Redmart – The Future of Grocery Shopping
Redmart has been dubbed as the future of grocery shopping. Founded in August 2011, it is reportedly Singapore’s largest online supermarket. Co-founded by Roger Egan, Vikram Rupani, and Rajesh Lingappa, RedMart sells more than 100,000 products and offers home delivery seven days a week all year round. Before we get into the business itself, let’s delve into the backgrounds of the founders.
Rajesh Lingappa began his first major career step in 1997. He moved to Singapore from India to join a small startup called INT Solutions. Having dealt with the Asian Financial Crisis immediately, he understood the importance of adaptability.
In 2007, Rajesh decided to be a founding member of a new start-up. This start-up, called Random Connexion, was dedicated to building software to connect people. Its goal was to find better ways of discovering just about anything on the Internet. Some examples can be products, people, or the news.
However, the company was not able the survive the financial crisis of 2008, and he moved on to work at Bubble Motion. His job was to lead the successful development and launch of an iPhone and Android app.
After years of development, he came across an advertisement for Redmart. Realizing how saturated the app market has become, Rajesh decided to meet with the CEO of Redmart. The rest was history.
An idea stood out during his meeting with the CEO:
How would an online grocery delivery model work in a small island-state like Singapore where things were already so convenient?
Roger Egan III
Roger loved entrepreneurship since young. At 10 years old, his first business was shoveling snow off his neighbors’ driveways in his hometown of New York. He just loved it, having the instinct for opportunity and propensity toward entrepreneurship that continues until today.
Roger worked as an Associate at Omega Capital for a couple of years before starting his own insurance brokerage company. That company went on to raise US$320 million in capital. He then moved to Singapore to complete his Masters at INSEAD. There, he met the other co-founder, Vikram Rupani, and the journey of Redmart began.
Graduated from the esteemed Babson College in Wellesley, Massachusetts, Vikram Rupani first started out at JP Morgan. Within the first two years, he established himself as the top corporate financial analyst in the Industrials and Transportation group there. He joined Carlson Capital as a Research Analyst for two more years until he moved to Bahrain to co-found a company called Vikkon Resins.
Vikkon Resins was known to be Bahrain’s first-ever polymer and alkyd resin manufacturing plant. A few years later, Vikram decided to move to Singapore to pursue his MBA at INSEAD Asia Campus, where he met Roger Egan II.
The Start of a Brilliant Journey
The Founders (Source: AsiaOne)
Roger Egan II had a brilliant but simple idea that got the ball rolling: Create an “eBay for Consumer Packaged Goods manufacturers” — the makers of instant noodles and the ever-useful toilet paper.
He thought of this idea through his experiences living an unhealthy busy life as a banker. “I didn’t have time to buy groceries. I viewed the chore as a waste of precious free time. And though I passed the store on the way home every day, I would always forget to get what I needed. Running out of things is a pain — at RedMart we remind you to reorder before you run out,” he said.
To get their idea started, Roger and Vikram decided to do a study to see if this concept could work in Singapore’s context. They decided to do a study to see if a similar online grocery shopping website could work here. They applied what they learned during their course and evaluated the business from a strategic, marketing, and operations angle for a year before deciding that an online grocery shopping website in Singapore could work.
One Step and It Begins to Soar
In October 2011, Egan and Rupani officially started Redmart. A few months later, Rajesh Lingappa then joined them as Redmart needed to expand and a Technology Officer was needed.
In its short two months of existence, RedMart’s novel approach has already received validation. It received seed funding from INSEAD professors Patrick Turner, Serguei Netessine, and Neil Bearden, in the form of a convertible note. Family and friends helped out too.
It reached a new momentum a few months later when one of their classmates and former employee of Skype decided to tweet about Redmart. After a few phone calls to discuss how the future of Redmart is heading and the current resources it has in place, Skype co-founder Toivo Annus decided to invest heavily in Redmart.
Growth and acquisition by Lazada
By 2013, Redmart was big enough to shift into a 12000 square feet warehouse to house a large variety of products. Besides the warehouse is a fulfillment centre to handle deliveries and fresh produce. Revenue generated to almost USD 250 000.
In November 2015, RedMart launched ‘RedMart Relay’, a service that uses Runners – freelance shoppers – to deliver goods to their customers. Similar to Honestbee, the Runners would pick up the items from participating local retailers and deliver them quickly. The service covers a wide range of services, such as food, household items, apparel, and electronics. The service also promises delivery within an hour from ordering.
Popularity grew, but profits could not match the expenses needed to expand and cater to new demands. Seeking new equity, Lazada stepped in to buy out the new company in early 2016. Just acquired by Alibaba, it became a new opportunity to use better resources to reach greater customers.
Why did Redmart succeed in Singapore?
By 2021, the South-east Asian grocery market is prospected to worth some US$309 billion (S$416 billion) as the shoppers prefer online grocery shopping more than twice a month.
Generic of pickers working at RedMart, for Job Series story on E-Commerce. Photo: Raj Nadarajan/TODAY
Lazada has been trying to expand for years with the grocery market but found itself hard to come by with the logistics and expertise required. With a partnership such as Redmart, it became a win-win situation for them. Redmart had the experience and a direct retail offering and platform for independent brands to sell. On the flip-side, Lazada has no prior experience on grocery it offers electronics, beauty, apparel, home, and living items and it is on their way now to become an all-in-one marketplace.
Operating online gives it – and other e-commerce players – a unique advantage in inventory control. Unlike brick-and-mortar grocers that may have less complete access to buying information, RedMart is able to track the behavior of customers through their online purchases, down to where they live.
Another great advantage of Redmart is its fees. Sellers pay no fees to Redmart, hence making it free to set their own price margins. Redmart provides the tools for order fulfillment, the sellers ensure delivery.
This concept works for both retailers and customers, as lower prices meant cost savings. Plus, with online order fulfillment, shelf space becomes unlimited, meaning demand can be tweaked to suit consumer needs. This became crucially important during COVID-19, where the lockdown sparked panic-buying. Redmart was ready for the challenge and ensured every customer at least have a minimum order.
Ultimately, RedMart’s ambition is to have the largest variety of household essentials and personal care items of all supermarkets in Singapore, providing even niche products that are usually located in disparate places.