The HappyFresh office is tucked away in an ageing building in Jakarta’s central Menteng district. The location is a bit weird because you wouldn’t expect to find one of Indonesia’s most talked-about startups so far away from “Slipicon Valley.” It’s a Friday evening and most of Jakarta’s business folks have gone home for the weekend. It looks like the HappyFresh team didn’t get the memo. The cramped office is still buzzing with activity. Co-founder and COO Benjamin Koellmann pokes his head around a corner.
You may recognize Koellmann as the former COO of Lazada Indonesia. He’s also one of the rare people who managed to stay with the fast-moving Rocket Internet firm for more than two years. “I have to say that Rocket is a super valuable experience for anyone […] However, Rocket has a really high turnover rate,” says Koellmann. “It’s a really high-intensity atmosphere, and you can never bond with anyone because people are always leaving for one reason or another – often to start their own businesses.”
Last October, Koellmann decided to do the same. His learning curve at Lazada had flattened out and he was ready for a new challenge.
Koellmann describes HappyFresh as a mobile-first online marketplace for existing grocery retailers. You may recall the headlines back in March when the firm announced its launch in both Kuala Lumpur and Jakarta. The startup is supported by a seven-figure undisclosed round of pre-series A funding. The investors are a bunch of mysterious VC firms, international angels, and institutional backers, whose identities are still secret.
Grocery school for green-shirted shoppers
There are a lot of moving parts to HappyFresh’s operation. In this early stage, anyone who wants to use the service must first have a smartphone. Koellmann says HappyFresh does have a website coming soon, but that the startup aims to do everything on a mobile-first basis, as that’s what the team believes the market calls for.
HappyFresh employs around 100 field personnel in Jakarta, which includes in-store shoppers and delivery drivers. Koellmann says his team is hiring new people each week, which means at the time of publishing this article, HappyFresh could already have more than 120 people delivering groceries in Jakarta.
According to Koellmann, HappyFresh also has a rigorous training process for anyone who wants to be an in-store shopper. He calls it the “HappyFresh Academy.” It consists of a two-week tutorial that teaches employees how best to pick the right food and maintain a high-quality user experience in the offline world.
“We also provide them with phones, and riders and shoppers have an internal company app so they know what they need to do,” explains Koellmann. “The internal app routes orders and gives them instructions. We can track each order at every stage […] If something is out of stock or the quality of what is left isn’t good enough, the shopper will call you [the customer], let you know, and help you pick something else if necessary.”
Not just for rich people
HappyFresh does not aim to be seen as a premium service for affluent Indonesians, says Koellmann. The perception of the startup as a fancy option came about as a result of HappyFresh choosing to launch with Ranch Market and Farmers Market (Jakarta’s high-end grocery outlets) as its only two store partners. Koellmann says it wasn’t premeditated, but it just kind of worked out that way.
“The goal [is] to be an open marketplace. We don’t want to be seen as a total premium player. We’re talking to more budget and middle-low stores on the value chain.” Koellmann says HappyFresh will announce more store partners in the coming weeks.
With this in mind, HappyFresh is also not imposing a minimum basket size. No matter what the item is, Koellmann says users can get it through the app, so long as it’s available in the physical grocery store. “Even if a customer wants to buy a single pack of cigarettes, they can do it through HappyFresh,” says Koellmann, adding that there is a three-tier pricing breakdown.
If users want something that costs less than Rp 300,000 (US$23), the delivery fee is Rp 40,000 (US$3). The second tier basket size is between Rp 300,000 (US$23) and Rp 700,000 (US$53). In this range, the customer will be charged Rp 25,000 (US$2) for delivery. If the basket size is more than Rp 700,000 (US$53), there is no delivery charge. In terms of generating income, HappyFresh also has a revenue sharing scheme in place with its partnering grocery stores.
Koellmann maintains the belief that the delivery charge is negligible when considering the time and money required to travel to the supermarket oneself in Jakarta. These costs could include things like fuel, parking fees, and toll roads.
Delivery fees and revenue sharing are two parts of how HappyFresh monetizes. The startup does have other streams of revenue, but Koellmann asked for that information along with HappyFresh’s number of monthly active users to remain off the record as the team is currently fundraising.
Grocery ninjas lurking in shadows
Koellmann says he is often asked whether Nadiem Makarim’s Go-Jek, which is a sort of Uber for motorbike taxis, is a viable contender with HappyFresh considering that it too delivers groceries on demand. Koellmann responds:
We admire what Nadiem and his team have built over the past four years […] Competition, if you even want to call it that, in an early stage market like online groceries in Southeast Asia will mostly help to change consumer behavior faster and grow the market overall, rather than redistribute market share or hurt existing players as it would in a moremature market.
Koellmann says that HappyFresh is different from Go-Jek because it has dedicated in-store shoppers that are well-trained in knowing what will best suit the consumer’s needs. This training is what he hopes will set HappyFresh apart from any other similar player. He believes picking and handling fresh perishables like meat, fish, fruits, and veggies is a job that needs to be done by trained professionals.Other competitors HappyFresh has its eye on include Indonesia’s Sukamartand the Singapore-based Redmart, a firm that could potentially make a play for Indonesia when the time is right. Koellmann again says HappyFresh is different, as those two companies focus on dry and packaged goods that come from a warehouse instead of perishable foods straight from the supermarket. If you look at Redmart’s website, however, you can see fresh produce, a variety of meat and seafood items, as well as fast-expiring dairy products.Koellmann says HappyFresh’s in-store shoppers try not to disturb the experience for offline buyers. The staff makes sure to stay off to the side and well out of the way, he adds. HappyFresh is currently present in 12 branches of Farmers Market and Ranch Market across Jakarta, with a goal to soon expand that to 24 in total.“We don’t want people waiting around for their groceries. We want to save them time,” says Koellmann. “The maximum time you should have to wait for your groceries from us is one hour. So far we’re on time on more than 90 percent of our orders in both Indonesia and Malaysia. […] You also have the option to choose specific time slots up to a few days in advance.”