E57 – The Impulso Podcast – In focus: Food delivery in Southeast Asia 2024

Momentum Works recently launched our 4th annual Food delivery platforms in Southeast Asia report and following the launch we also held an online sharing where we explored global developments, key events, and trends within the food delivery landscape in this region.

Some highlights of the event: 

• Doordash outperforms its international peers in capital markets while Meituan has its most challenging year since IPO
• Despite the recovery of F&B in the region, premium brands still face challenges
• Chinese F&B brands enter Southeast Asia en masse, bringing with them their methodologies
• Major players have made significant improvements in profitability, and have shifted their focus to balancing growth and profitability
• Where can platforms find growth amid flat topline growth
• Will TikTok enter the food delivery scene in SEA

You can watch the full recording of the event here:

Or if you prefer to listen on the go, tune into the full episode here:

Also available on Apple Podcast.

Featured materials: 

In focus: food delivery platforms in Southeast Asia, Momentum Works

Food delivery platforms in Southeast Asia 2024, Momentum Works

Lazada layoffs: lessons from history and Jack Ma, The Impulso Podcast

[AI-generated transcript] 

[00:00:00] Yorlin

Okay. Everybody’s 3 p. m. Thank you for joining our first event, Momentumworks event online. Thank you so much for joining. So today’s topic is food delivery platforms in Southeast Asia. Excited to take you guys through this one hour. 

Okay. About Momentumworks, you know about us, so I’m going to skip this slide. Okay, next slide. Okay, an introduction about the team that worked on this project. So we have Jianggan, myself, Liz, who led the report and the insights.

Sabrina, Bryan, Elody, and beyond. So some of us will be here today to share the insights in the report and more. Next slide. So this is our fourth annual food delivery platform in Southeast Asia Report. Most of you, I hope, have read the news and seen the numbers in the papers and the media. So today we are going to go through some I’m going to go deep into some of these numbers, but we will not be going through the report.

If you have not downloaded the report, do it. It’s free for a limited time. Okay. Next slide. But at the same time, I wanted to also highlight some of the immersions. Okay. So today is the last day to register for our live commerce business immersion, and there’s also a food and beverage business immersion coming up.

So register to get a first mover advantage. And the reason why we’re doing some immersion and why I’m sharing this with all of us in this sharing today is that we’ve done a number of immersions for our clients in the second half of last year, especially in November last year, where we did a, , so we did this for a number of clients last year, and what we realized was that there’s actually, things change a lot in, in China, especially, and you will see in this sharing later in the next few slides, why the live commerce is impacting not just e commerce but also other like the food delivery business as well as other ancillary service. So this one, I will actually get Jianggan this and Sabrina to share a bit more, okay? Thanks. Okay, next slide. So in the next 45 minutes, I’m just opening, we’re going to be covering quite a number of things. Global development, Southeast Asian trend, numbers, key players and strategy, where to find growth, and what will happen in 2024.

So, next slide. The numbers we’ll go through that next slide and a year of consolidation. Next slide. So, Jangan, Liz, Sabrina will go through. So, just to kick us off whilst I we, we tune up the audio. What else would you like to address today? So there’s four key topics happening. Temu, Lazada, Shopee versus TikTok, China’s demographic.

If we have some time Jianggan will answer that. So just do a quick Oh, okay. Numbers coming in.

[00:02:43] Jianggan

You see the results of the poll? Shopee versus TikTok shop. 

Okay, if we have an extra five minutes towards the end, we’ll discuss about Shopee versus TikTok shop because that’s that’s quite a big topic in Southeast Asia, the whole tech ecosystem last year. So thanks for the vote. Next.

So first, I think we’re going to talk about the global development in food delivery and the solve the trends that we see and some of the global players which are actually ahead of Southeast Asia, and that will impact how we assess this region. So, at the background of this image, you will see, this is the photo I took in Shenzhen about two months ago.

It’s a Meituan driver having a Eleme helmet and you will see this theme quite common across the food delivery scene in different regions and next page, please. So last year this is the stock market performance of the various food delivery platforms across the world. And you will see that we do a comparison and DoorDash is performing rewarded exceptionally well by the capital market.

Whilst Meituan has been punished and the stock price dropped more than half. So what is behind this? We will zoom into DoorDash and Meituan and the market they are in and the plans they have. Next page. First, DoorDash so this is the leading player in the U. S. as you can see in 2023 so DoorDash market share has grown to two thirds of the U. S. market. That’s almost approaching Meituan‘s market share in China. And they are having a good free cash flow, which allows them to invest. I think in a recent interview with The Financial Times and don’t I see you as she actually said that they have two parts of expansion first out of the U. S and second out of the restaurants.

So there’s a lot of analysis about why door dash is particularly successful versus other players. And if you look at some articles and analysis written by analysts. And quite often they will tell you that, okay, they have a very, very expanded virtual network. They care about riders, et cetera, et cetera.

But I think if you know the organization, well, if you know the founder, if you know this what was their style, you will get it, get a better picture. They actually spend a lot of time on the ground and tech wise. We don’t see much difference between them and their competitors and our friends at Meituan are very adamant that the DoorDash has learned a lot Meituan I mean, with these founders being Chinese immigrants in the U. S. when they were kids next page. So I want to talk about Meituan and One thing you notice is that of course, it’s probably particularly badly and we all know that. Okay. The context of the last 2 years is the whole take route in China.

