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Mobile penetration is often lauded as the driving factor for the growth of retail online, especially in China and Southeast Asia.

But according to Nielsen: What’s Next in Ecommerce 2017, more mobile phones doesn’t exactly mean more online demand for FMCG or groceries online.

The relationship between purchasing groceries online and smartphone penetration proves to be unpredictable and the reasons behind it are unique to each market.

grocery ecommerce growth

Grocery ecommerce penetration in Singapore is lower than France despite the higher smartphone penetration. Source: Nielsen

Take a look at the UK, the early entry of retailers like Tesco online in 1996 helped shape the country’s mass shopping behavior so now more than 20 years later, consumers are accustomed to buying groceries online.

Meanwhile in Singapore, going to the mall to shop for daily goods has become part of everyday life as malls are often situated near convenient and high-foot-traffic locations such as metro stations.

Shopping in a mall has also become a leisure activity and therefore still ‘a thing’ despite the online uproar and country’s high smartphone penetration. The same behavior can also be witnessed across Southeast Asia, which is why,

Retail space in the region keeps growing simultaneously with the growth of ecommerce, unlike in the West

grocery ecommerce growth

For grocery commerce, mobile & connectivity only accounts for 40% of its growth contribution.

What does it mean for FMCG companies?

Ecommerce may only contribute to roughly 10% of total retail sales worldwide but with the industry predicted to have 20% combined annual growth rate (CAGR) by 2020 to become a $4 trillion market, it is still higher than the expected CAGR of 4% for the FMCG category.

In four years, retail ecommerce size will rival the global FMCG market – Nielsen

Although compared to the fashion or electronics categories, the contribution of online to FMCG is still low, there is an undeniable shift in consumer habits that would be unwise for FMCG companies to ignore.

News of Danone’s partnership with Lazada only highlights the increasing number of FMCG companies, take Nestle and Unilever for example, realizing the importance of online channels as part of their growth strategy, especially in Southeast Asia.

Here’s what you should know today.

1. Jeff Bezos says Amazon will ‘keep investing’ in India as rivals raise new war chests

Amazon CEO Jeff Bezos has pledged to continue to invest in India as it bids to keep pace with rivals in the country that have landed large investments from big name backers.

 The prize on offer is a slice of one of the world’s fastest growing internet markets. India’s online population is tipped to reach 450 million-465 million people by June 2017, according to a report co-authored by the Internet and Mobile Association of India, thereby widening the audience of ecommerce customers.

Jeff Bezos’s tweet from earlier today

Bezos went public with his continued commitment to the country in a tweet that followed a meeting with Prime Minister Narendra Modi in Washington.
Read the rest of the story here.

2. Tesco launches one-hour grocery deliveries in London

UK supermarket chain Tesco has announced the launch today of a one-hour delivery service in central London called Tesco Now — echoing Amazon’s Prime Now delivery branding.

As well as a one hour delivery service (priced at £7.99), Tesco is offering a two-hour option (for £5.99) via the new Tesco Now Android or iOS app.  The supermarket chain already offered a same day delivery service in London and the South East, and a same day ‘click and collect’ option.

While Tesco staff will do the in-store picking, the delivery component of the service is being taken care of by UK startup Quiqup, which last month raised a £20M Series B round to grow its “shop on your behalf” app and b2b business.
Read the rest of the story here.

3. Recommended Reading: Dang Chang thinks he’s got the secret sauce for his delivery startup

Chang thinks the key to mastering food delivery without a storefront to lure in passersby is making delicious meals that people love. “If we can just make good food and get it to them fast, I think that’s the name of the game,” he says.

Even though on-demand lunch and dinner services are, at their core, food services, many have been the brainchildren of engineers and businessmen—”tech people,” as Chang calls them. These are people who don’t have experience in hospitality and team up with chefs to design a menu, but don’t necessarily value their ability to run a restaurant.

Read the rest of the story here.

Here are the ecommerce news you should know today.

1. Tesco is secretly setting up their online store in Singapore

Well, it doesn’t seem like a secret anymore. But news suggests that supermarket giant Tesco is gearing up to fight against Redmart and Amazon in Singapore. Tesco may not be visible on the streets  of Singapore, but it seems that the country will be Tesco’s testbed to go all out online, under the supermarket’s subsidiary called “Tesco Digital Ventures”.

Watch this space.

Read the rest of the story here.

 

2. Indonesia lays out regulations for peer-to-peer loan startups

It’s Indonesia’s first attempt at laying down rules to define how people may use the internet to connect money lenders with borrowers in efficient ways. Here are some quick pointers:

  • Foreign ownership limited to 85%
  • Foreigners can only act as lenders
  • Minimum capital of approximately $200,000

Read the rest of the story here.

 

3. What’s coming in Southeast Asia: The digital health opportunity

Healthcare in Southeast Asia is a US$100 billion dollar market. But there is a stunning diversity in the health systems of the ASEAN-10 cluster.

The ecommerce wave has also hit the healthcare sector, especially in regards to pharmacies. Digital marketplaces can help consolidate offerings to consumers in a landscape that is scattered with mom&pop pharmacies.

Going forward, this seems to be the trend for 2017.

Read the rest of the story here.

Interested to learn more about the Southeast Asian ecommerce landscape? Check out the 11 trends that will shape the region’s ecommerce landscape in 2017 here.

Here are today’s top ecommerce news.

1. Garena in talks to make $1B IPO in the US

It is in talks with several banks in Singapore this week to discuss the IPO. According to sources close to WSJ, the deal could commence in 2018. Garena is seeking to IPO in New York, but other details such as listing venue and total funds to be raised has not been finalised.

Founded in 2008 by Forrest Li, the Singaporean unicorn is currently valued at US$3.75 billion.

Read the rest of the story here

 

2. Google’s tax settlement talks with Indonesia fall through

It looked like a win for Google. Less than a month ago, the Wall Street Journal reported that the search giant was about to settle a tax bill with Indonesia, “for $73 million or less.” That deal is off, Indonesian tax authorities recently told Reuters, because the amount offered by Google is too small. It’s unlikely an agreement will be reached this year. Indonesia initially aimed for US$400 million in unpaid taxes and fines.

The Indonesian government has been pressing global internet firms like Google and Facebook to pay taxes in the country on the basis of the digital ads revenue they are generating here.

Read the rest of the story here

 

3. Tesco Malaysia partners with HappyFresh

Tesco Malaysia has partnered with online grocery platform HappyFresh to expand its capacity and capability to fulfill online orders. Shoppers are offered more than 12,000 products, including the grocery group’s private labels, while fresh produce is selected by HappyFresh’s concierge shoppers in Tesco Malaysia hypermarkets.

Read the rest of the story here

 

Like what you’re reading? Explore the ecommerce industry in depth with our recommended reading list.