PasarTap fills a gap in the online grocery market

• Sourcing from wet markets for fresh, affordable produce
• Eventual plan to bring more tech to local agriculture industry

WITH numerous online grocery platforms in existence today, Malaysia-based PasarTap has managed to distinguish itself from the rest by sourcing its products from wet markets or pasar in the national language Bahasa Malaysia.

“The biggest difference between us and the other platforms is where we get our products, and the variety of options we provide. A supermarket definitely has less variety than a wet market,” says co-founder and chief operations officer Hisham Talib.

Hisham emphasis the fact that by sourcing produce from suppliers at local wet markets, who in turn source their produce from local farms, PasarTap caters to local needs and taste buds. Being “hyperlocal”, as he puts it, is a fundamental part of PasarTap’s business model.

PasarTap started out as an exclusively B2C model but incorporated a B2B operations in February this year after getting advice and feedback from other industry players at last year’s RISE, the annual tech conference held in Hong Kong.

According to Hisham, the B2B side of the business has been positive enough to overtake the B2C market in two months mainly because PasarTap found a big gap in the market by supplying to small and medium restaurants and caterers. These SMEs are usually overlooked by traditional suppliers, who focus on big restaurants and chains instead. “These guys don’t attract big suppliers but they don’t have the manpower to go to the markets and get supplies at the best prices. Targeting them has been fruitful for PasarTap so far.”

The startup is certainly leveraging on the dynamic grocery delivery ecosystem in Malaysia. Hisham admits that competitors – the biggest being HappyFresh, Tesco and honestbee – have primed the market by introducing the concept of online grocery services, though PasarTap is astutely targeting a different sample of customers – SMEs and individuals who want local fresh produce.

“We are taking it to another level by focusing on the middle class and below,” he explains.

Mixing it up

The idea for PasarTap was born in quite a Malaysian way – Hisham needing to get large amounts of fresh and affordable supplies for kenduri (traditional celebratory feasts) that his mother was cooking for. Friend and eventual co-founder Hafiz Hassim, a restaurateur at the time, would go to the early-morning wet markets to get supplies for his restaurant.

“Naturally, I would use him to buy stuff for my mother. After a few times, we realised this could potentially be a business,” says Hisham.

To test their idea, Hisham, Hafiz (who is also chief executive officer) and third co-founder Fahmi Amri (chief technology officer) launched a beta stage platform in January 2016 for 100 friends and family members with 15 suppliers. After seeing good data rates for three months, they decided to officially open the platform to the public.

Now the service is streamlined into three layers: orders to the platform administrator, which distributes them according to location to the relevant PasarTap shopper (called a mandur) and supplier. The supplier will pack up the order and the PasarTap shopper will check the order for quality before passing it on to the rider to deliver. PasarTap has buyers and riders at each market it operates in.

Currently, PasarTap operates in two wet markets – one in Chow Kit, in the centre of Kuala Lumpur, and one in the town of Selayang, just outside Kuala Lumpur. It delivers to the centre and north of Kuala Lumpur as well as the large suburb of Subang. Next on the books are more of the Klang Valley and a few neighbouring cities and towns, including Klang, Bangi and administrative capital Putrajaya.

“We want to cater to as many areas as we can, and there is demand. We are ready to broaden operations,” says Hisham.

PasarTap secured its first funding in May this year and is taking the first steps to expansion. However, one of the biggest challenges it still faces is logistics, which Hisham says is something all online grocery services face.

After a little trial and error, PasarTap now operates a hybrid logistics system where it has its own delivery team but uses a logistics company to cover spill over when there is a spike in orders. This system also allows the startup to keep costs low. Though PasarTap is aware that its competitors have their own delivery fleets, it believes going the same way to be too big a spend for PasarTap at its current size.

“We will still use the hybrid system moving forward and leverage on other service providers. We believe in a low cost model and we don’t want to spend too much of our assets,” says Hisham, adding that the growing maturity of Malaysia’s logistics industry means more competitive rates for the startup.

Opportunities abound

Part of PasarTap’s five-year plan is to connect consumers, business and wholesalers to suppliers, becoming a huge marketplace where buyers can choose supplies from farms all over the country.

The startup also wants to help local smallholder farms increase their yield by providing more demand for their produce. Hisham explains that small farmers have to contend with multiple layers of middlemen, meaning farmers have to sell at low prices and consumers pay high prices. PasarTap wants to remove the middleman from the equation and become a platform for direct farm-to-consumer supply.

To get there, the challenge is incorporating technology into the agriculture industry. “The issue with agriculture in Malaysia is that it’s not sexy. No young person in their right mind wants to go back to their father’s farm to run it. There is no yield, no money and no technology there,” says Hisham.

The rub is that the technology does exist, and agriculture will be sexy if tech is introduced to it, but the government has to step in to ensure there is implementation across the board. This is starting to happen; as a market player, PasarTap was recently invited by the Selangor state government to provide input on the agriculture side of the Smart Selangor Blueprint, a plan to elevate the state’s economy.

PasarTap is seeing a yearly revenue of about RM250,000 (US$58,287), which, Hisham points out, is barely scratching the surface of Malaysia’s online grocery market. “The opportunities and potential for growth is huge, it’s just a matter of getting the ecosystem ready,” says Hisham.

Related stories:

HappyFresh Indonesia turns 2

honestbee launches in Malaysia

Tesco Malaysia, HappyFresh announce online partnership

For more technology news and the latest updates, follow us on Facebook,Twitter or LinkedIn.