And, of course, part of that is because of the confidence about the macro economy. Part of that is because of Covid part of that is because of the crackdowns that happened 2 years ago. Even if you benchmark Meituan against other Chinese tech players it’s also performing particularly badly. Only major tech company which was worse was was jd.com with e-commerce player challenged by Pinduoduo and and Douyin.

So Meituan is worse than Tencent, Baidu, and Alibaba. What happened? So this is from the earnings call Wang Xin and the founder of Meituan said in, I think it’s 28th of November 2023, that the, current stock price only reflects the value of the food delivery business. He thinks that Meituan is severely undervalued by the capital market.

And since he said this, the share price dropped another 30%. So obviously, I mean, there is a severe lack of confidence. We’ll dissect Meituan’s businesses and we’ll see that, okay, food delivery their core, which also the theme of our discussion today is doing okay.

But there are two parts of Meituan’s initiatives. I mean, first in their core, which is the in store, which is equivalent to I think Dain that Grab is launching in Southeast Asia which captures most of their advertising revenue from the merchants that’s under threat from Douyin, TikTok’s Chinese cousin.

And the second part is amongst the new initiatives. This gets a little bit confusing.Meituan has Meituan grocery, which is fresh on demand first party. And and they also have Meituan Select, which is a community group buy, pre order, and delivered, fulfilled the next day. So that’s bleeding quite a bit.

So of course, there are other business that Meituan doing next page when you go to the details. You, you probably have read coverages throughout the year that that Douyin has or, or, or Tiktok Chinese version has made local services, a key part, and they have. Multiple initiatives helping merchants distribute vouchers and working with Alibaba on Elema food delivery platform to fulfill some of the food delivery orders.

On the right of this image, you will see two screenshots and you can see how these two players are fighting against each other. On the left, you see live stream, but that’s from Meituan, not Douyin. On the right, you see a marketplace plus review plus vouchers and that’s from Douyin not Meituan.

So you can see that Douyin is trying to leverage it’s massive user base to monetize in different ways. And we already know that they are doing it big in e commerce and we can see it in Southeast Asia and local service is something that they have put a lot of effort in. In China, and so we can’t rule out that they will not do the same in Southeast Asia.

So the advantages and disadvantages of both platforms when they fight against each other, we have listed on the left. I think throughout the year, you can see that Meituan is actively and rigorously defending their turf and a key strategy they’re using is what we call deterrence, right?

Lower the prices to consumers, lower the commission to merchants and make their the whole sort of operations more efficient. So that it becomes less attractive to a potential new merchant, new entrant. And I mean, of course that their best hope is that, Hey, leave me alone channel the, your 800 million active users to e commerce, challenge Alibaba, challenge JD, don’t challenge us.

But of course this is an ongoing process. And I think this is something which is very much worth watching because if TikTok does something similar in Southeast Asia, I think all the players need to be very careful about. Next page. So, so this is community group buy and some of you might remember about two years ago, there was what people call the second war of thousand group buys in China.

Meituan won the first war and became a large local services player. And the second world war is about community group buy you assign community leader, you put orders, and you deliver to the leader, the leader distribute the next day. So so after two years back then, I think every large tech company in China has either jumped in themselves or backed a player in this battle.

So after two years, only two viable national level players remained, Meituan and Pinduoduo. So interestingly both are doing about roughly the same size in terms of GMV about U. S. 30 billion annualized so that is about twice the total food delivery GMV in Southeast Asia, but the key difference is that Pinduoduo in this market market is almost breaking even.

They’re losing a bit of money, but but we heard from multiple sources that they’re very, very close to breaking even. And Meituan is making big losses in this. So, the question now becomes, how can Meituan reverse their fortunes , to be added? Because the company has been focused a lot on efficiency and being a market that’s so low margin that nobody else can win against it.

But in this market, they have a formidable competitor who is actually very efficient. So how can they reverse their fortunes? Or as some people suggested, they should simply shut it down. So they will reduce their losses, and Pinduoduo will Sort of improve their, their, their, their share price as well.

[00:10:36] Sabrina

So why are we looking at community group buyer when actually we’re talking about food delivery platforms in Southeast Asia? Is this a trend that you see carrying over in this region as well?

[00:10:45] Jianggan: I think the two parts, right? I mean, first community group is largely focused on groceries, which I think since like two or three years ago has been identified as the next growth frontier.

By most food delivery players across the world, including Southeast Asia. Nobody back then had managed to crack grocery effectively at massive level. So this attempt in China is interesting. And the second is that we will go through that later, which is how do you expand your user base for core services?

And the community group has been used in China by players as, as a measure method to, to reach out to player, to, to consumers, which they had not been able to reach out to using normal food delivery services. So, so, so either way, it could be an expansion. Of the operations in Southeast Asia maybe not a party now because everyone’s fighting for profitability, but whatever they managed to achieve there, I think offers some interesting lessons

so Meituan last year, expanding into Hong Kong. I think April or May using a name called KeeTa or sort of similar to cheaper and according to our friends at measurable AI by November. So they are achieving 37 percent of market share in Hong Kong, which is slightly behind FoodPanda, which is the leading player, I think, with 42%.

So and we probably also know that around that time, we kind of sort of Declines to acquire food Panda across Southeast Asia and other places. So the company has been very cautious in international expansion. So we took this photo in Singapore, and we believe that is the foodpanda writer. Buying a Meituan bag on Taobao rather than actually having any affiliation to Meituan himself.

