How HappyFresh's Dark Stores Will Lead to Next Evolution of its Business Model

With the launch of HappyFresh Supermarket, the brand has seen month-on-month growth in users of 300 percent and it is also working on growing its coverage within each market and the number of facilities to reach more underserved consumers.
How HappyFresh’s Dark Stores Will Lead to Next Evolution of its Business Model

HappyFresh was started out of a need to simplify grocery shopping. In crowded cities like Jakarta and Bangkok, a weekly grocery trip to the nearest supermarket would involve being stuck in traffic for at least 30 minutes to an hour – just to shop and carry all the groceries back while heading home in the same traffic situation. This entire process would at least take up hours, if not longer. At HappyFresh, the brand aims to alleviate those pain points for its customers as e-commerce is becoming a norm, and it believes that consumers can make use of e-grocery to reutilize their time and effort spent on their weekly grocery trips to the store.  

The retail strategy of the brand will be geographically focused to ensure there is a strong penetration into the residential areas of each facility's coverage zone. These activations will focus on 1-to-many and 1-to-a few communication in the early stages while moving into stronger remarketing in phase II to bring back newly acquired customers.

Highlighting the USP of HappyFresh, Guillem Segarra, CEO said, “At HappyFresh, we truly see the importance of understanding grocery as a category – informing our brand ethos of providing a superior grocery-shopping experience that prioritizes quality and value for money. We focus our business purely on groceries and aim to improve our customers’ satisfaction. We position ourselves to be the one-stop service for our daily and weekly shopping needs, and look to simplify the experience for anything that ranges from freshly-handpicked produce, frozen food, and even personal care items in a single platform – with a focus on pre-planned weekly needs and large basket order value.”

Options Galore

The fulfillment centers of the brand range from 600 to 900 square meters, with the ability to carry up to 15,000 SKUs of fresh, dry, and frozen produce within the inventory that are maintained in three temperature zones, with chillers and freezers to preserve the freshness of the products. These design choices related to the size of facilities, range assortment, and categories are made in order to fulfill the daily and weekly grocery shopping missions which is the core focus of the brand. 

“HappyFresh is currently operating in Indonesia, Thailand, and Malaysia, and we will be focusing on these markets by expanding our coverage into more tier-II cities and perfecting the operations of HappyFresh Supermarket,” he stated.

Building a Sustainable Model

HappyFresh believes that the democratization of grocery shopping within the region must be achieved sustainably. It is committed to sustainability as it constantly looks at ways to reduce its ecological footprint by challenging suppliers on reducing plastic in packaging, and customers are also encouraged to do their part by choosing the ‘GoGreen’ packaging option during checkout. 

“HappyFresh Supermarket has also recently started working together with local food banks such as FoodCycle in Jakarta and Food Aid Foundation in Malaysia to reduce food waste by redistributing unsold surplus food to underprivileged communities,” he said.

How HappyFresh’s Dark Stores Will Lead to Next Evolution of its Business Model

Betting Big on Dark Stores

HappyFresh Supermarket adopts a dark store concept. It has been exploring and researching the concept of dark stores for a while, namely the required infrastructure, as the next evolution of its business model. 

“HappyFresh Supermarket is our first exploration into completely adding dark stores into our operating model to complement our existing offerings. We believe that it is a natural step given the current volumes and industry maturity,” asserted Segarra.

“For the business model that HappyFresh runs, the concept of dark stores implemented here will be significantly different from many of the Q-commerce players in our markets. More specifically, the dark facilities we employ must be substantially larger to meet the stock-keeping-unit requirements of our product offering range, and have planned infrastructure differences from the average dark store,” he further added.

Technology: An Important Aspect

HappyFresh is highly dependent on tech which allows the brand to better meet the needs of its consumers. 

“We are constantly listening to our customers in each country to find out and understand what are the top products they require in their shopping missions. We crunch these data through our advanced demand planning tool to ensure the lowest out-of-stock situation without having an over-stocking situation to avoid wastage. This allows us to focus on quality and values for our customers in the long term,” he explained.

“We are also starting to build our tech capabilities by building up a tech team in India. We are looking into recruitment for tech talent in Bengaluru, India,” he further added.

Future Plans

The brand is currently focused on increasing HappyFresh Supermarket facilities and it is delivering at scales of millions of orders a year.

Elaborating on the future plans of the brand, Segarra said, “HappyFresh currently does not have brick-and-mortar retail outlets, and we solely focus on online sales. We work with existing supermarket retailers to onboard them onto our online platform, which allows our customers to shop at these supermarkets in the comfort of their homes, having their groceries picked up by a personal shopper and delivered to their doorsteps.”

“HappyFresh Supermarket complements our existing business model by providing consumers with more choice and variety, offering a larger product selection with more value for money and a variety of delivery time slots to meet different consumers’ needs,” he further added.

With the launch of HappyFresh Supermarket, the brand has seen month-on-month growth in users of 300 percent and it is also working on growing its coverage within each market and the number of facilities to reach more underserved consumers. 

“We believe the growth will continue as we provide the best service to our customers, making fresh, handpicking groceries accessible to everyone,” he shared.

“HappyFresh will continue to grow the number of facilities this year and beyond, to cope with the increasing demand with wider coverage. We are expecting to launch more than 100 dark stores as we expand in the region. We are also continuing to focus our efforts on providing convenient and safe service, we will be enhancing our existing operating model together with the partnerships we already have with supermarket retailers across the region. This will unlock the additional operational efficiency, higher service levels, and quality controls to improve customer experience further. We want our customers to get all the groceries they need in the freshest condition and at an even faster speed, ensuring an effortless online grocery shopping experience,” he concluded.
 

Guillem Segarra
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