Why Grab bought Jaya Grocer; how NFTs can be the future of O2O commerce

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Hello there ,

As a platinum Grab member, I must confess that the convenience of ride-hailing and food deliveries has gotten the better of me more times than I’d like to admit. But oddly enough, the super app’s GrabMart service just doesn’t sit right with me.

Efficiency is high on my hierarchy of virtues, but there’s just something soothing about strolling through aisle after aisle of freshly stocked produce.

Maybe that’s one reason why Grab recently acquired Malaysian supermarket chain Jaya Grocer. To demystify the deal, my colleague Emmanuel dug deep into Grab’s evolving business model and discussed how it might fare in an impending showdown of ecommerce giants.

This week, we’ll also dive into how non-fungible tokens could revolutionize Southeast Asia’s online-to-offline commerce scene.

-- Tian Wen

THE BIG STORY

 

Making sense of Grab’s Jaya Grocer acquisition


Image credit: Timmy Loen

The deal marks a seismic shift in Grab’s ecommerce push, but its foray into the grocery space may not be smooth-sailing.

THE HOT TAKE

 

Will the metaverse boost online-to-offline retail?


Image credit: Timmy Loen

Here’s what happened:

  • NFTs issued by brick-and-mortar businesses are selling fast and for record sums
  • For Southeast Asia, NFTs could be the missing piece in the O2O commerce puzzle
  • Amid regulatory uncertainty, experiments that pair NFTs with physical goods are still rare in the region


Here’s our take:

Nike made headlines in December when it acquired RTFKT, an NFT studio based in the US.

RTFKT collaborated with teenage artist Fewocious last year and sold 600 sneaker-NFT pairs in just six minutes.

Meanwhile, fashion powerhouse Balenciaga has taken things further via a metaverse tie-up with iconic battle royale game Fortnite. Under the partnership, Fortnite*’s millions-strong player base can visit in-game Balenciaga stores. In the real world, the game’s fans can shop real *Fortnite-Balenciaga products at a physical outlet of the luxury brand.

NFTs could kick O2O commerce up another notch. As the craze over these tokens hits fever pitch in Southeast Asia, retail companies in the region could ride this wave to metaverse riches (or it could be just a fad).

The good thing about NFTs is that they can be used to create unique digital experiences that drive real-world customer engagement. Case in point: Mighty Jaxx, a Singapore-based collectibles company, has launched exclusive physical-NFT pairs on marketplaces like OpenSea.

The company auctioned off a limited edition “Doge to the Moon: Boss Edition” physical collectible through an NFT launch in November. Mighty Jaxx also ran a 24-hour exclusive on its “The beauty of rebellion” physical collectible seven months earlier. Unlike similar campaigns on ecommerce platforms like Shopee and Alibaba, NFTs confer not only a sense of ownership, but they also provide entry into an exclusive community.

For luxury brands, NFTs can serve as an immutable proof of authenticity. High-fashion houses like Burberry and Gucci, for example, are already banking on this capability.


Photo credit: gloffs / 123RF

But beyond exclusive physical goods, NFTs can also be instrumental in building O2O commerce ecosystems.

From a price-skimming point of view, NFTs let customers pay across a wider range of price levels. They are a step above because unlike non-crypto options, NFTs are “easily sliced and diced into a descending series of price tiers,” says Chris Dixon, general partner at VC firm A16z. That flexibility may be key in introducing NFT-physical product pairs for a range of goods in future.

Dixon also suggests that NFTs can reduce customer acquisition costs “to zero” by “making users [into] owners.” Instead of splurging on online advertising or a sales team, companies can mint NFTs and find new customers in the metaverse on a smaller budget. But NFT-minting fees can add up, and the cost benefits might not be fulfilled.

Even if customer acquisition costs are reduced, the community that NFTs are issued to could also pose another problem. Balenciaga’s partnership with Fortnite instantly put its merchandise in front of nearly 3 to 4 million daily players, but it’s questionable how well the move converts to actual sales.


An image from luxury brand Balenciaga's collection on Fortnite / Photo credit: Epic Games/ Fortnite

But an NFT-driven O2O commerce strategy could really shine in generating revenue from two dimensions at the same time. Games like Fortnite and World of Warcraft have shown that there’s strong demand for accessories that let players express themselves via their in-game or online avatars. The same desire for self-expression can also be found in nearly every aspect of our everyday lives.

This is more than simply bundling NFTs with physical products. Companies can offer access to exclusive deals if customers own multiple NFTs or provide discounts on physical goods. Because NFTs are unique and price-flexible, the possibilities are endless.

However, there could be limits on how far NFTs could power O2O commerce in Southeast Asia. Countries like Thailand, for instance, have imposed a total ban on NFT trading.

Elsewhere, the laws governing NFTs are less clear.

Indonesia doesn’t regulate NFTs for now, but the country’s central bank prohibits the use of cryptocurrency in any payment transaction. It’s unclear how that might affect local NFT owners, given that majority of NFTs worldwide are minted on the Ethereum blockchain.

There’s also NFT fraud to contend with. Cases like the US$2.7 million Evolved Ape scam and the US$3.4 million Squid Game token scam could not only dampen consumer interest in NFTs but also encourage more stringent regulation of the space.

Ultimately, NFTs are still a regulatory gray zone. Can the risks outweigh the rewards? Possibly, if companies can prove the skeptics wrong by showing how NFTs can do what current options cannot. For the region’s O2O contenders, this could be the golden opportunity that they’ve been waiting for.

-- Tian Wen

 

NEWS YOU SHOULD KNOW

Check out Tech in Asia’s coverage of Asia’s ecommerce scene here.
 

1️⃣ Vietnam’s Mio has raised US$8 million in series A funding led by Jungle Ventures. The round raises Mio’s total funding to US$9.1 million.
 

2️⃣ Carousell’s advertising arm is launching its own ad servicing platform to tackle Google and Facebook’s dominance in the space. It will leverage data collected from over 150 million searches per month on Carousell’s platforms.
 

3️⃣ US-headquartered Thrasio plans to invest US$500 million in the Indian ecommerce market. The ecommerce roll-up giant had acquired Indian consumer label Lifelong Online in a deal worth between US$150 million to US$200 million.
 

4️⃣ Singapore’s Raena bagged over US$10 million in a round led by Alpha Wave Incubation, AC Ventures, Alto Partners, and Alfamart. The round pushes the social commerce startup’s valuation to roughly US$81 million.
 

5️⃣ Vietnam-based Con Cung has raised US$90 million from healthcare investor Quadria Capital. The retailer plans to use the funds to continue developing its app and launch 2,000 offline stores by 2025.

FYI

 

1️⃣ With top influencers gone, how will China’s livestreaming scene look like this year?

Amid an ongoing crackdown against tax evasion, Chinese regulators recently upended the country’s US$60 billion livestreaming industry by toppling its most popular key opinion leaders. It’s not all doom and gloom, though. As Kung Fu Data CEO Josh Gardner points out, many users are now tuning in to other live broadcasters. Users can also look forward to more in-house livestreaming and newer, more entertaining show formats.

That’s it for this edition - we hope you liked it! Do also check out previous issues of the newsletter here.

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In the meantime, if you have any feedback or ideas, feel free to get in touch with Terence, our editor-in-chief, at terence@techinasia.com.

See you next week!

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