Farmers in Cameron Highlands, a cradle of Malaysia's farming industry, dumped hundreds of tons of produce in March after Covid-19 lockdowns shuttered wholesale markets and restaurants across the nation. They also gave Alibaba a chance to crack a difficult arena.
Lazada Group, the South-east Asian subsidiary of Alibaba Group Holding opened a virtual store to link farmers and housebound Malaysians. The uptake surprised even the e-commerce giant: consumers bought an average of 1.5 tonnes of cabbages, carrots and spinach each day. On the fourth day, 3.5 tonnes of veggies were sold in less than half an hour.
By the third week, about 70 tonnes had been delivered from farms to doorsteps across the country.
Fresh groceries - now one of the top three categories on Lazada Malaysia - were not even an option there three months ago.
Before the coronavirus outbreak, Lazada had dedicated grocery arms only in Singapore, Thailand and the Philippines; after the outbreak, it has expanded to Malaysia, Vietnam and Indonesia.
It is keen to maintain that momentum, backed by 30 fulfilment centres across 17 cities in the region.
"Covid-19 is a catalyst of digital transformation in South-east Asia," Lazada Group chief executive Pierre Poignant said in an interview. "When consumers build a habit, it doesn't easily go away. E-commerce will become a way of life."
Demand for fresh groceries has surged globally, but the spike in Malaysia opened a window, in particular for China's largest online commerce firm, into a lucrative market after years of building one of the region's largest delivery networks.
Since March, more agricultural entrepreneurs, fisheries and local businesses have started to pivot brick-and-mortar business to e-commerce, said Lazada Malaysia chief operating officer Shah Suriye Rubhen.
The festive Ramadan period has also galvanised demand and farmers have responded by increasing their assortment of goods on offer.
"Local SMEs are realising that digitising their business is the way forward to remain sustainable in the long-term, diversify their revenue stream and market to the increasingly growing Internet economy," Mr Shah said, referring to small and medium-sized enterprises.
Alibaba's unit may have scored in Cameron Highlands, but the wider South-east Asian market remains heavily contested.
Lazada, started in 2012 by Rocket Internet before Alibaba eventually bought full control of the firm, was the first e-commerce outfit to serve six countries in South-east Asia.
But its fiercest rival, Shopee, a unit of Singapore's Sea Limited, has expanded aggressively in the past year and overtaken Lazada as the most visited website last year, according to research firm iPrice Group.
In Indonesia, the largest market in the region, Alibaba-backed Tokopedia ranks as the top e-commerce firm based on web traffic, followed by Shopee, Bukalapak and Lazada.
Blibli is the online grocery leader, while "Shopee, Tokopedia and Lazada are playing fast catch-up", said Mr Roshan Raj, a Singapore-based partner at research firm RedSeer Consulting.
The resurgence in online grocery has also attracted new entrants from adjacent industries.
Singapore's Qoo10 was swift to act when the Government ordered bubble tea shops to temporarily shut along with other non-essential services, offering DIY bubble tea kits.
Even meal delivery firm Foodpanda started grocery delivery.
At home in Singapore, Lazada's Lazmall, where brands sell directly to consumers, has recently attracted big names such as Under Armour in Singapore and Thailand, Starbucks and 3M in Indonesia and department store chain Robinsons, which is shutting one of its three Singapore outlets in August.
"There are brands that I would not have imagined would come to e-commerce," Mr Poignant said.
The co-founder who took the helm last year says Lazada is interested in grocery deals in South-east Asia. His firm last month teamed up with Indonesia's Rumah Sayur Group to source vegetables from 2,500 farmers in West Java.
Lazada acquired Singapore e-grocer RedMart in 2016.
"South-east Asia's e-commerce market is likely to move from a subsidy game to a quality game," said Mr Lai Chang Wen, chief executive of Ninja Van, which helps e-commerce clients deliver more than a million packages daily in the region.
"This shift will be pivotal and have a lasting impact."
Alibaba's artificial intelligence technology is another asset. Lazada has more than 100 people working on personalising its experience, part of Lazada's 9,000-strong workforce across six countries.
BLOOMBERG
