Even before the onset of COVID-19, it was clear that efficiency and convenience are crucial to delivering a stellar customer experience, according to a study by PwC. The same study also showed that 80% of US respondents believed these two factors are integral to a positive experience overall.
Then COVID-19 happened. The need for efficiency in ecommerce deliveries spiked as more people began working from home and practising social distancing. Ecommerce adapted to COVID-19’s new rules, shaped by consumers placing more orders online.
Over at GGV, our portfolio encompasses ecommerce companies that have responded to the quick commerce trend, coming up with solutions to address key pain points.
This article will showcase four companies – Frubana, JOKR, Miss Fresh, and Grab – and the steps they’ve taken to ensure that they deliver their products to their customers efficiently.
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Frubana: The everything store for restaurants in Latin America
Before founding Frubana, Fabián Gómez Gutiérrez was the regional expansion leader for LATAM delivery unicorn Rappi. While he was at Rappi, Fabián identified a significant pricing discrepancy: restaurants on Rappi paid exorbitant prices for products that were not passed down to farmers, who only took a little cut of the earnings. For example, Rappi’s restaurants paid $1 for a kilogram of fresh limes when farmers like Fabián’s father only earned 30 cents from the transaction.
This was when Fabián realised that intermediaries in the supply chain were the problem – due to their involvement, farmers and restaurants alike were heavily disadvantaged.
Determined to eliminate intermediaries and directly connect farmers with restaurants, Fabián piloted an app to market their produce. However, the app failed, with Fabián revealing that only “a couple of tens of farmers [used it].” Undeterred by the failure, he remembered that he could use WhatsApp instead, as most farmers were already active users of the mobile messaging service.
With the farmer network established, Fabián officially launched Frubana, a B2B marketplace that directly connected restaurants and retailers with farmers. The elimination of intermediaries reduced operation costs and drastically improved the farm-to-table process, putting fresh produce directly into the hands of restaurateurs and retailers alike.
Despite COVID-19 and the closure of over 70% of its partner restaurants, Frubana could grow its operations by at least six times. This resulted from Fabián’s willingness to adapt to the new circumstances, expanding Frubana’s offerings from just fresh fruits and vegetables to include everything you can find in a grocery store – from other food items like poultry and meat to cleaning products like dishwashing liquid and bleach.
Just like that, Frubana evolved into a quick commerce business for restaurants. Moving forward, Fabián intends to expand Frubana to more parts of LATAM:
“Our number one dream is scale. We only cover 2% of LATAM’s restaurants – that’s 40,000 restaurants out of around two million restaurants.”
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JOKR: Grocery delivery in 15 minutes flat
With same-day delivery expected by 56% of online consumers aged between 18 to 34 years old, it has become essential for ecommerce businesses to switch to a quick commerce model to answer this growing demand.
Ralf Wenzel astutely identified this need for speed in the world of ecommerce. As he shared in his podcast episode with us:
“People nowadays celebrate moments and don’t plan ahead anymore – it’s about the here and now. That’s why if you don’t build an ecommerce platform that is able to fulfil deliveries within minutes instead of hours, you lose your competitive advantage.”
Efficiency thus formed one of the core tenets of JOKR’s business. Based in New York, JOKR operates on a bold premise: all grocery orders will be fulfilled within 15 minutes or less. And this is done without the usual caveats like minimum spending requirements or delivery fees.
JOKR has proven that it can stick to its guns and maintain this business model. This is achieved distributing of micro-hubs in side streets across metropolitan areas and the clever use of data to anticipate what customers want, when, and where.
On top of that, JOKR utilises data to maintain a dynamic inventory and catalogue management system. With this system, JOKR can rotate its inventory to support all-day deliveries.
That’s why JOKR has expanded beyond its native city of New York to Boston, Philadelphia, DC and other cities in the USA. It has even tapped into the LATAM market, serving customers in key markets like Mexico, Brazil, Colombia, and Peru.
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Miss Fresh (每日优鲜): Online grocery delivery in China
Although Cecilia Sun built a career in investments with Baring Asia and Deutsche Bank, she decided to give it all up and dive straight into entrepreneurship. According to her, she was driven by a desire to leave her mark on the word:
“Deep in my heart, I think entrepreneurs can really change the world and make a significant impact on society. I want to use my limited time on earth to do something that matters and can really change the world.”
Imbued with this conviction, Cecilia entered the online grocery world by joining online grocery startup Miss Fresh (每日优鲜) in 2015. However, the online grocery industry in China is notorious for being highly competitive. Out of over 4,000 online grocery companies in the country, only 1% is profitable, 4% can break even, and the rest largely lose money.
