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It's an e-commerce boom, but online supermarket RedMart is not sitting still

SINGAPORE — When it comes to turning 10 years old, online supermarket RedMart is taking a leaf out of the book of Primary 5 and 6 kids of that age — that a major test is just around the corner.

Lazada chief retail officer Richard Ruddy in RedMart's warehouse at 47 Jalan Buroh on Nov 3, 2021.

Lazada chief retail officer Richard Ruddy in RedMart's warehouse at 47 Jalan Buroh on Nov 3, 2021.

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  • The pandemic has lifted the fortunes of all supermarkets, especially those with e-commerce sales
  • 15 per cent of all sales by supermarkets and hypermarkets occurred online in September 2021, up from 7.5 per cent in March 2020
  • To find out what it means, TODAY speaks to Mr Richard Ruddy from Lazada, which owns RedMart
  • RedMart is celebrating 10 years since its founding in 2011

 

SINGAPORE — When it comes to turning 10 years old, online supermarket RedMart is taking a leaf out of the book of Primary 5 and 6 kids of that age — that a major test is just around the corner.

Founded in Nov 1, 2011, RedMart has spent half of its corporate lifespan under the ownership of Lazada after the Alibaba-backed online marketplace acquired it in 2016.

The past two years of the pandemic have lifted the fortunes of all online retailers, especially supermarkets like RedMart. But Mr Richard Ruddy, Lazada chief retail officer and the head of grocery, has his eye on the future, where trouble is already brewing.

Revenue growth from online groceries during the pandemic was between 70 and 80 per cent year-on-year, doubling from the already significant 30 per cent year-on-year growth from before the pandemic, said Mr Ruddy in an interview with TODAY.

With the coronavirus situation worldwide approaching a new normal, the RedMart chief foresees that its growth will eventually taper down, though it is on track to serve a quarter of the groceries industry in Singapore in the coming years.

“But I also wouldn’t say that we are making hay while the sun is shining,” he said.

“We understand that this is a distressed time and everything we do is focused on the customer, having the right range and quality, and more importantly, the right service and delivery.”

Its standalone app folded into Lazada’s own in 2019, just prior to the pandemic, leading to questions whether the online grocery brand can retain its identity and form.

As it turns out, that has not stopped customers from returning to RedMart for necessities and household supplies.

The work-from-home situation, as well as the hybrid working system that Mr Ruddy believes will continue, meant that more people are realising the convenience of buying groceries online.

Traditionally, the concept of the grocery business was to provide a good promotion so that people think that they are getting a good deal. With home-based work becoming commonplace, people are also learning that they do not have to go to the store to get that deal and can save time buying it online, he added.

Said Mr Ruddy: “People are looking to try to recover time for themselves… instead of running to a store to pick stuff up for an hour and a half. There’s also the hygiene perspective of waiting in a line when the virus could be all around.”

As of September this year, 15 per cent of all sales by supermarkets and hypermarkets happened online, according to the Department of Statistics.

This represents a doubling from before the circuit breaker period, when the online sales proportion was 7.5 per cent in March 2020.

The proportion of online sales is even higher for computer and telecommunications equipment (53.7 per cent) and furniture and household equipment (32 per cent) in September 2021, official statistics showed.

RedMart's warehouse at 47 Jalan Buroh on Nov 3, 2021. Photo: Ili Nadhirah Mansor/TODAY

SUPPLY CHAIN WOES

Nevertheless, the pandemic has revealed the fragility of supply chains, which can threaten online businesses that deal in importing and exporting goods.

Global supply chain woes were precipitated by pre-pandemic trade tensions and then accelerated by the multitude of national lockdowns that came as a result of Covid-19, which temporarily slowed or ceased the flow of raw materials and finished goods.

There are also continuing concerns for supply chains caused by geopolitics, labour and equipment shortages in the global shipping and logistics industry, as well as the mounting energy crisis.

This has impacted industries, especially electronics and manufacturing, at a time when demand could tip over as advanced economies recover.

All of that has cast a pall over e-commerce and online retailers, many of whom depend on the fair winds and following seas of global logistics. Customers will also likely feel the pinch due to the rising prices of goods.

REDMART’S LESSONS FROM THE PANDEMIC

The pandemic’s shockwaves are why RedMart cannot sit still on its 10th birthday. It recently completed its 353,000 sqft West Fulfillment Centre, which boasts an automated storage and retrieval system where over 48,000 products can be sorted, stored and retrieved automatically to fulfil customer orders.

The larger warehouse space more than doubles its previous 81,000 sq ft space at Fishery Port Road.

RedMart also has more than 120,000 products on its platform, out of which 25 per cent are fresh and frozen products. It has expanded its international offerings to include products from Australia’s Woolworths, Britain’s Sainsburys and Korea’s Lotte Mart, as well as “special imports” from Japan and Taiwan, too.

To guard against supply chain woes, RedMart has grown its assortment of private label products to more than 400 products, up from just three products six years ago.

More than half are produced with local partners and suppliers, including brands such as local eatery Fishball Story and vegetable farm Sustenir.

Over the past year, the customers who buy housebrand products have doubled, and more than half end up buying these housebrand products when they buy on RedMart.

Asked how RedMart decides what product to source for its housebrand, Mr Ruddy said: “If we see customers are searching for particular things on the app, and they can't find what they want... then we can understand that there is potentially a gap in our range.”

Like many others, RedMart experienced its fair share of stock fluctuations during the pandemic, like the panic buying by Singaporeans during the circuit breaker and in subsequent mini-lockdowns.

“We sold an incredible amount of eggs, cooking oil, rice and noodles. Initially I think we sold like half a million more eggs from one month to the next. Were people consuming half a million more eggs? Not really, but this was the kind of survival instinct that was going on then,” said Mr Ruddy.

On the plus side, because familiar brands were snapped up, customers were also finding “niche, artisanal alternatives” to buy, he added.

This meant buyers were discovering a greater variety of products, including international goods from countries that they might have wanted to visit, but could not due to travel restrictions.

People were also buying more fresh items online as well, contrary to the idea that fresh meat, fish and vegetables should come from the local wet market or physical supermarket.

“Our base of customers who are buying fresh is almost 30 per cent higher than it was before (the pandemic). I think that it’s an endorsement of everything we have been doing as a retailer… and was really a sudden, overnight sort of change for us.”

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e-commerce supply chain online shopping RedMart Lazada

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