Foodpanda joins online grocery delivery fray

Competition in the online grocery delivery market is expected to escalate as Germany-based food delivery app Foodpanda becomes the latest player to step into the segment under Pandamart.

The move highlights the industry players' focus to capitalise on the "quick commerce" trend, where items are delivered rapidly, rivalling traditional convenience stores and supermarkets.

Pandamart faces tough competition from GrabMart, linked with super-app Grab, and HappyFresh, which has a business connection with Line Man.

"We are entering the era of quick commerce [q-commerce] where digital customers expect faster delivery within minutes or hours, unlike the 4.0 e-commerce era when users wait for same-day or next-day delivery," said Thomas Buchan, director of new verticals at Foodpanda Thailand.

Q-commerce is a new development for fresh food and grocery sales as consumers become more familiar with online ordering, he said.

Pandamart, which launched in June, provides delivery services by 20 minutes within 10 kilometres from its storage facility.

Pandamart has two business models. First, it runs a retail business with its own inventory. It purchases products from brands and delivers them using its drivers.

Its storage facilities cover seven areas in Bangkok. The first facility was established in the Lat Phrao area.

Mr Buchan said the company uses its location intelligence, which gauges population density and online ordering demand, before launching storage facilities.

The firm aims to have 30 facilities in major cities by year-end, he said.

Regarding the second model, Pandamart works with more than 1,000 merchant partners to supply products to riders for delivery. The partners include CP Freshmart, Gourmet Market, Lawson 108, Tesco and Beauty Buffet.

For the first model, the company earns money from normal trading business, said Mr Buchan. In the second model, the firm's earnings come from commission.

Pandamart offers free delivery for orders of at least 50 baht to attract users.

Jackarintr Sasinin, head of Pandamart operations at Foodpanda Thailand, said its first storage site at Lat Phrao has 300 square metres of space and 2,500 items. Beverages, snacks and alcohol are the three best selling items, he said.

An average of 400 orders is recorded per facility per day.

Pandamart is expected to drive growth of Foodpanda's revenue for years to come as grocery delivery is expected to eventually exceed food order deliveries.

Pandamart operates in 12 countries in Asia-Pacific.

Mr Buchan said digital platforms need to invest in this market to better accommodate the customer experience, in line with changing behaviour.