COVID -19 boosts need, demand for e-commerce in Myanmar
Jens Michel, CEO of METRO Wholesale Myanmar Ltd: We have put a very strong emphasis on maintaining the highest level of quality, traceability and overall safety of our products.
E-commerce and food delivery have flourished in Myanmar since the lockdown and other restrictions to contain COVID-19 took hold in the country.
METRO Wholesale Myanmar Ltd, which started out serving hotels, restaurants, tea shops and caterers, has pivoted include delivery of food and daily necessities to consumers in Yangon during the pandemic.
METRO CEO Jens Michel said the pandemic has accelerated demand for e-commerce and digital grocery shopping as people try to limit social contact, and he believes the trend will not change soon.
“E-commerce has now become much more common, and I believe that e-commerce has a very strong chance to prevail as life returns to normal in 2021,” he said.
Launched in Yangon in March last year, the German company invested about € 10 million in a 7000-square- meter warehouse facility in the Thilawa Special Economic Zone. It has since expanded to Mandalay, Nay Pyi Taw and Taunggyi in Shan State, as well as tourist hubs like Kalaw, Inle Lake, Bagan and Ngapali. Sixty-one percent of its products come from local suppliers.
Mr Michel talked with us about the company’s experience breaking into Myanmar’s wholesale market, the challenges and opportunities presented by COVID-19, and the post-pandemic period.
How do you see the country’s progress in e-commerce?
Myanmar will follow the growth surge and evolution of e-commerce-Amazon, for instance – but on a much smaller scale. Our business accelerated significantly in 2019 and during the pandemic. I believe there will be more e-commerce because people appreciate its convenience and safety, even in normal times. They don’t have to spend a lot of time travelling to buy the goods they want but can get it delivered to their homes. The pandemic merely enhanced the need for safety, security, and distance, which has accelerated e-commerce generally, not just in the food business.
What was METRO’s experience entering the market here?
Breaking into a traditional market like Myanmar is never easy because it is a strong relationship-centric market. But I believe the unique value we could bring to our customers and clients has helped them to see the potential and benefits of our business model.
We have a fully digitized operating platform, and have from very early on banked on e-commerce. We have a fully fledged supply chain with food traceability, which sets us apart from a lot of traditional operators and gives us confidence in our supply chain.
Were customers reluctant to try the new technology at first?
The digital revolution in Myanmar has certainly taken off since telcos launched their services here. We have seen very fast adoption of the mobile internet, and digital literacy will grow alongside that. I think e-commerce as an industry is still shaping itself, though people are using it more and more. I think there's still a learning curve. The pandemic has brought out the real benefits of e-commerce. I think it has significantly accelerated the adoption of the technology and of e-commerce in general, not just in Myanmar but globally. Products from METRO are delivered almost contactless-people come to your house, they drop the products off, you can pay by credit card, limiting cash-handling. When we launched, this was new, and with everything new, you go through an education cycle and it takes time to adapt. In the last six to eight months, digital literacy has significantly increased.
Do you see any obstacles in infrastructure or regulations?
As a food business, for sure. I think we are the only one of the players who has really invested in a sophisticated cold chain. That is one of the hurdles the food industry will have to overcome, because I believe that there is a strong need to build our cold chain facilities around the country so that you can dispatch products faster. What would help e-commerce would be the simplification of financial transactions. To have the capability to pay online, instantly or with credit cards, and take cash-handling out of e-commerce will be one of the transformational challenges in the future.
What prompted you to start delivering groceries in Yangon?
The initiative came from what we learned in other markets about disruptions in food manufacturing and sourcing. We wanted to make sure the community had access to quality food. One of our core strengths is our domestic and international sourcing, which has helped us get through this crisis. I wanted to make sure that we could bring those services to the Yangon community because we understood that shortages may occur, and physical retail may not be as effective during the pandemic. Our grocery delivery service has been a shining success - the customer feedback has been fantastic over the past few months, as we have continued to improve our services.
How have you overcome the challenges of local sourcing?
There are certainly challenges with logistics, particularly in areas that have new regulations. We have worked tirelessly for the past few months to make sure there is as little disruption of supplies as possible, whether it is fruit and vegetables from Shan State or seafood from Myeik lin Tanintharyi Region).
What is your advice to new businesses like yours?
The main advice I would give is don't cut corners because you don't want to leave customers with the short end of the stick. Meet compliance standards and quality standards and make sure you adhere to them so that customers can reap the benefits and continue to trust your products and your brand. We have put a very strong emphasis on maintaining the highest possible level of quality, traceability and overall safety of our products.