Will Lay Hong be an e-grocer?

SO, it’s clear that Lay Hong Bhd, a producer of egg and poultry products, is not going into the e-commerce space. However, its major shareholder, Innofarm Sdn Bhd, is making strides into setting up an e-grocer chain. Innofarm, which controls 31.05% of Lay Hong, has acquired a 14.41% stake in MMAG Holdings Bhd. MMAG is a company that provides logistics and courier services. It is setting up warehouses and cold rooms to cater to the same-day-delivery grocery business. It is hoping to ramp up its same-day delivery services from 3,000 deliveries to 9,000 deliveries a day. Innofarm also has a stake in PanPages Bhd, a company offering a platform for businesses to publicise their trade. The PanPages platform includes Alibaba’s global trade portal. PanPages also has a stake in Lay Hong’s grocery subsidiary – G-Mart Borneo Retail Sdn Bhd. PanPages’ reason is to build up its own e-commerce business. At the moment, it looks like Innofarm, the major shareholder of Lay Hong, has a strategy mapped out for its venture into the e-commerce business. It wants to supply poultry products on the same day to its customers. Capitalising on online infrastructure is the way forward for companies that are dealing with retail customers. The days of owning supermarket chains and waiting for customers to come to the outlets are over. However, gaining a share of the online retail business is tough. The traditional supermarket chains are already doing it. The likes of Tesco and Giant are well into the game. They are doing the same-day delivery business in urban areas where the market is growing. For Innofarm, the trek up the online business will be a long-haul one. It will involve capital and persistence. It is not a game for those without staying power. The online grocery business is a volume game and the existing players have an upper hand. For now, Lay Hong is insulated from the vagaries because the major shareholder, Innofarm, is taking the initiative. However, one day, Lay Hong will probably play a bigger role in the online business of Innofarm. When that happens, hopefully, the e-grocery business would already be cashflow-positive. Only then would it be attractive to Lay Hong shareholders.