In which countries does Go Jek operate
Greedy to Southeast Asia, Foodpanda to get involved in Grab and Gojek
A decade, but 50 times the growth. It's not often that you see numbers like this. And yet, this is the projected growth rate for the food supply industry in Southeast Asia, a study shows. This mammoth market is the one that troubled European food company Foodpanda is looking to crack.
Founded in 2012, the company quickly made a name for itself in Asia and some Eastern European countries before reaching a difficult level in 2016. It ceased business in Indonesia and sold its units in Vietnam and India.
It looked like defeat.
But in late 2019, the year when ordering groceries on demand became a normal habit for many from an occasional activity, the tables turned.
Foodpanda's parent company Delivery Hero, which was founded in Germany and is listed in Amsterdam, has taken over the South Korean food company Woowa Brothers worth 4 billion US dollars. And Southeast Asia's little red dot, Singapore, is the headquarters for Woowa-Delivery Hero Asia's new joint operations that are making the region the epicenter of this realm of food delivery.
Foodpanda 2.0 anyone?
Southeast Asia is a great growth opportunity for the industry. East Asian countries like South Korea, Taiwan, and Hong Kong are considered relatively mature markets, and Woowa has been profitable domestically for several years.
“In more mature food delivery markets […], food delivery accounts for an estimated 10-15% of total F&B spending,” a spokesman for GrabFood, Grab's on-demand platform, told The Ken . Grab currently offers food delivery in six countries in Southeast Asia. "In Southeast Asia that number is less than 5% [...] and there is considerable margin."
In fact, the total value of online grocery orders (gross value or GMV) is projected to reach $ 5.2 billion by the end of the year - more than double the 2018 value, according to a joint study by Google, Temasek, and Bain.
By 2025, that number is expected to exceed the 20 billion dollar mark.
And Foodpanda is getting ready for it. The company is moving its research and development center from Berlin to Singapore and plans to develop its own mobile wallet, a former Foodpanda employee told The Ken.
She also wants to make big investments in cloud kitchens, a form of business that rents fully functional kitchens to restaurants. Foodpanda has set itself the goal of increasing from the “handful” of cloud kitchens it currently operates in the region to 100 in 2020.
Cloud kitchens are an important new phase in the development of business models for food delivery. They can help delivery platforms cut costs and allow restaurants to produce food more cheaply. As a result, the format received a lot of attention and money in 2019. You just have to look at Rebel Foods, India's largest cloud kitchen startup, to see why. And Rebel Foods, best known for its Faasos brand, is entering the region in partnership with Gojek, Grab's biggest rival.
In order to find one's way in this landscape of possibilities, Foodpanda's second act has to learn from the mistakes of the past. The decline in 2016 was due to the rise of on-demand platforms such as Gojek and Grab, which had introduced the concept of offering food delivery in addition to transportation and other services. Grab and Gojek expanded so quickly that Foodpanda struggled to keep up.
Now Foodpanda has to deal with these two - especially Grab, the only challenger in the region with a regional presence comparable to Foodpanda. In addition, the appetite for Southeast Asia will affect Gojek, whose expansion into Thailand and Vietnam is still in its infancy. Indonesia, the largest grocery delivery market in the region, could prove to be a flaw in Foodpanda's plans for a comeback - the company has been out of the market since its troubles in 2016.
For parent company Delivery Hero, which has reduced its losses in Germany and is now looking to Asia, this is a battle it cannot afford to lose.
The woowa factor
However, investors seem confident that Delivery Hero
The company's share prices soared after the deal with Woowa Brothers in December.
At the close of trading on January 3, 2020, prices reached 70.80 euros (79.01 US dollars) per share, after 50.16 euros (56.20 US dollars) on December 12, 2019, the day before the publication of the Business.
This is true despite the overall losses of the Delivery Hero Group. The company's latest statement for the third quarter of 2019 shows hundreds of millions are in the red with EBITDA of minus 420 million euros (-468 million US dollars).
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