Sun, Sep 08, 2019 - Page 16 News List

Ride-hailing firms square
off in global food fight

Small stalls and restaurants are benefiting as Grab and Gojek compete to rule the Southeast Asian food delivery market

By Yoolim Lee and Harry Suhartono  /  Bloomberg

A Gojek driver, center, waits to collect an order from a Bakaro Grilled Express stall during the GoFood Festival in Jakarta, Indonesia, on Monday, July 15.

Photo: Bloomberg

Nanik Soelistiowati, the owner of a banana fritter stall in West Jakarta, is the unlikely prize in a battle between two of the most valuable technology start-ups in Asia.

The 64-year-old woman signed up for Gojek’s nascent food delivery service in 2015 after hearing about it from her children. Delivery motorbikes slalomed through traffic jams to deliver her delicious snack, which uses honey for a caramelized flavor, to all parts of congestion-choked Jakarta. Sales took off.

Then in 2017, rival Grab Holdings Inc approached her with an offer to undercut Gojek’s take of 15 percent. It was too good to refuse, and when Grab pushed aggressive discounts to consumers, demand spiked so much that Soelistiowati ran out of bananas to fry.

SOUTHEAST ASIA’S HOTTEST

Grab and Gojek became Southeast Asia’s two hottest start-ups largely on the strength of their ride-hailing businesses, but now they are in the midst of an international food fight.

In the space of just four years, Jakarta-based Gojek has grown to have 400,000 food merchants such as Soelistiowati cooking up 50 million orders a month, or about 1.7 million orders per day, across locations in Indonesia, Vietnam and Thailand.

Singapore’s Grab came in later, but it is catching up fast with the help of massive funding from SoftBank Group Corp and the acquisition of Uber Technologies Inc’s local ride-hailing and food delivery business last year.

This year, Grab says it has tripled sales and doubled its roster of merchants.

COMMON GROUND

The two companies are led by a pair who met while studying at Harvard Business School, with Gojek cofounder and chief executive officer Nadiem Makarim and Grab cofounder and chief executive officer Anthony Tan finding common ground in their shared background.

They also concur in seeing a bright spot in the food delivery market because it offers much more attractive margins than the more established ride-hailing business, said Florian Hoppe, a Singapore-based partner at Bain & Co.

“Today, the food delivery market is significantly smaller than transport in Southeast Asia, but it’s expected to be on par or bigger than on-demand transport by revenue over the next five years,” Hoppe said.

Globally, the online food order industry has grown into a hyper-competitive field, which has led to consolidation as companies claw for a bigger slice of more than US$300 billion in restaurant deliveries.

However, in Indonesia online food deliveries account for just 1.3 percent of the total food market, compared with 8 percent in the US and about 12 percent in China, according to data from Euromonitor.

“We are only scratching the surface in terms of penetration in this part of the world,” Gojek chief food officer Catherine Sutjahyo said. “We truly believe that this is a big opportunity.”

Elsewhere in the world, companies such as Uber are also aggressively moving into the food delivery business in search for higher profit margins, having identified the same opening as Grab and Gojek.

The Southeast Asian duo offer digital payments and sundry other services on top of their ride and food delivery staples, aiming to be the WeChat-like super app in the region.

Gojek, which processed US$2 billion of food delivery transactions last year, is not content just riding a rising tide. The company employs data and machine learning to study patterns of consumption, driver behavior and traffic.

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