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The Growth of the Online Grocery Market in Malaysia

16 Nov 2022 | Malaysia

For more than two years, the online grocery market in Malaysia has seen immense growth because of COVID-19 lockdowns. Early players in the market, like retailer HappyFresh which was established in 2014, report seeing a growth in traffic of up to 20 times more from 2020.

As Southeast Asia’s digital economy developed rapidly in recent years, the shifts in customer behavior during the pandemic also propelled the growth of the online grocery market in Malaysia.

Despite the country reopening and in-store business activities increasing in the past year, Malaysians have grown increasingly reliant on online shopping. This behavior is expected to continue, as consumers have shown that online shopping is now considered a habit in the country. This has also changed the way that online grocery shopping is being done in Malaysia.

How big is the online grocery market in Malaysia, and how are retailers keeping up with demands for e-grocery fulfillment? We look at the current e-grocery landscape in Malaysia and opportunities for businesses to explore in this category.

Online grocery trends

Online grocery

Extended lockdowns in Malaysia until 2021 accelerated the growth of the online grocery market in the country. E-grocery providers were forced to increase their fleets to keep up with consumer demands and the influx of orders. The overall trend of growth was present even after Malaysia eased restrictions on movement last year.

As consumers grew accustomed to online grocery shopping in Malaysia, some behaviors also changed in the past year. When consumers used to buy in bulk to avoid contact with people outside their households, they are now ordering groceries online more frequently and in smaller amounts. The convenience offered by e-groceries allowed consumers to get comfortable with purchasing food products and other home goods online.

Consumers are also expecting reduced order fulfillment times from e-grocery retailers. Large companies like HappyFresh and Grab continually shrink their delivery times to improve customer experience and edge out the competition. The dependence on online grocery shopping also fast-tracked the scaling up of these e-grocers that were forced to deploy changes to their supply chain and logistics capabilities.

Looking ahead

Now that the demand for online groceries in Malaysia has been cemented, retailers should continue to adopt smart technologies that will allow them to improve their services.

Automated systems for inventories will allow higher operational efficiency that will ensure the freshness of goods upon delivery. Improving the user experience (UX) of online grocery storefronts will also give customers a more pleasant experience when shopping.

The digitalization of quality control will also allow online grocery retailers to monitor the freshness and availability of the items they sell. Cloud computing and the Internet of Things (IoT) will also help merchandisers decide on how to increase or enhance the assortment of the goods that they sell.

Lastly, adding more payment methods through fintech will help increase service offerings that allow flexibility for consumers.

The demand for online grocery shopping will continue to rise, higher quality of service will be required from retailers. The availability and assortment of products, the freshness of food items, and the timeframe for delivery will determine the growth of the online grocery market in Malaysia, and businesses are expected to deliver.

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