Recently, BeepBeep!, an instant grocery delivery app for Southeast Asia based on the dark store model, apparently shut its operations, after raising a $6 million “pre-seed” round earlier this year.
And just this week, the troubles at HappyFresh, a regional 3rd party grocery delivery service, and Tanihub, an Indonesian B2B/B2C play, became public thanks to TechinAsia’s relentless reporting. As a result, HappyFresh just shut its Thailand and Malaysia operations, with Indonesia the only market standing.
I still remember back in May, a few friends living in Singapore were telling me how amazing BeepBeep! was: “It is incredibly good. It has all the vegetables and fruit; its riders are well trained and polite – much better than Foodpanda and Grab”.
My response to them ranged from “Use it as much as you can, while you still can”, to “If a digital lending service gives you money instantly, and tells you no need to repay, you will be praising its service as well”.
In early July one amongst this cohort of friends said “BeepBeep!’s business seems to be doing well – items are always sold out”. At the end of the same month, the same friend said “I can’t use BeepBeep! anymore. They have removed all the fresh items, with only FMCG left. Why would I buy FMCG from them?”
Apparently what happened at BeepBeep!, according to friends who are close to their operations, is that they are simply following the directions of their investors. When investors complained about the lack of variety, they increased the assortment; when the same investors asked, a few weeks later, why the wastage had gone up so much – the team reversed on the assortment.
A team that is very easily swayed by their investors, or other stakeholders, always gives a warning sign. It seems something similar happened at HappyFresh: they went to build a 1P supermarket with dark stores after raising the US$65 million series D last year.
Even though dark stores were in the mode of the time, the founders/management should have known the dangers/risks/capital investments associated with running a dark store model, especially when Grab, Foodpanda and Shopee were lurking around like sharks. HappyFresh, which of all the companies had a number of near death experiences, should have known this danger particularly well.
Investors or the market pressuring you for quick growth does not mean you should actually actively pursue that strategy. Chinese cross border fashion platform SheIn, which we discussed in detail in the “Who is SheIn report” recently, clearly withstood investor pressure to fix their supply chain back in 2017 – and now their growth is solid, and unstoppable.
We do see a few earlier stage companies in Southeast Asia exhibiting the same founder confidence/determination. Alas, it is not that common – too many founders are not that sure of themselves doing the right thing, and become swayed by investors (or others) too easily.
I had a long chat with two founders who, after having burnt more than 30 millions of dollars of venture money(collectively), recently decided to shut their respective ventures.
The biggest lessons learnt? Not surprisingly both gave the same answer: “When an entrepreneur takes the opportunistic decision to build a venture, he or she would find it very hard to sail through very tough times.”
“You need to really believe the thing you are building,” one of them stressed.
And I agree.