GUEST COLUMNIST
By AMANDA CUA
You might be receiving your last order soon. About two weeks ago, Delivery Hero scaled down a portion of its Asia business. Now, you might be thinking, “So what? Who’s Delivery Hero, anyway?” But you might want to pay a little bit more attention to them, because they’re the German-based firm that runs and owns the foodpanda brand in Asia.
The company, foodpanda, which operates in several Southeast Asian countries like Singapore, Cambodia, Laos, Malaysia Thailand, Myanmar, and the Philippines, is arguably a popular addition to the diet of regular Pinoy office worker.
Need a quick pick-me-up in the middle of the day? You can head over to their app (but first, you consult the internet for any discounts and vouchers) and order a refreshing snack.
Unfortunately, we might be saying goodbye to foodpanda and their panda mascot Pau-pau soon.
Scaling down
In a report by Reuters, Delivery Hero has confirmed that it’s in talks with “several parties” for a partial sale of its Asia business for a little over €1 billion or $1.07 billion, according to Wirtschaftswoche, a German publication.
More recently, Fruitas Holdings Inc., purchased foodpanda’s kitchen equipment in the Philippines to improve the operations of their cloud kitchen subsidiary earlier this month. BusinessWorld reported that the acquisition will expand Fly Kitchen’s offerings and capabilities.
But back to the Delivery Hero. The food giant said that they had to reduce their APAC teams in efforts to “streamline operations to become leaner and more agile.” Why? It might be because of their declining market share in the region.
In a statement released earlier this April, Delivery Hero reported that all of their segments aside from Asia showed a growth rate of 16 percent in the first quarter of 2023. Meanwhile, Asia declined by seven percent.
Grab’s on the move
Speaking of market share, one of foodpanda’s potential buyers is none other than Grab Holdings.
According to Momentum Works, a tech research firm, Grab is the market leader in food delivery in Southeast Asia, holding 54 percent of the region’s gross merchandise value (GMV) Meanwhile, foodpanda trails behind with 19 percent and Indonesia’s Gojek at 12 percent.
Some business analysts have given their two cents on the feasibility of the deal.
CGS-CIMB analysts Ong Khang Chuen and Kenneth Tan said, “We think antitrust approval will be the biggest hurdle for Grab, and a sale to deep-pocketed buyer (like Grab) could disrupt the current competitive landscape.”
Another Uber situation all over again?
Although regulations might make it tough for Grab to buy foodpanda, the supposed deal can ripple into significant changes for the larger food delivery ecosystem in Southeast Asia.
For one, this would significantly consolidate Grab’s market share, making it easier for them to acquire new customers without spending big on marketing.
For consumers though, it might not be such an optimistic story.
Grab’s current “monopoly” over cars, especially in markets like the Philippines, has caught flak from critics, who insist that the company inflates prices because of commuter demand.
And with Manila’s troubled and overwhelmed commuter system, it’s not hard to see how Grab could easily take advantage of this. What would consumers face if Grab were to acquire foodpanda?
Take for example the case of Uber.
Uber left the Chinese and Southeast Asian markets after Grab bought its business in 2018. And at the time, the Philippine Competition Commission warned of a virtual monopoly of the industry.
The Land Transportation Franchising and Regulatory Board had also accredited six transport hailing companies like MiCab and Hirna. But even with Angkas and Joyride in the mix, none have matched Grab’s market dominance.
The future for foodpanda
So, how does this fit in with the current situation?
If Delivery Hero does decide to leave the Southeast Asian market, then they should do so with a smooth transition that doesn’t undercut delivery riders, merchants, and consumers.
While layoffs in tech are nothing new, it still shouldn’t be a shortcut to cutting costs to maintain profit margins. Their platform workers too, risk losing livelihoods, and should at least be given some sort of protection if the transition pushes through.
And for the regular consumer? It’s no secret that healthy competition is a key ingredient to ensuring a fair and enjoyable customer experience.
After all, on Mondays, you might find a better deal on foodpanda, and on another day, Grab’s got the better discount.
But, for all we know, we might have nothing to worry about after all.
(Amanda Cua is the founder and CEO of BackScoop, a media startup with a free newsletter that features news on business and startups in Southeast Asia.)