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Traffic boost induced by COVID-19 spark delivery problems for agritech startups and online grocers

As the government enforces large-scale social restrictions to contain the COVID-19 pandemic, online grocers are struggling to handle overwhelming order numbers.

Photo by Gary Sandoz on Unsplash

With the number of confirmed COVID-19 cases in Indonesia quickly climbing above 2,200, the nation’s government enforced large-scale social restrictions to contain the disease’s spread. This action has significantly limited people’s movement outside of their homes, and many shopping and entertainment centers are closed.

Some supermarkets have reduced their operational hours and limited the numbers of customers in their stores at any given time. Many Indonesians have turned to agritech platforms and online grocery services to acquire necessities and basic goods. This switch has given many service providers in the field an unprecedented boost in app downloads and orders.

“We have seen a surge in traffic by five to ten times, with spikes reaching even higher traffic,” said HappyFresh Indonesia managing director Filippo Candrini to KrASIA. The first bump started right after the announcement of the first two cases in early March, and continues to stay high as the government started enforcing social safety measures.”

Indonesian agritech companies TaniHub and Kedai Sayur reported similar upticks. TaniHub’s co-founder and president Pamitra Wineka claimed his platform’s B2C sales have doubled since early March and are still growing as part of the highest surge since the company started operating in 2017. They also acquired 40,000 new users.

As for Kedai Sayur, other than a traffic boost, the platform is also seeing a shift in the target market. “There’s a small decrease in B2B customers such as hotels, restaurants, cafes, and catering. On the other hand, demand from household and individual customers is increasing,” said Kedai Sayur CEO Adrian Hernanto. “Our business flow is now more focused on the B2C side.”

Delivery problems

While the new business is welcome, the sudden boost comes with obstacles too. Some users have experienced delivery delays or found that they were unable to book deliveries at all.

Katalyss Putridewi, an interpreter living in Central Jakarta, has faced difficulties in booking delivery time slots on HappyFresh for the last few weeks. She said that this has almost never happened in the four years since she started using the company’s service for grocery shopping.

And when she finally was able to reserve a slot, she was informed that there would be a delay. “They would call to say that the delivery would be approximately 1.5 hours later than scheduled. Once, the items were delivered at around 2:00 p.m. the next day,” Putridewi said.

Candrini admitted that the company is facing difficulties with getting orders to users, especially in same-day services. In the past few weeks, HappyFresh’s delivery fleets have worked around the clock to move orders, but a portion always needs to be pushed back to the following day. He added that there is another snag: apart from high order volume, HappyFresh’s supermarket partners have also been busy with offline buyers, thus their personal shoppers have to spend more time on-site.

TaniHub is grappling with similar issues, including an increase in logistics costs and difficulties with fulfilling same-day delivery services. “However, we are still able to make the deliveries within 48 hours,” Wineka said.

Since movement restrictions will be in place for the foreseeable future, platforms like TaniHub, Kedai Sayur, and HappyFresh are making preparations to handle rising customers numbers. HappyFresh has started to hire more delivery drivers and personal shoppers. They are also in discussion with supermarket partners to implement measures that will streamline the order compilation process.

“They [supermarkets] rely on us more than ever. Therefore we need further collaboration,” Candrini said.

Furthermore, to prevent panic buying or hoarding, the companies have placed restrictions on the purchases of certain items, such as rice, sugar, cooking oil, and instant noodles. The caps are in line with police-imposed limits that have been in place since mid-March.

So far, Candrini hasn’t noticed any signs of hoarding by HappyFresh users for other products. “There is an increase in order frequency, but that is not panic buying,” he said.

Both Kedai Sayur and TaniHub have put in place similar restrictions to ensure that all consumers have a chance to acquire the goods they seek, but there are some exceptions. “Buyers registered as B2B have no limits in purchasing, but they still need to go through an approval process,” said TaniHub’s Wineka.

To prevent stocking problems, Kedai Sayur is continuously communicating with their main suppliers to ensure the distribution of goods remains smooth. “We also equipped them with tools and safety procedures to prevent the spread of COVID-19,” said Hernanto.

However, none of the companies have experienced shortage in stocks yet. While some of HappyFresh’s users have had to make adjustments to their purchasing habits, such as by switching brands, the company’s supermarket partners have been able to keep up with demand.  

Safety measures

Although many Indonesians are now hunkered down at home, the workers that keep these platforms running need to venture out every day. The companies have made internal adjustments to ensure the safety of drivers, shoppers, and partners.

HappyFresh has implemented contactless delivery and payment services to minimize the chance of cross-contamination between users and riders. All interactions are conducted through phone calls or the app’s chat feature. Candrini has encouraged all users to use cashless payment methods. “If they insist on using cash, we advise them to put the money inside envelopes before giving it to the riders,” he said. The company also provides face masks, hand sanitizer, and gloves for their fleet of workers.

Meanwhile, TaniHub has halved its working shift to 12 hours, and put in place stricter safety protocols in the warehouse. “There is more frequent disinfection of the warehouse and health checks for every worker to make sure nobody sick comes into work,” said Wineka.

It is possible that online grocery shopping will remain a habit for households in Indonesia in the long run, so the companies aim to continuously improve their customer experience to maintain users’ loyalty. “We will reengage with them once the situation calms down, because then we will be able to give all of our services to consumers. Right now, we will focus on delivering our best,” said Candrini.