Food delivery platform gross merchandise value (GMV) in Southeast Asia (SEA) grew at a “modest” 5 percent year-on-year (YOY), reaching $16.3 billion in 2022, mainly driven by relatively smaller markets of Malaysia, Philippines and Vietnam, according to a report by Momentum Works.
“Malaysia, the Philippines and Vietnam, three smaller markets, have recorded significant growth, as players, including Grab and ShopeeFood, expanded penetration,” the report stated.
The report revealed that of the $16.3 billion GMV across SEA, the Philippines recorded $2.4 billion GMV, with 60 percent coming from Grabfood and 40 percent from Foodpanda. Meanwhile, Malaysia recorded $2.2 billion and Vietnam $1.1 billion GMV.
According to the Singapore-based venture outfit, with mounting pressure to reach profitability, existing and new food delivery players have continued to cut back on their food subsidies and compete based on service quality.
“As of end 2022, Grab is estimated to account for 54 percent or $8.8 billion of the region’s food delivery GMV, a 16 percent increase from the year before. Foodpanda is estimated to contribute 19 percent or $3.1 billion of the region’s GMV, a 9 percent decline from 2021.Gojek and Shopee are estimated to maintain their food delivery GMV at 2021 levels at $2 billion and $0.9 billion respectively,” the statement of Momentum Works on Tuesday read.
Jianggan Li, Chief Executive Officer and Founder of Momentum Works, said 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,” Li said.
Meanwhile, the report of Momentum Works revealed the movement of consumers, merchants and riders as business transitioned from the Covid-19 pandemic, wherein dine-in areas were blocked and collection tables were set up for easy pick-up of delivery orders to the post-Covid era wherein crowds are returning to food establishments and merchants offer special menu for delivery.
For consumers, the report noted that consumers now have both online and offline food options to choose from and returning to office means a shift in lunch demand patterns. As for the merchants, the report said they “re-strategize” to cater to resumption of offline/dine-in traffic; many franchises/chains resume store opening and even expansion; and establishments differentiate offerings and promotions to dine-in, food delivery and other consumers.
For the part of riders, the report stated that with the exception of Singapore, reopening has “no visible impact on rider supply.”
With the said transition, the report also revealed that pure online models are giving way to “online-offline integration,” which it said extends to groceries and cloud kitchens.
According to the report, another trend observed was food delivery players made moves to consolidate “fragmented” food and beverage digitalization. It noted that more players entered into strategic partnerships or acquisitions with point-of-sales and restaurant management solutions providers in 2022.
These said moves, the report noted, are “expected to strengthen merchant retention and enable players to provide more and better differentiated services to merchants by harnessing online and offline sales data.”
Meanwhile, for revenue expansion, the report stated that food delivery players have began building advertising products to “lock in” more merchant investments. In fact, it said many are experimenting with subscription programs as a tool to improve consumer retention and encourage “larger basket size” orders.