But the, but the company has been very cautious in international expansion and readily so. So I think what they’re told a few analyst is that they figure out is very hard to make a profit in Southeast Asia But that aside I think for a company that large with just now we talked about you’ve just one segment of Meituan’s business already twice the GMV of the entire food delivery in Southeast Asia and for organization point of view, how do they dedicate enough resources, people and leadership attention to an array of different markets, which collectively contribute to what?

To 3 percent of your total GMV for organization point of view is very, very difficult. Okay. We also saw last year, I think it’s a collapse of investor confidence in 1P quick commerce. So dark stores were popular during the pandemic, 15 minutes delivery. I think, I think for us in Singapore, there were a few players attempting that as well.

And and globally, there’s lots of money and pouring into this. But I think we see that retreat. We see lots of exits. We see lots of consolidations. The question is, does this model actually work? So this is the number we got from a Chinese 1P Darkstore player affiliated to a large platform.

So they said, according to their operations, no matter how much they try, 4, 000 orders per store per day is the bare minimum for them to operationally break even. And so anything below that, they can’t optimize their assortment of SKUs, they can’t optimize their delivery fleet well enough and to be operationally breakeven now.

Okay. This factor is in multiple things, right? I mean, the, the consumption power, the density of the city, the topography, et cetera. So in each market it’s different market will probably be different, but I do think that the players will each market will probably have a breakeven point beyond this with the, with the average order size.

You can breakeven. But I think now it’s a bit hard because of the capital environment, nobody has the ability. Oh, I have the willingness to actually spend so much time to try to figure that out. 

[00:14:43] Sabrina

If you were to guess like roughly a break even point for let’s say a player in Southeast Asia, what do you think would be a good gauge?

Do you think it would be around 4, 000 orders per day? 

[00:14:52] Jianggan

I think, I think, I think first Southeast Asia is a diverse market, right? I mean, Singapore spending power is very different from Indonesia spending power. And the main power cost of Malaysia is very different from the main power cost of Vietnam. So if I were to guess, I’ll probably say that it’s the city topography is different as well.

So it’s probably somewhere between China’s level and India’s level. And Zomato says that they have the positive contribution margin at one, two, four, seven orders per store per day. Yeah. So it’s probably higher than that. It’s probably lower than China since, you know, I don’t know, 2000 maybe, but we’ll only find out if someone actually.

Has done that and figure that out. Yeah. 

[00:15:29] Sabrina

Speaking of consumption power, right? Last year, Momentum Works actually launched a coffee report. And we introduced this thing called a Frappuccino Index. So this Frappuccino Index actually provides a fresh lens on global purchasing power and affluence through the eyes of a venti Starbucks caramel frappe.

So if you guys are interested, we actually have a website just so you guys can go and see. And of course, we’ve broken down the index based on different cities. I think we have to update it though, cause The price of a venti Starbucks has increased in Singapore. And if you don’t see your city here, but you’re curious to know, just send us how much a cost of a venti caramel frappe is in your city, and we’ll try to add it into our website.

[00:16:11] Jianggan

Sabrina drinks that once every week. So she helps us check the price in Singapore. 

[00:16:15] Sabrina

Yeah, that’s how I know that it increased.

[00:16:17] Liz

Okay, so we’re identified four key trends in 2023. It’s about F& B industrial bond, Chinese chain brands, F& B entering in Southeast Asia, restaurants progress on digitalization, and also towards the same goal, like different platforms accepting different strategies.

So the first one is about the overall F& B industry including online and offline. So a friend who’s operating an Indonesian chain told us that it is a good year for F& B. So market sizing here, we made it based on the government’s Statistics and very interesting. You can see that including the Q4 result based on the last three quarters the four year number in 2023 is actually surpassed 2019.

So yes, 2023 is the first year we come out of the pandemic. 

[00:17:06] Jianggan

I just, I just want to add a caveat. I mean, some of you might see this number as being smaller than the numbers that you’re monitored put as as the food services market size of each of Southeast Asia as a whole. We actually made an effort to, to go through different government statistics websites to, come through their sort of numbers.

And this is this, what happens when you add all this together. How accurate this number is, I mean, depends on how accurate the government statisticians are. But I think the trend, if they use the same methodology, I think the trend is clear. 

[00:17:37] Liz

Yes, yes. But actually some high end restaurants towards the like premium market has a different feelings.

I think that maybe because some macro uncertainties like inflation, so middle classes are more cautious in their spending. Next, please. 

[00:17:52] Jianggan

Yeah, I think middle class go to high end restaurants for anniversaries. 

[00:17:57] Liz

Okay, so the second trend is about Chinese F& B brands entering Southeast Asia which I believe that if you guys are based in this region, you must have noticed or heard from friends.

So I remember that when I first came to Singapore in 2021, there are already Haidilao, Mi Xue, Cha Ji I had the feeling like, Oh, I was still in China at that moment the entire intent and 10 super popular. But look at this chart. You can see that in 2023, it was just like a bomb. I mean both categories and number increased crazily.

Right? So, and many of them actually chose Southeast Asia as their first destination, like Luckin. 

[00:18:38] Jianggan

So, you guys might know that we run a blog platforms in Chinese on WeChat as well, where I think now it’s the most followed blog about Southeast Asia and emerging markets in general in Chinese.

And, and like every week we’re receiving inquiries from F&B players saying that, Hey, it’s so competitive in China and we want to sort of expand outside China and people told us that Southeast Asia is easy for us because we can find many people speak Chinese. So, so many of them actually exploring this market and and what do you see on this list?

