Amid the burgeoning grocery sector and the pandemic, the online grocery retail sector in Indonesia has great untapped potential. A report by Redseer in February said the e-grocery sector has exceeded $5 billion in gross transaction value (GTV), and is projected to reach $25 billion GTV by 2025.

As a result, tech investors, startups, and e-commerce platforms are scrambling to get into the country’s $169.4 billion (2022) grocery market by acquiring stakes in local businesses.

Last year, GoTo bought a 4.76% stake in Matahari Putra Prima (MPPA), which operates more than 150 grocery outlets and retail chains such as Hypermart, through Gojek subsidiary Pradipa Darpa Bangsa. Meanwhile, e-commerce marketplace Blibli in 2021 acquired 51% of IDX-listed retail company Supra Boga Lestari, which operates premium grocery chains Ranch Market and Farmers Market.

Major brick-and-mortar grocers have expanded online. Supermarket chain Hypermart developed an e-grocery portal and created the Hypermart Online mobile app and service which delivers groceries. SuperIndo and LotteMart have also created shopping apps, including premium grocer Ranch Market Group, which offers a delivery services through its Kesupermarket app.

Tech investors have poured significant money into the sector. In the past two years, dozens of online grocers have raised significant investments, including Segari’s $18 million, HappyFresh’s $65 million, and TaniHub’s $D 65.5 million.

These investments will leverage the groceries’ existing capabilities such as logistics fleets, said Aldi Adrian Hartanto, a partner at MDI Ventures.

However, tech investments into the grocery business might not be as lucrative as previously thought due to the high operating expenses, poor logistics infrastructure, policy and regulation challenges, and uneven digital payment adoption.