Online grocer Jocom debuts on 1exchange to raise funds for expansion plans

MALAYSIA-BASED online grocer Jocom on Thursday made its debut on 1exchange (1X), Singapore's first regulated private securities exchange, to support its local and overseas expansion plans.

Jocom listed about 26.7 per cent of its shares at an aggregate value of S$5.6 million, valuing the company at around S$21 million.

Jocom's status as a listee on a private securities exchange, backed by the Singapore Exchange, will also expose the firm to a new pool of investors and enhance its positioning for more business opportunities in the future, said chief executive officer and founder Joshua Sew in a press statement.

The online grocer, which already has a presence in China, is looking to expand its operations to markets such as Indonesia and Australia, positioning itself as a gateway for Malaysian producers to make their products available to overseas markets.

Between 2015 and 2020, Jocom generated about US$40 million in sales revenue with its business growing 30 per cent year on year, boosted by the increase in online grocery purchases amid the Covid-19 pandemic.

Indeed, online grocery retail was pushed into the mainstream as countries went into lockdown in a bid to contain the virus. But it was something that Mr Sew and co-founder and managing director Agnes Chua did not foresee when they first dipped their toes into e-commerce for groceries.

Back then, the online grocery space wasn't quite as developed as it is today, Mr Sew told The Business Times in an interview.

Still, Mr Sew and Ms Chua decided to take a chance. As it happens, his family had experience in the logistics industry, while Ms Chua's family was in the grocery business.

Armed with a background in computer science and programming, Mr Sew, together with trained accountant Ms Chua, launched Jocom in 2015 with an initial investment of RM100,000 (S$32,700). Despite their combined expertise, Mr Sew said that it took a lot of grit and resilience to stay in the business.

Jocom - an acronym for "just order conveniently on mobile - now operates its mobile grocery store through its subsidiaries Jocom MShopping and Jocom Ethirty seven. As at March 18, the platform has some three million users, 500 vendors and 15,000 products.

It was also Malaysia's first grocery mobile app and is now among the few end-to-end platforms for grocery shopping in Malaysia. This means it has full control over the entire order journey from purchase to order fulfilment. Jocom also has ownership over the platform, proprietary software, delivery fleet, and storage facilities.

Part of the business also includes running virtual shops and fulfilling orders on other online marketplaces.

Mr Sew is eyeing a US$10 million target from fundraising efforts to support operations and expansion plans in the next three to five years.

Jocom plans to invest a significant amount of resources into developing an artificial intelligence (AI)-powered back-end system, which will analyse big data such as demographics, customer preferences and spending power.

These AI-driven analytical insights can potentially support delivery logistics, inventory management, merchandise pricing and generate cost savings.

Other areas of technology that Jocom will be focusing on include automation.

"When we reached a certain size, we found that automation is a part of a business that we need to have," said Mr Sew.

He admitted that despite efforts to streamline the process of packing and fulfilling orders, more can be done to boost efficiency. He cited British supermarket Ocado as an example. The firm had designed highly automated warehouses powered by robots and are able to process some 65,000 orders weekly.

Asked how Jocom intends to compete with the big boys, Mr Sew said that he is confident there is plenty of room for growth.

"There's no way a player is able to conquer everything. We believe the billion-dollar industry will be shared," he said.

"Today, we hold less than 2 per cent (of market share for groceries in Malaysia) and eventually we want to grow it to more than 5 per cent."

On the prospects of going public, Mr Sew floated the idea of listing in the United States.

"We are trying to see if it will be suitable for us to go into the US in the next stage," he said. Already in the works are pilot projects to sell South-east Asian goods there.

Chief executive officer of 1X Choo Haiping said that the exchange is pleased to welcome Jocom on board, given its contributions in the digital transformation of many traditional businesses in Malaysia through its accessible mobile commerce solutions.

The 1X platform is regulated by the Monetary Authority of Singapore. It enables private firms to list a portion of their shares in the form of tradeable private equities, which can be bought and sold by investors at any time with no lock-up period.

There are currently two other listings on 1X - boutique fund manager Aggregate Asset Management, which listed in 2019, and wellness and aesthetics services operator Crigen Resources, which made its debut last year. They sold 5 per cent and 28 per cent of their shares respectively.