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The practice of ordering food and groceries online has become more common since the onset of the Covid-19 pandemic. In Asia, using food delivery and e-commerce platforms for day-to-day grocery purchases have become increasingly common. This saw Southeast Asia's online grocery sector grow nearly 3x during the pandemic as work-from-home arrangements persisted and meal habits shifted in favour of home cooking.
It is estimated that groceries will account for 15% of the overall e-commerce GMV in 2025, implying a CAGR of 30%. With e-commerce and food delivery players expanding into the e-grocery space – which potentially offers even higher growth than food delivery – this new economy sector offers growth investment opportunities worth looking out for.
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Top e-commerce pick in Southeast Asia
Sea Ltd is the largest e-commerce platform in Southeast Asia with footprints in Singapore, Indonesia, Malaysia, and Vietnam.
Sea Ltd launched ShopeeFood in Indonesia and Malaysia, and, in August 2021, rebranded DeliveryNow in Vietnam. ShopeeFood will seek to take a slice of the e-grocery pie in Southeast Asia which remains largely underpenetrated.
Top e-commerce pick in Hong Kong
We are upbeat on Hong Kong Technology Venture after it transformed from a zero-inventory model into an inventory-based model for e-grocery following its investments in a fully automated warehouse, truck fleet, and delivery infrastructure.
It benefits from repeat purchase and traffic from its inventory-based strategy and has started making stable profit since FY20.
Top e-commerce pick in China
JD.com is the second largest e-commerce platform in China with over 300m annual active customers. It outperformed other players in the early stage of the Covid lockdown, thanks to its self-owned logistics and fulfilment infrastructure.
We believe JD.com’s e-grocery business will have cost, supply chain, and infrastructure synergies with its existing logistics network.
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