It’s only a sample list of the players which actually expanded into this region in the last few years. There’s much more. So. , this will bring a shakeup because because we know that, I mean, you see from the previous slide, I mean, the total pie of F&B it’s growing a little bit, it’s recovering a little bit, but it’s not growing that much.

So that will bring an interesting shakeup and many of these players will probably fail, but nonetheless if enough of them succeed that brings interesting competitive pressure to the whole F&B scene in this region. Oh these are the three photos I took last weekend in Kuala Lumpur, Malaysia.

So, there’s a new mall called The Exchange TRX which is affiliated to the newly opened second tallest building in the world in central Malaysia. And the, the premise is huge. I mean, it took me half an hour drive to actually find the entrance because it’s so confusing with signage and stuff.

But this was 3pm. And this three F& B outlets, Hey Tea, so we might know is a premium Chinese bubble tea brand long queue. And and we did assessment. We need to wait for like half an hour to get a cup of bubble tea. And of course, I’m not a big bubble tea fan as Sabrina is, so I was not too bothered.

And Taier the sauerkraut fish that that Liz mentioned about. Also packed with people waiting outside. I think sauerkraut fish as a category is also quite popular in Indonesia at the moment. The third is interesting is beef noodles from the northwest of China which is populated by ethnic Muslims.

So, so that kind of halal noodles actually quite popular in Malaysia now, and I think, it’s getting popularity in Indonesia. So this is 3 p. m. and every restaurant is packed with people waiting outside. Of course, this is a new mall, right? Things might wear out in half a year’s time, but you can see that it’s a sign of like many Chinese F&B players coming to Southeast Asia.

 And last year for people in Singapore, you will probably notice Luckin Coffee, which now has more than 10, 000 stores in, in China. They opened about 30 stores in Singapore. Very stable and very aggressive. And Cotti which was founded by Luckin’s original founders who were outside from the company because of Scandal. They, they launched in Indonesia, Thailand, Vietnam, Malaysia, and Singapore last year. So they are competing in, the, I think, limited coffee scene in Southeast Asia. We actually have a full report on that. We did a poll on our WeChat platform, talking to the Chinese audience. We said, okay, how do we think Luckin is doing in Singapore?

And to our surprise, 1, 300 people actually responded and more than half of them, I presume that many of them actually live in Singapore, but originally from China. And they said that it’s doing exceptionally well. So people seem to have that confidence in Luckin’s ablility. And of course this year we would probably see them expand into other countries.

So when we see the Chinese F&B players, it’s not only just the F&B players, they’re also bringing their methodologies. Because these guys come from a very, very competitive environment, and to stay afloat, let alone thrive, they need to be very efficient operationally. So the image on the left of of this slide you can see is the advertisement and the Changi airport by this Shanghai based , branding consultancy called Hua and Hua.

So, on the right are a few case studies of what they have done. I mean, we mentioned about Mixue, which currently has about 4, 000 stores in Southeast Asia. They created the whole branding as well as the whole storyline of of Xue Wang the Snow King having a bump with a frog.

So, some people are saying that, oh is that the serendipity or is that the spontaneous event? No, but it’s actually a tool in a marketing package that franchises can choose and they just buy the tool. They just hire the people. And, then they have the whole methodology of how to shoot the video and make it viral.

I have some friends who are franchises and they told me that. This is the easiest the franchise to be because they don’t have to think about anything. Of course Hua and Hua also helped Haidilao the, the Hotpot chain, revamped their branding to be more international. They also helped, interestingly Southeast Asia, a Singapore based roast duck store, and they changed the whole slogan.

 , and you can see the logo at, at the bottom. It’s previously elegant of of all. A photo of, sorry, an image of a waiter in traditional attire. On the right is a duck with a number two. So, so basically this is what they call super science, something people will remember. And they changed the whole slogan of of the restaurant to the must eat herbal duck in Singapore.

So aligning the herbal duck category and the Singapore. So when Chinese tourists go to Singapore, not only Bak Kut Teh, but you can also have the herbal duck. 

[00:23:47] Yorlin

What’s the, what’s the similarity between part number two with this and the fish? Why do people like using two?

[00:23:53] Jianggan

Oh, I don’t know. 

[00:23:55] Liz

Actually, waiter in Chinese.

[00:23:57] Yorlin

Oh, waiter. 

[00:23:58] Jianggan

Waiter, yeah, yeah. For instance, I mean, Taobao customer service is so close to Taobao Xiaoer. So basically customer service. And I think they paid about 6 million for this branding exercise. 

[00:24:10] Sabrina

I feel like everybody we thought this through with Singapore just agrees that the rebranding is very ugly.

I can’t believe that they paid so much for it,

[00:24:21] Liz

but you can remember, 

[00:24:22] Sabrina

yeah, but you can remember. 

[00:24:23] Jianggan

6 million, sorry, 6 million RMB, not 6 million USD. So that works out to be about 900, 000 yeah, it’s still a lot of money and just not including the annual retainer that they’re doing next page, please. So last year I think one of the key trends we put in our food delivery report is the fragmentation of FMV digitization.

I mean, during the pandemic, everything went digital and there are so many, like, new players. Raising money to, actually target different parts of the digital experience, right? Reservation. Ordering payment reviews, et cetera, et cetera. So, so lastly, we mentioned that the key food delivery platforms were actually trying to consolidate these.