Add to that the reality that Miss Fresh (每日优鲜) was competing with ecommerce giants like Alibaba and Meituan (美团) – this meant that Cecilia needed to identify a particular niche that had not been explored by anyone before.
Cecilia identified that Alibaba specialised in cross-city businesses, while local services were Meituan (美团)’s area of expertise. Both had to be avoided. With these in mind, Cecilia eventually found Miss Fresh (每日优鲜)’s niche in what she termed “local retail”, specifically targeted at young millennials living in China’s first-tier cities, including Beijing, Shanghai, Guangzhou, and Shenzhen.
According to Cecilia, local retail differs from local services in two key ways: local retail has lower margins compared to local services, and local retail has lower product variety as consumers do not require too many choices when purchasing daily necessities.
With these two key distinguishing factors in mind, Cecilia devised a quick commerce strategy that caters to the needs of China’s millennials in first-tier cities. Miss Fresh (每日优鲜) blended quality, efficiency, and affordability to offer users an online grocery experience that delivers within one to two hours at a low cost.
Cecilia’s incisiveness helped Miss Fresh (每日优鲜) to rise above the competition in the ecommerce industry consistently. Today, it is recognised as China’s top online grocery retailer, able to fulfil up to 2,000 orders each day with more than 3,000 stock-keeping units (SKUs). Miss Fresh (每日优鲜) was even able to weather the storm of COVID-19, its gross merchandise value (GMV) tripling during this period.
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Grab: The superapp that offers quick commerce as an option
Before becoming today’s Nasdaq-listed powerhouse, Grab once had nothing to do with ecommerce at all. It began as a humble ride-hailing app called MyTeksi, which Anthony Tan and Tan Hooi Ling founded after winning a new venture competition at Harvard Business School in 2011.
Grab the superapp only really started taking root when GGV managing partner Jixun Foo came onboard and pushed Anthony towards adding payments to the mix with the launch of its e-wallet. The introduction of an e-wallet proved to be the vantage point for Grab’s eventual expansion into other sectors, including ecommerce.
In a survey Grab conducted after crossing 1 billion rides across Southeast Asia in October 2017, it learned that the “majority of the 500 consumers who responded wished for a one-stop, everyday app that complements their daily lives.” As Lim Kell Jay, Head of Grab Financial Group said about Grab’s vision:
“Grab is focused on creating a seamless experience and unlocking value for our customers by offering complementary services on one platform. From the moment you wake up, you can plan and book your entire journey across different transport modes in one tap, shop and receive discounts on the go, and have your favourite foods and shopping delivered right to your doorstep – all enabled by one mobile wallet, within one everyday app.”
Just one year later, in May 2018, Grab launched GrabFood, a quick commerce food delivery service that delivers all food and beverage orders within an hour or even minutes, depending on the distance. GrabFood not just taps on Grab’s existing fleet of ride-hailing drivers to perform deliveries but also deploys cyclists and motorcyclists to do so.
Later on, Grab further expanded its quick commerce offerings with the online grocery service GrabMart. Recognising that different users have different delivery timing expectations, GrabMart offers on-demand deliveries. This gives users the flexibility to choose between swift or slow delivery times.
Grab’s foray into ecommerce was timely, with COVID-19 taking the world by storm in 2020. The company accelerated its GrabMart expansion to Indonesia, Thailand, Vietnam, the Philippines, Myanmar, and Cambodia.
The result? Grab became the superapp that does everything in Southeast Asia. Its quick commerce services played a huge part in helping Grab profit during COVID-19, leading to the superapp going public in December 2021.
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Quick commerce: The future of ecommerce
With quick commerce proving to be a game-changer in so many regions worldwide, it’s clear that it is the new face of ecommerce. With quick commerce retail projected to reach $20 billion in valuation by the end of 2021, it would only be in the best interest of every and all ecommerce players to make the switch to keep ahead of the competition.
Our managing partner Hans Tung strongly believes that quick commerce is the future of ecommerce, emphasising that COVID-19 has made swift turnover times a necessity for all players involved today. As he said in Cecilia Sun’s podcast episode,
“The reality is when you have a pandemic, the in-store experience becomes less important. [Instead], the delivery and effective cost to the consumer become extremely important. It’s a model that’s worth looking at, as people can run B2B operations better in the long run. They’ll have a more efficient supply chain or distribution system that will win the consumer battle.”