“We really want to make a point of not becoming a superapp,” Foodpanda’s Jakob Angele told Nikkei Asia in an interview this week. “We want to be an app which stands for something very concrete and has a very clear value proposition for customers.”
Angele’s comments come as Foodpanda marks 10 years of doing business in Asia, with its new regional headquarters in Singapore. Operating in 11 Asian markets, the company hopes to strengthen its engineering and business team as it faces strong regional competitors like Grab, GoTo and Sea.
Foodpanda, a subsidiary of Frankfurt-listed online delivery service provider Delivery Hero, started its business in Singapore in 2012, ahead of Grab and other rivals. The company focuses on “quick commerce” food, bringing small meal and grocery orders to customers almost instantly.
The online food delivery market in Southeast Asia is expected to grow to almost US$50 billion by 2030, more than tripling versus 2021, according to research specialist Frost & Sullivan.
“There is still a lot to do on the food side. We’re still very much at the beginning of the journey on interaction with food and food consumption,” Angele added. Apart from food delivery, the company has moved, over the years, into grocery delivery, with over 300 warehouses in the region, as well as rolling out a dine-in service.
Meanwhile, Grab and GoTo are moving into its territory under the superapp strategy, expanding from ride-hailing into food delivery and financial services by leveraging their customer base and data to offer new services. These companies have been doling out costly incentives to attract drivers and customers.
By market share, Grab was the leading on-demand food delivery service in Southeast Asia last year, with around 49%, followed by Foodpanda at 22%, according to Singaporean consultancy Momentum Works.
While Foodpanda does not disclose information on its user base or transactions, Angele said the company is still the market leader in most of its 11 markets, based on its own internal tracking. Hong Kong, the Philippines, Malaysia and Taiwan are some of the company’s large markets.
“We’ve been operating in a hypercompetitive market for 10 years. This competition is something very normal and we saw, over the years, so many competitors come and go,” Angele said.
Foodpanda, too, has had to adjust to cutthroat competition, refocusing on its core markets. At the end of 2021 Foodpanda pulled out of Japan after less than a year, a market where Uber Eats and local players like Demaekan are entrenched.
“Japan is a huge market … we strongly believe in network effects. What we looked into is how long would it take and how much money to invest to become a market leader, or at least close to market leader. You can imagine that would have been a lot of money for such a big market,” Angele said.
“It was partly a financially driven decision. It was unfortunate. because with the fundamental business progress, we were actually quite happy.”
The company is in a new phase of business, with the reopening of the economy from the pandemic and customers returning to brick-and-mortar stores. According to Angele, the company’s order volumes are still higher than pre-Covid levels, but growth has slowed this year, following the surge in demand during the peak of the pandemic.
“Markets like Singapore can still grow by maybe another five times,” he said.
Angele said some of the improvements the company is considering include ways to manage orders from suppliers more efficiently using technologies like artificial intelligence.
“One space we are very interested in is, for example, to better support the interaction between restaurants and their suppliers with technology,” Angele said. The way restaurants manage supplies “is still very much in the 20th century.”
In the face of the global tech sell-off, tech companies have been forced to become more focused on profitability than revenue growth. Foodpanda’s parent company is no exception. In April, Delivery Hero vowed to achieve positive adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) on a group level in 2023.
“The global climate is – it’s a bit more challenging these days,” Angele said. “But I do feel Foodpanda is actually in a very good spot. We always try to grow the business somewhat reasonably and sustainably. We are very conscious about how much we grow just by discounting our transactions.”