I mean, many of them launched or purchased post players. And what we see now is, I mean, there’s fragmentation remained, right? I mean, even in China, I think some of the largest food delivery players also questioning. This investment in posts and this investment in large sort of on the ground sales force to help people to replace the post.

How much of that is worth it. Right. So, so the fragmentation remains, I think will probably be a natural course of being for a while. But what we find also interesting next page is. People, after the pandemic, people talk about, you know, I have online, I have online, I have like multiple branches, I have lots of people, I have lots of processes in the restaurant, and how do I manage all these people and organization effectively.

Most of the restaurants we spoke actually for, for this exercise. They use the very traditional means, I mean, kind of digital right i mean you have whatsapp online for communications groups, I mean for people in branches to report problems, etc. We have Excel and software and Google sheets to to do the planning, etc.

And some of them actually used. Some tools like StaffAny like QuickBooks and we actually saw some restaurants actually use Slack and also restaurant chains for Slack, for the, for the back office people. And we also see efforts by Lark, which is owned by ByteDance to, to actually consolidate all these tools into one suite, which helped them manage that.

I think a Google Suite does something similar, but of course the functionality is a bit different. And and, and let’s not forget, I mean, we mentioned about Mixue be like 4, 000 stores in Southeast Asia for each major franchisee is a huge operations involving lots of people and many of them part time.

It’s actually not easy undertaking to manage them. Number four on the divergent strategies of platforms in 2023. So we’ll go through that in details when we talk about platforms, but just just top headlines. Grab sharpener, focus on core food food business. Goto has a new CEO since June and they realign a strategy.

And I think I think a good move is the divested Tokopedia successfully to TikTok. And now allows the group to be more focused. Shopee you hardly see Shopee mention about Shopee food anymore. But as we I can briefly mentioned Shopee food actually grew quite a bit. And it seems that the Shopee food with the exception of Vietnam has been absorbed. Into Shopee as part of the Shopee total story to fight against the talk Lineman strengthen the ecosystem. They met a number of acquisitions of a post player of a payment platform in in Thailand. And I think, I think they seem to be determined to be market number one in Thailand very soon. And of course we have delivery hero the owner of Baemin and the food Panda.

They were looking to divest less profitable markets, which next page. It’s a whole saga happening with food panda. There’s lots of juicy details, which I will not go in into that. But but that shakes a little bit of the the morale of the whole organization. Nextpage.Also this monday, delivery hero were announcing they wereSelling the entire stockholding they had of Deliveroo, which is listed in London. We know that for a while there were discussions about FoodPanda and Deliveroo in Singapore and Hong Kong combining because Deliveroo in this especially, at least in Singapore, they were occupied a good position for some of the premium customers and premium restaurants.

So now with this di Divesture. It seems that the, the, the the potential merger is probably off the table as well. And we look at the price of of 1.13 pound per share. That’s about 30% or yeah, 30% of what they bought it for two years ago. And that was, I think it was what, 360 Pence?

Pence. Okay. 3.6 pounds. . Numbers. Okay. Next page. So, so our estimate for, for this region is that for a second year in a row, the growth of top line GMV or food delivery platforms is about 5%. That means basically the, in terms of top line we have reached a state that the top line growth is.

Happening, but it’s limited. And that were quite different methodologies and a different operational sort of structures of, different players, which which, which is interesting, but probably less exciting for people actually involved in this because it comes up. Just through vouchers as you used to next page.

And when you look at the different markets Indonesia is still the biggest just a few highlights. I mean, Singapore has remained basically stagnant for, two years in terms of top line. But look at the top look at the number, it’s still more than 50 percent of Indonesia’s volume. And obviously, I mean, it’s, largely urban country with capital, almost 15 per 15 times that of Indonesia.

There’s lots of spending power. Most markets we see have a small growth, like low single digit with Singapore being flat. And Vietnam, we saw a growth, actually quite significant growth. I mean, 20 something percent, 25 to 27 percent. The, and of course, in most markets, you start to see like two leading players with a, with a bit of like other players taking a small market share.

Next page. So, this is the number of the leading players so bear in mind that when we do our total food delivery tally, we don’t actually include those fulfilled by LALA move and those like people place directly with restaurants, the restaurants send their own driver, a lot more to fulfill.

There’s one interesting component of the whole market, which we’re not including this report, but I think it’s worth mentioning. Next page is the self operated delivery operations of of QSRs, quick service restaurants, fast food chains in the Philippines. We haven’t because, I mean, counting the numbers takes lots of effort, so we haven’t counted the exact numbers of the different players but, I think various sources that we have get back to us of something similar to about one third.

to 40 percent of the total food delivery platform GMV. We think it probably makes sense because if we just look at Jollibee per se, their annual sales is already much bigger compared to the total platform GMV in Southeast Asia. Interestingly led a project last month for a client to look at a QSR market in Southeast Asia.

We tallied the financials of all the major QSRs across, across the region. In other markets, you don’t have anybody as dominant as Jollibee in the Philippines. But nonetheless, I mean, the sales volume of some of the large QSRs is actually quite significant, and of course, many of them choose to work with food delivery platforms for delivery, but this is a significant volume if they want to take in house.

[00:31:43] Sabrina

I’m going to give Jianggan a break. So now we’re going to be talking about the key players, as well as the key players in the region, as well as their strategies. So, of course, as mentioned by Jianggan, Grab continues to extend their leadership in the region.

