Food at your doorstep: the online delivery revolution

Food at your doorstep: the online delivery revolution

Its size maybe dwarfed by those of North America and Western Europe, but the online food delivery business in Asia has been witnessing steady growth of about 15% a year. Food delivery service in Asia now appears poised for a breakthrough to the next level, as more players both domestic and international experience enter the industry.

Restaurants were once thought to be immune to the threat of e-commerce, but the arrival of online food delivery platforms has transformed the industry into a new battleground. Competition among online restaurant aggregators as well as logistics networks is intense as several partnerships have been formed in an attempt to create business models that appeal to distinct market segments.

While food delivery in China is dominated by domestic players, smaller markets in Southeast Asia have been more promising for international and regional players such as Deliveroo, Foodpanda, UberEats and Lineman, which has been especially popular in Thailand. The high growth potential and fast-changing consumer behaviour in Southeast Asian markets have offset their small market size and continued to attract new businesses.

EIC has identified two major underlying factors behind changing customer behaviour during this rise. First, smartphone penetration and internet access allow everything to be connected at a fingertip. Consumers increasingly are discovering their interests through their smartphone screens, and the need to be physically outside of the house to learn about new places is diminishing.

The second factor is that digital consumers are much more savvy and particular. Moreover, they are ensuring that their voices are being heard much louder through online comments and reviews.

Online food delivery services connect in a big way with these consumers by allowing them to be able to have their favourite dishes from the restaurants of their choice at any time and anywhere. There's no need to go out and fight the traffic or to wait in line for hours to be seated in a busy restaurant.

In a similar manner, online services are serving as a replacement for meals that used to be prepared and consumed at home. With rising urbanisation and the hard-driving Asian working culture, consumers are looking for an easy treat and nothing could beat a favourite menu item delivered right to the living room and having it while watching your favourite TV show. Along with many other new digital services, online food delivery platforms are invented to please the demanding customers.


While the demand is here to stay, this does not necessarily mean that any player who comes along will be able to successfully capture this opportunity. There are five key competitive factors that platform aggregators who wish to win in online food delivery must possess: delivery time and coverage area, variety of restaurant choices, delivery cost, payment methods, and consistently good user experiences.

Nevertheless, within this highly competitive market environment, challenges are inevitable. EIC has broken down major challenges that online food delivery platforms are expected to encounter into external and internal factors.

External challenges or those factors that aggregators are unable to control are: food standards from restaurants, technology acceptance or adoption rates among users, and aggressive pricing due to competition in the market. The internal challenges are logistics management, coming up with an attractive business model for drivers, and high marketing costs. Platform aggregators that can come up with the right business model to optimise their logistics service as well as create the right incentives to keep drivers working for them will be able to create satisfaction for their users.

It is also very important to keep in mind that each market has its own uniqueness, and a success story elsewhere cannot be directly transferred to another market. The business shutdown of Foodpanda in Vietnam and Indonesia presents a very good example. Germany-based Foodpanda sold off its Vietnam unit in 2015 to a local rival and in the following year terminated its operation in Indonesia, admitting it was losing out to a new generation of app-based taxi services such as Go-Jek that also offer food delivery.

Key factors behind the failure of Foodpanda in these markets were its unsuitable business model for the local environment. In Vietnam, Vietnammm, a subsidiary of Takeaway, one of the world's largest online food delivery websites, was able to operate delivery services at a much cheaper cost as compared to those of Foodpanda.

During its time in Vietnam, Foodpanda hired around 100 full-time employees, which was deemed to be too many for the service it provided. In Indonesia, meanwhile, close-range delivery service was believed to be a weakness that made it hard for Foodpanda to compete. This strategy limited the options available to users and in the end turned customers away.

Local market's knowledge and understanding are therefore at the forefront of winning strategies. It is vital that food service operators and aggregators understand customers' priorities in each market and make sure that those are being delivered at all time.


Looking into the future, we expect to witness a blurring of segments between food and non-food delivery as players attempt to offer both services. However, we expect to see more non-food delivery platforms expand into food-delivery than the other way around.

Acquiring companies or establishing partnerships in order to cover both segments will become the norm for those seeking to create a larger user base. This also includes collaboration with logistics experts and food review platforms to create a more complete and interactive user experience.

We also expect that only a handful of players will remain as clear winners over time. This is partly because platforms in their initial phase are forced to spend large sums of money on marketing to capture users. If the money is not spent effectively, the business might never make it to the next phase. In any case, only those players with strong financial backup will be able survive and thrive in the long run.

Lastly, product differentiation will be the ultimate success factor. Platforms will be competing on their abilities to meet sophisticated customer demands in terms of the number and types of restaurants represented, recommendation services, coverage location and unique customer services.

It is clear that digital food delivery service in Asia is here to stay, and those who can find the right touch in each market by utilising the perfect mixture of glocalisation (globalisation plus localisation) will triumph.

EIC, a unit of Siam Commercial Bank Public Company Limited, offers in-depth macroeconomic outlook and sectoral impact analyses. For more information, please visit or contact

Do you like the content of this article?