Food delivery apps ripe for consolidation
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Food delivery apps ripe for consolidation

Market value down 0.6% since last year

Grab Food delivery drivers deliver food ordered via the app in Bangkok. (Photo: Somchai Poomlard)
Grab Food delivery drivers deliver food ordered via the app in Bangkok. (Photo: Somchai Poomlard)

Food delivery and ride-hailing platform operators are expanding their businesses amid a stagnant economy, mainly through mergers and acquisitions, cross-platform collaborations, and planned initial public offerings (IPOs).

According to Kasikorn Research Centre, this year the market value of the food delivery business is estimated to be 86 billion baht, down 0.6% from 2022.

Average spending on food delivery per order is expected to increase, while the volume of food orders through the platforms is predicted to contract by 11.3% because of changing consumer behaviour.

The online food delivery business will face challenges related to operational costs and financial expenses, resulting in the continuous adjustment of the platform operators to maintain business sustainability, according to the research centre.

Food solutions

Worachat Luxkanalode, country head of Grab Thailand, said the company is shifting the focus from food delivery in order to become a provider of food experiences and solutions by offering more features such as restaurant dine-in, self-pickup, and group ordering.

He added that Grab Thailand will build more use cases and food solution marketing tools so restaurants can expand their customer base.

Grab Thailand also has GrabUnlimited, a monthly membership package of discounts. The programme increases customer loyalty and saves on marketing spending. Currently, 50% of GrabFood users are also GrabUnlimited subscribers.

Mr Worachat declined to comment on speculation that Grab is among the potential acquirers of rival Foodpanda, saying the food delivery market will likely see consolidation because there are too many players.

Cross-platform tie-ups

A previous statement from Delivery Hero confirmed it was negotiating with several parties regarding a potential sale of its Foodpanda business in selected Southeast Asian markets. Any discussions or plans are in their preliminary stages.

Meanwhile, Foodpanda Thailand has extended its partnership with airasia Superapp, which will be renamed as airasia MOVE.

Under the collaboration, airasia Superapp users can gain access to Foodpanda's nationwide food delivery services, while Foodpanda customers can gain access to airasia ride's budget-friendly ride-hailing services.

Siripa Jungsawat, chief executive of Foodpanda Thailand, said the partnership will strengthen Foodpanda by delivering a complete and seamless service experience to existing users of both apps, expanding the customer base.

She added that this partnership will result in a more comprehensive and sustainable business ecosystem. Apart from Foodpanda Thailand, airasia Superapp also collaborated with Foodpanda Malaysia in May this year.

Ben-Jie Lim, head of partnerships and global markets at airasia Superapp, said this partnership bolsters both applications, introducing users to innovative services catering to diverse needs, and enhancing overall convenience.

Foodpanda users can seamlessly access ride-hailing services directly through the app, facilitating more convenient and efficient travel within Bangkok, all at an appealing price point, he added.

Moreover, for every 15 baht spent on the airasia ride service in the Foodpanda app, users will earn 1 airasia point, which can be redeemed for a variety of products and services across airasia Superapp.

Acquisitions and Listings

Line Man Wongnai was previously rumoured to be acquiring Foodpanda. The company recently acquired FoodStory, a Thai startup specialising in restaurant point-of-sale systems.

In August, Line Man Wongnai and Line Thailand jointly acquired the shares of the payments business Rabbit Line Pay Co (RLP) from the latter's two shareholders, RabbitPay System Co and Advanced mPAY Co. The transaction allowed Line Man Wongnai to become the majority shareholder of RLP.

RLP was officially rebranded as Line Pay, effective as of Oct 18, 2023.

Yod Chinsupakul, chief executive of Line Man Wongnai, said earlier that the company sees growth in e-payment opportunities in Thailand. To acquire the RLP shares is a major milestone for the company's growth.

"We're open for organic growth, acquisition and partnership, and paving the way for Line Man Wongnai's IPO by 2025," said Mr Yod.

Bloomberg reported in September that Line Man Wongnai had started preparations for an IPO in Bangkok that could raise around 10 billion baht, according to people with knowledge of the matter.

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