According to a Bloomberg report, regional internet giants Grab Holdings Ltd. and GoTo Group faced difficulties in 2022 as spending on food delivery in Southeast Asia grew at its slowest rate in at least four years.

The available data point to the resumption of offline dining and the reduction of government subsidies for deliveries as the causes of this stabilization.

Food Delivery Platforms in Southeast Asia

Based on the latest report by Singapore-based consulting firm Momentum Works, the food delivery industry in Southeast Asia has declined in the three largest markets: Indonesia, Thailand, and Singapore.

The report highlights that the decline can be attributed to various factors, including the reopening of Singapore and the withdrawal of government subsidies and floods in Thailand in the second half of the year.

Despite the decline in the larger markets, Malaysia, the Philippines, and Vietnam have experienced significant growth. This growth can be attributed to the expansion of Grab and ShopeeFood, which have increased their market share.

Grab has successfully displaced Foodpanda and ShopeeFood as market leaders in Malaysia and Vietnam. The company now accounts for 54% of the total platform GMV in the region, or US$8.8 billion, of Southeast Asia's food delivery GMV in 2022-a 16% jump from 2021.

ShopeeFood, on the other hand, has reduced market-share acquisition incentives, and Foodpanda/DeliveryHero is rumored to be exiting a few markets in the region.

A Competitive Industry

Southeast Asia's food delivery market has been growing quickly over the past few years, and many companies are trying to get a piece of it. But the recent drop in the three biggest markets shows that there are still issues in the market. Government regulations, competition, and the region's infrastructure can all significantly affect how well e-commerce companies do in the region.

To remain competitive in the Southeast Asian food delivery market, enterprises must adapt to the changing landscape. This could entail entering new markets, devising new strategies, and investing in technology and infrastructure. They will be well-positioned to capitalize on the growth opportunities in this exciting and rapidly evolving market.

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According to the same report from Momentum Works, Grab, a leading food delivery company in Southeast Asia, has a GMV (Gross Merchandise Value) of $8.8 billion in the region. The company's market share has increased significantly, cementing its position as the dominant player in Southeast Asia's food delivery industry.

Foodpanda, another leading food delivery company in the region, had a GMV of 3.1 million dollars. This is a significant difference between the two companies, with Grab's GMV nearly three times that of Foodpanda. GoTo's Gojek and Line Man follow the two.

Momentum Works predicts that this trend will persist in 2023 due to DeliveryHero's potential exit from some SEA markets and Shopee's plans to concentrate on e-commerce.

Additionally, established players have been developing advertising-related products to draw in merchant investments and broaden their income streams. Businesses are also considering subscription models to increase consumer orders of larger basket sizes.

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