For those such as Zalora, the motivation is clearly survival—and not just for the duration of the lockdown. As a Zalora supplier put it, “A pandemic-induced recession will likely push consumers to tighten their belts”. The supplier requested anonymity for fear of upsetting the company.
But for the likes of Grab—which was expanding to grocery delivery even before Covid-19, as a spokesperson confirmed—the lockdowns look like an opportunity. For one, it helps get rid of marketing costs that Grab would otherwise need to spend on luring new signups.
Giant lines form outside supermarkets in Manila as the Philippines enforces strict quarantine measures
That being said, the crisis is no ideal time for expansion. There are various hurdles. Stock shortages. Manpower issues. Delivery delays.
Companies’ already strained inventory, fulfilment and delivery operations are struggling to keep up with the unprecedented demand. Players argue, however, that the supply issues are only temporary.
But scaling up requires enormous investment. Grocery delivery is fundamentally a low-margin business and it needs huge volumes to turn a profit.
There’s no easy math.
Crisis brings opportunity
Post-Covid-19, the landscape is likely to become crowded. Apart from tech companies, traditional retailers will have to reinvent themselves to offset any decline in store footfall. Such as partnering with platforms like Grab or investing in their own technology.
In the long term, the crisis may prompt a shift in consumer preferences, says Satish Meena, an analyst at research firm Forrester. More consumers will be comfortable buying groceries online, giving providers a boost.
But not everyone is likely to succeed, he says. The bigger challenge, especially for new players, is retaining whatever initial base of customers they acquire during the crisis and reaching economies of scale.
It doesn’t help that the user experience has been far from ideal.
Zialcita landed a delivery slot on the Philippines’ MetroMart app only after three attempts over a span of five days. The delivery was scheduled for a week later and when the order finally arrived, seven out of 10 items were missing.
“We’re well aware of the supply issues, although it’s still disappointing that we waited too long only to find out that most items were unavailable,” says Zialcita. She had paid a US$6 shopping fee on top of a US$2 delivery fee.
Her mom’s order from Zagana was also delayed by two weeks.
MetroMart did not respond to us repeated requests for an interview and comment. Zagana’s Sy says they encountered supply problems after farmers from provinces north of Metro Manila had difficulties delivering their produce due to numerous quarantine checkpoints. The more time vegetables spend on the roads, the poorer their quality. Plus, the company, which partly relies on third-party logistics operators, was not prepared to handle such huge volumes.
Zagana’s backlog worsened as orders piled up. At one point, Sy says, the team took its app offline and temporarily blocked its website so it could plug the gap. “The delays caused a backlash, but there was nothing we could do but apologise and explain the situation.”