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5 ways to stay ahead in SEA's booming food delivery scene

Updated: Apr 5, 2022

According to a study by Statista, online food delivery business has created estimated revenue of 4869 million dollars in the UK. By the end of 2023, the business would increase up to 8.3% and it would have a market share of 6703 million dollars in the US.

Southeast Asia’s online food delivery spend is expected to grow at a compound annual growth rate (CAGR) of 24.4% versus 12.1%. Growth is expected to be fastest in emerging markets such as Myanmar, Vietnam and the Philippines, with the total regional online food delivery Gross Merchandise Value (GMV) to more than triple from US$9 billion in 2020 to US$28 billion in 2025.

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According to the 2021 Mckinsey report on food delivery, rival platforms will continue to fight one another for customers, restaurants, and drivers in each individual market, potentially leading to further consolidation over time.

So what can platforms do to compete and remain relevant in the food delivery business?

Before we discuss the ways in which platforms can stay ahead of their rivals, we should consider why I believe that securing the market for customers is most crucial in dominating the food delivery scene.

According to the 2021 Mckinsey report on food delivery, platforms are sticky. Once customers sign up, 80 percent never or rarely leave for another platform, creating a strong winner-take-all dynamic.

That being said, here are 5 ways platforms can stay ahead of their rivals:

Speed of delivery

60 percent of consumers on average cite that delivery time and efficiency is the greatest variable in customer satisfaction, where the optimal wait time is no more than 40 minutes.

Quality of Food

A recent study from Wisely revealed that 24 % of a restaurant's revenue comes from the top 5 percent of customers. This means that customer retention and repeated purchases are crucial, and according to Alex Canter CEO of Nextbite/Ordermark it is the "first impressions" that matter most. This means that food delivered to customers should not be "soggy, cold or visually unappealing", on top of that the food should make customers craving and wanting more, such that they will make recurring purchases.

Variety of Food

Food ordering platform DeliverHero reveals that the right variety can lead to more loyal customers who order more often and/or have a bigger order volume, and have a greater tendency to promote the use of platform to their peers.

A research by US online food ordering company DoorDash has also shown that food customisation options drive upsells and bigger ticket sizes.

cost of delivery

While more people are using food delivery apps, there's a limit to how much some will spend on the services. According to Statisca, 51% of respondents are not willing to pay more for delivery and 29% will spend between USD 1-5, while in Singapore 39% of respondents will pay SGD 10-20.

data and ai efficiencies

In response to the above mentioned problems, it seems that leveraging on data as well as Artificial Intelligence can put platforms above their competitors.

One such way highlighted by Clive Choo, a lecturer at Nanyang Technological University’s business school, said food delivery firms should invest in good software programmers and marketers. “This will help them to continuously improve their routing algorithm."

Another way could be developing systems and procedures to track delivery service activities and other variables affecting food quality and safety. Machine learning assists companies offering online food delivery reducing /providing an accurate estimation of the delivery time, predicting the impact of delivery time and temperature on the food quality, reducing food wastage.

For example, aside from improving payment options, Easy Eats serve to allow their restaurants to gain insights into their customers’ behaviours with data analytics and even optimise operations in the kitchen. Post Easy Eat AI implementation, restaurants noticed an average of around 30% increment in revenue and 15% reduction in costs.

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