HappyFresh, the grocery delivery service that opened its doors in Southeast Asia earlier this year, has landed a $12 million Series A round to develop its service and further expand across the region.
The startup offers a one-hour delivery that borrows from established U.S. companies like Instacart. It works with physical retailers to sell their grocery products, but it uses its own shoppers and delivery teams to get the goods from the shelves to a customer’s doorstep. Founded in October 2014, it is currently live in Jakarta, Indonesia, Kuala Lumpur, Malaysia, and Bangkok, Thailand.
HappyFresh previously closed a multi-million dollar seed round — the value of which was not fully disclosed — and its Series A comes from a list of reputable backers in Southeast Asia. Vertex Ventures, which is part of Singapore’s Temasek Holdings, and Sinar Mas Digital Ventures (SMDV), the fund associated with Indonesian retail giant Sinar Mas Group, led the round. Asia Venture Group, BEENEXT, Ardent Capital, 500 Startups and Cherry Ventures also took part.
Markus Bihler, HappyFresh’s CEO and co-founder, told TechCrunch in an interview that he was delighted to receive the backing of “the strongest, most resource-rich local investors” who will help the company “navigate” Southeast Asia and its cultural diversity.
“What we’re building here is a pan-Southeast Asia food tech group with the ambition to define how people shop and interact with groceries more broadly than a next hour grocery service,” Bihler said.
Bihler, whose resume includes a stint with The Boston Consulting Group, further explained that HappyFresh serves two distinct business: retailers, with which it partners to help them reach out online and via its mobile apps, and consumers, who appreciate the convenience of on-demand shopping.
“We’re building a product for supermarket customers and end shoppers, we give it equal resources,” he explained.
HappyFresh is integrated into existing IT services and backend systems within retail partners, Bihler explained. Advancing the company’s technology is one focus for the new capital. From the outside, fulfilling shopping order seems straightforward, HappyFresh’s systems needs to load balance available goods with customer requests.
Aside from the tech — which is somewhat reminiscent of the systems used by on-demand services like Uber, GrabTaxi and Lyft — HappyFresh blends people power. It uses “professionally trained” personal shoppers to select the right goods for its customers. That means the best bananas, highest quality steak or ripest tomato packs to fulfill orders. In cases where product is a store is deemed to fall short of the required standard, Bihler said HappyFresh will call a customer directly to make a decision on the item, rather than just taking the best of what’s left.
“End-to-end quality control is essential,” he explained. “As it represents a customer’s shopping.”
HappyFresh is working to make the shopping experience even easier and more convenient. Beyond one-click repurchases — which let customers re-order a previous shopping basket, because repeat orders are commonplace — it is focused on tailoring the experience to each user.
“Going forward, we’ll use search and shopping patterns to learn about your preferences and further personalize your shopping experience and the offers to you,” Bihler told us. That could mean surfacing coupons or offerings that fit with previous searches or orders.
Indeed, that vast trove of data not only helps HappyFresh tailor its service, but it helps retailers themselves gain greater insight into their customers. That’s a real challenge for brick and mortar companies.
“We’ve developing customer insight and data to make this a two-sided partnership,” Bihler said, without revealing too much more information for now.
He’s equally coy about how the service is doing at this point.
“We’re seeing very consistent 100 percent month-on-month growth in each city, which leads us to believe that there’s real pent up demand for online grocery services,” he said, declining to provide raw figures.
How many users are coming back to the service consistently?
“A very high proportion are return customers… we’re seeing a consistently high frequency of repurchasing,” Bihler answered.
Recipe Suggestion Service
It’s still early days for the service, of course, so you can perhaps forgive the reluctance to divulge a fuller data set. One topic where Bihler speaks with more certainly is expansion plans for HappyFresh.
“We want to expand across Southeast Asia,” he said. “We just launched in Bangkok and we are in the process of coming to Taipei, Taiwan. We are also looking at new cities within existing countries and just opened up in Surabaya, Indonesia.”
Another area where the service is moving into is recipe ideas after it teased Happy Recipe — “a recipe platform which will integrate with HappyFresh core product.” Bihler isn’t saying too much about exactly what Happy Recipe will be, but the idea — he said — is to give customers recipe ideas for their shopping.
“We want to stay one step ahead [of the competition] by providing the inspiration for what to cook,” the HappyFresh CEO said.