Grabfood puts other food delivery players on the backpedal
When ride-sharing platform Grab acquired the Southeast Asian operations of rival Uber, the deal also entailed the takeover of Uber
Eats and its integration into the relatively newer Grabfood platform—and industry observers and analysts foresee a bleaker horizon for competitors like Foodpanda, Honestbee, and Deliveroo.
The combination of the two delivery platforms poses a more palpable threat to rivals because it helps cement Grabfood’s leadership position and shuts the doors on merger and acquisition deals critical for staying competitive, said Terence Lee, chief editor of Tech in Asia.
“Grab’s chances of success of becoming Southeast Asia’s de-facto mobile platform has improved significantly with the Uber deal, which means investors may be spooked about backing a lesser competitor,” said Lee. “Second, even if an acquirer is interested, the stock of these competitors may have dropped since then, which means they won’t be able to get favourable terms.”
Even without the merger, Grab’s competitors would have struggled to raise funding due to Grab’s sizeable lead in the allimportant area of logistics, noted Justin Hall, principal at Golden Gate Ventures.
“Food delivery is not about food; it’s about logistics, and the technology required to economically and quickly deliver goods from point A to point B,” said Hall. “Grab has a stranglehold on consumer logistics, especially high-volume, consumer-facing logistics.”
Just as most investors should be wary of any startup whose business model is trying to compete with Facebook, they would also be cautious of those trying to go toe-to-toe with Grab, said Hugh Mason, CEO of JFDI Asia.
But Lee highlighted the potential of other food delivery companies to invest directly into making their own products as a differentiation and profit-boosting strategy. “Instead of just delivering food from restaurants, they can set up their own kitchens and capture more of the revenue for themselves,” he said.
Despite the emergence of a strengthened Grabfood platform, Luc Andreani, managing director of Foodpanda, insisted that the delivery company holds an edge in Singapore by being the only one that has established a nationwide presence and a dine-in satellite kitchen based in Woodlands. “As such, our edge lies in our strong infrastructure and efficiency in managing huge volumes of orders, superior customer service, and, by far, the largest restaurant offering in Singapore,” he said. “We are the only platform catering to all tastes, from shiok hawker centre dishes to famous chains and more premium restaurants.”
Deliveroo, meanwhile, is undaunted by the merger and still plans to invest and expand in Singapore over the next few years. “The demand from customers to have great food delivered straight to their door continues to grow. Deliveroo in Singapore is going from strength to strength as our rivals sell up and move out,” said Sid Shanker, general manager of Deliveroo.
Honestbee, for its part, is drawing strength from their pioneering efforts in providing on-demand hawker food delivery service in Singapore. “Singaporeans can have their favourite local delights delivered right to [sic] their doorstep… Our customers can order from multiple stalls within a hawker centre, and check-out with just one basket,” said Chris Urban, managing director at honestbee Singapore.
Grab Food launched in Singapore in May