Where Foodpanda and Gojek actually saw a decline while Shopee and Lineman had notable growth in the region. And of course, an industry veteran that we spoke to actually said that in 2023, every platform achieved some sort of profitability according to their own definition.

So if you guys have read our Apples to Apples report, you’ll know that there are different measures of profitability.

And on the left, you can see this is where each of the companies are in terms of. The different stages of profitability. So grab and delivery hero have reached adjusted EBITDA break even, but of course they still have positive free cashflow and positive net income. Whereas companies like Meituan and Uber have already reached positive net income.

And of course, I think we’re all looking forward to see GoTo’s Q4 results. To see whether or not they have reached adjusted EBITDA break even. 

[00:32:46] Jianggan

I’m actually curious whether they include Tokopedia for the last month because, oh no, probably not. Probably not excluding because the TO only closes in this year.

Anyway, so yeah, sorry.

Okay that’s a very short break.

I’m not going to go through this slide in detail, but it highlights a few key things that each player is focusing on. And, obviously the operations of each player in different countries. Next page. And this slide will be circulated so we can read that in detail. What I want to focus a little bit on is we, have lots of questions from investors from different stakeholders for analysts.

About, you know, discount levels of different players and why some players seem to have like haphazard way of discount discounting. I mean, what’s the rationale behind it? So, so this is something that we have been using to analyze large tech companies. I mean, the factors of leadership people organization and product and which one is more important because.

Quite often for us to choose, I mean, which one to invest in, which one to buy shares for, which one to even work for. And you probably need to look at these factors, right? So I’m just going to throw a few questions, right? So for instance if a food delivery company is global versus it’s regional versus it’s country only.

So what kind of resources they can leverage? What kind of attention and focus of leadership they would have? Second, if the company is still run by its founder versus a company that’s run by a professional manager, what difference does it make? And at which level of maturity that a founder becomes an obstacle to the company rather than a driving force?

If a company so if a food delivery operation is part of a larger sort of tech measure with different diverse operations and would that be sort of positive sign for the food delivery part of the business, or would that be a draft for the food part of the part of the business because the leadership is divided in attention?

So these are all the questions that we have in mind when we look at it. And and different players and and sometimes when you understand the styles of the leadership, we understand how the organization is structured we understand the incentives of the key decision makers, the key people, they use roughly get a sense of, I mean, how this company will potentially move in the future, whether you should worry about them as a competitor, you should, I mean, whether whether you can place a bet on them.

Next page. So here we chose a few quotes. Next page. From leaders of respective companies, and of course, in the case of Goto Delivery Hero and Shopee and we, we chose the leader who actually represent a company of the, of the entire group. So, of course, I mean, the different highlights like grab mention, the more affordable services this year, they’ve been pushing a lot on expanding the user base go to diversity Tokopedia, which took away a huge track of the of the financials and would they focus on, on Gojek or would they focus on financial services? DeliveryHero for a long time functioning like a private equity organization, I mean, combining different operations in different countries.

Sometimes there’s operational synergy, sometimes there’s not. So in this new environment, how would they fare? Lineman coherent transaction experience for all stakeholders and they are buying a payment company. They have lots of other resources. They can leverage as well, such as line. But of course, this is also part of a large setup which has its own complexities, but they seem to be determined to become a market number one in Thailand.

And they’re moving towards that. The last thing is Shopee food. I mean, I know some people working on Shopee food there. They are not mentioned anymore in any of the earnings and stuff. And and, and, of course, we see the number of still growing. But what I find interesting is is the full fighting mode that that Forrest Li, the, the the founder of SEA group actually mentioning in the.

In the employee letter, I mean, that’s mainly against TikTok as a competitor, but we’ve been speaking with lots of people and most of you are finding that. Okay. So we, our companies at this stage with like more than 20, 000 people, I don’t understand what food fighting mode is. So, so, so, so it’s a tricky part about, I mean, how do you build a, a cohesion organization?

How do you make sure that people move according to the vision? Because founders, they are driven. Okay. But but people come along the way. How do you motivate them? What kind of motivation do you have for them? This all determines how they would go does Lineman owned by line? Partially, I think Line’s the shareholder, but they merged with a local review site called one night.

And actually the, the CEO was the founder of one night. So, so they have sunlight ownership, and they also have investors as well. I think G I C is the major investor in them next. 

[00:37:24] Liz

Okay. So the key question is where to find growth based on the fact that you have seen many platforms achieve profitability and they want to remain it.

So cannot burn your money. And it’s a competition is becoming intense . So we summarized three points user based advertising and also use tech to develop operations. . Yeah. So first expanding user base, you can see that there’s still quite a space for penetration. I mean considering Grab the largest platform in the region the mostly active users only have about 5%.

In comparison to the whole population here, so there are still 95 percent untapped. So where to find the ? 

[00:38:08] Jianggan

I think, that the 5 percent is it’s the entire Grab also includes ride-hailing. So when it comes to food delivery, it’s even smaller. So this whole part of this region, which has not been untapped by food delivery.

And of course the question, the question many people ask is that would there ever be tapped because they don’t, because of the spending power. I think at the end of the day, so somebody has a, has a simple formula, right? If your, if your income is higher than that food delivery driver, you should go and work as, sorry.

You should order food delivery. If your income is lower, they should go, go and become food delivery driver. I mean, that’s a simple metric. Yeah. . 

