Coronavirus: Alibaba’s Lazada expands grocery sales in Asia, linking farmers with hungry customers

Lazada previously had dedicated grocery arms only in Singapore, Thailand and the Philippines. Since the outbreak, it’s expanded to Malaysia, Vietnam and Indonesia

Demand for fresh groceries has surged globally, but the spike in Malaysia opened a window in particular for China’s largest online commerce company into a lucrative market

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Demand for fresh groceries has surged globally. Photo: Handout

Published: 11:24am, 14 May 2020Updated: 2:35pm, 20 Oct 2020

Farmers in Cameron Highlands, a cradle of Malaysia’s farming industry, dumped hundreds of tons of produce in March after Covid-19 lockdowns shuttered wholesale markets and restaurants across the nation. They also gave Alibaba a chance to crack a difficult arena.

Lazada Group SA, the Southeast Asian subsidiary of Alibaba Group, which owns the South China Morning Post, opened a virtual store to link farmers and homebound Malaysians. The uptake surprised even the e-commerce giant: consumers bought an average of 1.5 tons of cabbages, carrots and spinach each day. On the fourth day, 3.5 tons of veggies were sold in less than half an hour. By the third week, about 70 tons had been delivered from farms to doorsteps across the country.

Fresh groceries – now one of the top three categories on Lazada Malaysia – weren’t even an option there three months ago. Before the novel coronavirus, Lazada had dedicated grocery arms only in Singapore, Thailand and the Philippines; after the outbreak, it’s expanded to Malaysia, Vietnam and Indonesia. It’s keen to maintain that momentum, backed by 30 fulfilment centres across 17 cities in the region.

“Covid-19 is a catalyst of digital transformation in Southeast Asia,” Lazada Group CEO Pierre Poignant said. “When consumers build a habit, it doesn’t easily go away. E-commerce will become a way of life.”

Demand for fresh groceries has surged globally, but the spike in Malaysia opened a window in particular for China’s largest online commerce company into a lucrative market after years of building one of the region’s largest delivery networks. Since March, more agricultural entrepreneurs, fisheries and local businesses have started to pivot bricks-and-mortar business to e-commerce, according to Lazada Malaysia Chief Operating Officer Shah Suriye Rubhen. The festive period of Ramadan, in a country where more than half the population is Muslim, has also galvanised demand and farmers have responded by increasing their assortment of goods on offer.

“Local SMEs are realising that digitising their business is the way forward to remain sustainable in the long-term, diversify their revenue stream, and market to the increasingly growing internet economy,” Shah said.

Alibaba’s unit may have scored in Cameron Highlands, but the wider Southeast Asian market remains heavily contested.