Total food delivery spending in Southeast Asia (SEA) grew a modest five per cent to reach US$16.3 billion in 2022 after two years of COVID-19-driven deliveries boom, according to a new report by Singapore-based Momentum Works.
In its third edition, the organisation offers in-depth insights into SEA’s six core food delivery markets –Indonesia, Malaysia, Singapore, Thailand, Vietnam, and the Philippines.
The report revealed that for the first time in three years, growth was driven primarily by the region’s smallest food delivery markets, including the Philippines (increased by US$0.8 billion), Malaysia (US$0.6 billion) and Vietnam (US$0.3 billion). Meanwhile, larger markets such as Singapore (decreased by US$0.4 billion), Thailand (US$0.4 billion) and Indonesia (US$0.1 billion), recorded a GMV decline as COVID-19 became endemic and economies reopened.
It also stressed the urgency for companies to focus on profitability.
“Major players pivoted away from cost-intensive business models such as dark stores for groceries and dark kitchens for food delivery. This trend is expected to continue into 2023, with Shopee planning to refocus on its core business in e-commerce, and DeliveryHero rumoured to be divesting its operations in a few Southeast Asia countries,” it wrote.
Also Read: foodpanda: Taking Asia’s food delivery ecosystem through the pandemic and beyond
The report stated that as of the end of 2022, Grab is estimated to account for 54 per cent or US$8.8 billion of the region’s food delivery GMV, a 16 per cent increase from the year before.
Foodpanda is estimated to contribute 19 per cent or US$3.1 billion of the region’s GMV, a nine per cent decline from 2021.
Gojek and Shopee are estimated to maintain their food delivery GMV at 2021 levels at US$2 billion and US$0.9 billion, respectively.
“The competitive landscape became a lot more muted in 2022 compared to 2021. New entrants such as Shopee and AirAsia have gone back to focus on their core sectors, while incumbent players adopt a much more conservative expansion strategy. With profitable growth being the biggest focus now, food delivery players are experimenting with a variety of strategies to improve delivery margins and strengthen consumer loyalty via advertising, subscription programmes, and more. We believe profitability is attainable with volume, density and operational efficiency,” said Jianggan Li, Chief Executive Officer and Founder of Momentum Works.
In experimenting with new strategies, players with a large consumer reach and merchant base will have the edge over others.
Also Read: Are Singapore’s food delivery apps charging users more during a pandemic?
The report also stated more defined online and offline strategies are also expected as merchants differentiate their channel offerings: Food delivery continues to form a substantial part of a merchant’s overall sales, even after the dine-in resumption.
“As a result, merchants are creating more differentiated offerings and promotions for dine-in and food delivery to reduce cannibalisation and maximise sales for both channels. Similarly, delivery players are expanding into the offline space through features such as dine-in coupons, restaurant reviews, and more.”
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