[00:38:43] Liz

Yeah. Yeah. So the question here I have a poll for you. This one, right? Okay. So which one should be the biggest potential? In major cities, expansion into smaller cities, or tourists?

[00:38:55] Jianggan

Interesting. So, of course, people are most people are saying that it’s expansion to smaller cities, which I think some of the players are do are doing and and major cities that I think there are still a lot of people who are untapped in major cities, but to serve them. Well, you have to move down.

A little bit to, , I mean, in terms of offering, in terms of pricing, et cetera, et cetera. So I have natural inkling that the major cities would probably be something that the platforms are focusing on, tackling. And and the smaller cities, we still see expansion. There are still instance, there are still cities in, in Indonesia that Shopeefood tries to expand in.

I think Grab still has a I think 20 smaller cities in Thailand, which they have yet to tackle. So, so there, there’s still a bit of room there. But of course, bigger cities, smaller cities, or cities in different countries with different topographies would require totally different methodologies.

Next. And of course, one thing that I think some players are trying to do at least to grab Gojek is to segment the users, right? I mean, I mean, basically economics. Previously, you have one standard offering. Whoever is willing to pay more, you can’t capture the full value. Whoever who is not able to afford this offering get priced out.

Now we have like three different peers at least grabs offering in many markets that allows premium users to pay more for faster service that allows other people to pay less for a sort of a slower service, et cetera. So, so this, this is just a simple illustration. I think there’s more fine granularity can do.

And if you have a larger, user base, this is what the Chinese tech companies have to offer. Or at least they think they have perfected and in Southeast Asia, there’s still a lot of ranking you can do. And you need to have enough data and enough user base to be able to do it effectively next page.

So Grab has been promoting Saver a lot across the region. And I think that’s the key driver for them to, to expand their monthly transacting user base from, I think 28 million to 34 million over the last five to six quarters. Next page. And of course, advertising is big. And this year we see more and more players placing advertisements into the platforms.

Next page. So, large what is Liz Bagels? Your bagels? 

[00:41:11] Liz

Yeah, my brand. Big brand, sorry. 

[00:41:14] Jianggan

Fictional brands, okay. Anyway, small F& B merchants, I mean, they will place like, you know, performance driven ads, maybe some kind of branding, but they don’t really have the budget for that. But you have large F& B chains, you have FMCG brands, which hope that, okay if you, if you buy a meal, just add ice cream or add, add a can of Coke together with that.

And of course you have financial services, which have traditionally, I mean, in this region, been struggling with higher customer acquisition cost. So transactional platforms become something that they are willing to at least try to invest in. So in China, we know that I think 3 7 to 40 percent of Alibaba’s revenue comes from advertising or different kinds of sort of services, which are basically advertising.

So, this, I think quite a bit of room that that the players here can exploit, but of course, how well you can do that. I mean, depending on, I mean, what’s the results of your advertising and how big brands I mean, would shift sort of marketing budget allocation practices.

My name is wrong. Okay, this page I didn’t, I didn’t really detail before that. Okay. Continuous operational optimization. Of course, there are a lot which can be done, which is at least two simple things here and group orders and batch orders, right? I mean, basically, how do you sort of optimize the price, optimize the efficiency throughout the whole operations?

I mean, if you look at the Meituan’s experience they’ll tell you that there’s no sort of magic is basically opera. You have a, if a strong sort of back end, which allows you to, to optimize operations at each different level, squeezing wall to send savings for each part of the operations, then you have a cost structure that your competitors can’t beat.

Next page. So this is a question that we, we had a brief discussion. I mean, I took this photo in, I think, Hangzhou, near Alibaba headquarters in China. So this is the the locker. And of course the lots of people asking us, like, do you think this will ever exist in Southeast Asia? And there are different what do you call that?

Perspectives on this. And what do you guys think?

Here’s the result. Okay, most people believe that interesting. Most people believe that it’s in some places.

[00:43:27] Yorlin

Yeah, 70 percent deals is going to happen. 

[00:43:30] Jianggan

Okay. So, one thing about this in China is that, and of course, I mean, actually quite a few people asked me personally that how do you keep the food warm.

Thanks, Harris. Yeah. Saja’s in Malay, not Bahasa, it’s Bahasa Malay, Malay, right, which is also Bahasa. What’s the word in Indonesian? Bahasa Indonesia? No, Saja? Maybe Sanja. Okay. Okay. Okay. Got it. Thank you. Thank you. Okay. 

[00:43:57] Yorlin

Delegation coming out? Yes. Thank you.

[00:44:00] Jianggan

Thank you. Yeah. Yeah. Okay. Next time we should put the slash So how yeah, so, some people ask how do you keep the food warm? But actually it’s not a consideration because what we saw in China. So what, what problem listing solves is mainly the lift, right? I mean, during. Because buildings in China packed, especially during lunch hour for people to come and pick their food.

I mean, either the rider has to wait a long time for the lift to go up up or people have to, I mean, the consumer has to wait for a long time for lift to come down. So quite often they just place this into the locker and when the lift comes down, they will just receive from the locker. Rarely we see that people take more than five minutes to, retrieve that, but it’s huge savings for platforms with large density.

Next page, please. So what will happen in 2024? Well this is of course, a previous stage. This is the Robin Hood rider with the lineman back and we see that increasing in common with different platforms that riders mix and and match. Next , crystal bowling has becoming harder in the current environment since the pandemic because every year people make predictions at the beginning of the year, they realize the year will evolve very differently compared to their predictions.

