Grab­food puts other food de­liv­ery play­ers on the backpedal

Singapore Business Review - - CONTENTS -

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

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