, and will be available in Thailand and Malaysia by the end of 2018. Singapore’s launch remains to be revealed.
However, the introduction of an online grocery service that will be available to Grab’s distribution network of 7.1 million drivers, delivery partners, agents, and merchants could pose some threats to incumbent grocers - both physical and online - in Singapore, even if the feature will not yet be rolled out in the city this year.
Shirley Zhu, programme director of IGD Asia, said shopper expectations are rising, so grocery retailers will need to adapt to these changes rapidly. “Retailers will need to embrace changes and even initiate changes to remain relevant, whether by themselves or through their partners.”
This is not the first challenge online grocers are encountering in Singapore. Despite the boom of online shopping, online grocery retailers are struggling to break the city’s traditional grocery shopping habits and are rethinking their strategies.
“We’ve seen how retailers in China partnering up with on-demand grocery delivery companies can help drive sales for both parties. Walmart China, for example, makes their products available on JD.com’s delivery arm Daojia. On the soft opening day of its Huixuan supermarket in Shenzhen, it reported more than 1,000 orders received on the platform, which set a record for stores on Daojia,” Zhu said.
Zhu noted that in Singapore, NTUC FairPrice has already entered a strategic alliance with Grab, benefiting from the delivery capability of Grab, as well as its data on consumers.
Meanwhile, Golden Gate Ventures principal Justin Hall concurred with Zhu and said there are some platforms that could really stand to benefit, which will incrementally improve existing grocery platforms. “Grab is attempting to create an open API platform, which is by definition an integrative platform, basically an open 3PL platform that integrates across all grocer platforms to be their last-mile delivery partner,” he said.
However, this could be painful to any lightweight logistics solutions that don't work with Grab depending on how good the integration and service actually is, Hall noted. “I think the platforms that work with Grab will certainly have an advantage but might lead to a tail-wagging-dog syndrome, whereby the partner eventually gets absorbed by Grab,” he added.
Jasmine Toh, senior analyst at Quest Ventures, said, “Whilst Grab groceries will work with partners, these partners are also not standing still.” She also noted how NTUC FairPrice's online effort has been rejuvenated with its new Fairprice On.
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