And I think one gentleman on this page might come back to become the centerpiece of the world. So something which, I mean, different people, different perspectives, but anyway next page. So a few questions were throwing out right so we’ll go to focus more on our divest Gojek, because we know that I think Gojek has been under a bit of pressure operationally from Grab in Indonesia, but since the divestiture of Tokopedia, I think.

I think there might be some strategy rethink, which is worthwhile at the, at the Goto level. I mean the, the affiliated bank that they’re doing at Jago is doing exceptionally well. So there’s lot of and and if they can keep the, the, the payment and, and a financial services piece, there might be something more interesting.

So, so if, if. If divestiture is a possibility, will Grab or TikTok be a potential meaningful buyer? Interesting thought. Next. How will Foodpanda exit? I think, I think that that leakage of Grab talking to Foodpanda was kind of unfortunate, and you can read the gossip grapevine to see what exactly happened.

But but because now Grab is a public company, and they’re probably more concerned about antitrust Measures that they try to buy a taxi company in Singapore and The antitrust watchdog in Singapore is still reviewing that. It has been a few months. And acquiring FoodPanda across multiple markets will probably have more scrutiny.

So what exactly will happen in the market? I mean because I think deliverable seems determined to exit this market and leaving that in a sudden will probably cause lots of chaos. So, so how exactly will things evolve? Will there be another buyer? Interesting question. Next. So will TikTok be a potential disruptor?

So they are big in local services, that there have been repeated rumors in the last quarter of 2023 that they might be buying Elema from Alibaba, that’s a delivery platform. So the three gentlemen on this page, you probably know the two on the right very well, Shou, which is the CEO of TikTok, and Yiming, which is the founder of ByteDance.

And I would encourage you to, to watch the guy on the left a little more closely because I think lots of major decisions and he plays a very, very big role in it, including what’s happening now as we speak. Next page. You want to talk about this? We we actually used quite a bit of chatGPT while developing this report.

I mean, first with free cash flow, right, which have thought that’s his financial statement. So you can say, give me the free cash flow. And we also asked the question that will TikTok be a threat to Food delivery platforms in Southeast Asia? Then he gave me this. And I was trying to argue that it doesn’t make sense because you can’t see TikTok competing against TikTok.

One of the players here is actually wearing a TikTok helmet. But then I think that’s, that’s when chatGPT started hallucinating. So I didn’t get anything better after that. But I think TikTok could be an interesting player to watch if they started entering the advertising space or the fulfillment space of food themselves.

Next page. While we’re doing the study we spent quite a bit of time on the ground talking to lots of people and actually here’s a big thanks to, to the people who have shared their perspectives, who have shared their, and some of them shared their restaurant shared their numbers, some of the post players, some of the payment players, some of the fleet owners a big thank you.

And and of course we have observed a fair share of rider fashion, mix and match in this region. Next page. Oh yeah, we talk about the immersions and I’ll be leading an delegation in March to China. You’ll get firsthand of of like commerce ecosystem. Meet stakeholders. Do join us if you can. We still have, I think we still have a few spots.

Next 

page. 

[00:48:46] Sabrina

And if you register by today, you have a first mover discount of 20%. Today is the last day. Yes. Okay. Register me putting number. Yes, just fill in the phone and 

we’ll contact you. 

[00:48:57] Jianggan

You have details on this page, which you can read the next page. I think people want to talk about shopee and Tiktok shop, which we have two minutes left.

I think we should do a promise report earlier. Last year we did in July. I think this year we should probably do it earlier. Sorry, people look at additional work. So, so I think TikTok shop the move to acquire or sort of the move to take control of Tokopedia I think it’s a master stroke. And from the different sources that we have before you from Indonesia, they have recovered about 50 to 60 percent of their pre ban volume.

They’re, they’re, I think approaching like 2 million orders a day in Indonesia and across different markets. We we heard from sources on the ground that they’re becoming a bit more cautious with government may become a bit cautious about not to being too aggressive in promotions that I would say makes them a even more formidable competitor to the platforms in Southeast Asia.

Lazada with its layoffs, and of course people look at layoffs, and I think, we explained that in our podcasts that a few episodes, that there’s actually much bigger play behind the layoffs and this whole organizational restructuring for a lot of that to be able to dig in for the long term for them to move.

More flexibly in a competitive environment. And one thing, even with the full consignment cross border from China. I don’t think that was seeking a market number one. I think they have made it clear with their restructuring moves. But the question is, what will shopee do what was shopee respond to that.

And we know that Shopee promoting Live against Tiktok shop, it’s been very hard. So, so there, but they have the advantage of being local, understanding the market, having local heads having a good financial ecosystem on top of the e commerce. So there are advantages they can still play. Let’s see. How they will leverage that over the next few quarters. 

[00:50:50] Sabrina

Maybe we can do a podcast just on this since people have asked. Sure. Stay tuned. 

 If you guys have any questions, like feel free to leave them in the chat, we’ll try our best to answer them in an upcoming episode of our podcast or on our TLD blog.

So if you guys are interested in hearing more about Lazada’s layoffs or maybe Shopee and TikTok shop, do subscribe to our podcast. We’re on Spotify, Apple podcast, and some of our episodes are on YouTube as well.

Thank you for joining our event today. We will be sending this deck to you guys soon and the recording will be available. On YouTube by this Friday. Thank you Byebye.