Thank you to everyone who joined the “On a Platter: Food delivery landscape in Southeast Asia” briefing right before the Lunar New Year. 

With a lot of insights to cover and close to 400 participants, there were many questions which we did not have time to discuss. 

We promised to share our thoughts on these questions on TheLowDown – here we go. We are publishing these in two parts – here is part 1 (you can read part 2 here). Any additional thoughts, discussions and comments are welcome: 


1. Would you share more details about how these estimates are generated?

We have been publishing food delivery market size estimates for about three years – and we are becoming more and more confident about our estimates. 

Momentum Works does have a wide network of contacts on the ground in each country which we have been able to tap into. These include F&B operators, POS / payment providers, logistics providers (fleet owners, riders and 3rd party logistics platforms), panels of consumers and other ecosystem stakeholders. 

We use the data points collected to approximate the size of each market & share of each major platform, which will then be challenged or validated by the practitioners and ecosystem stakeholders we had spoken to. The final numbers you saw on the deck came after multiple rounds of calibration. 

Over the years, we have also grown the network on the ground, as people refer us to their colleagues, friends and other stakeholders (we are very grateful for that). 

Also, most of the major platforms have become public (or part of a larger public group) by 2022, there are now additional data points for us to validate what we have found from the ground. 

Even though they do not report the exact food delivery numbers – Shopee lumps food delivery in ecommerce, GoTo groups food delivery with ride hailing in ‘on demand’ segment, Grab puts food and other deliveries together, and DeliveryHero does not separate Southeast Asia from Korea (>70% of their Asia GMV) – their numbers give us indication whether we have done a decent job, or gone far off. So far we have been doing a decent job. 


2. Based on the size of the market, it’s still a surprise to me that the SG market is double the VN market. The key players are also there.

Even though Euromonitor puts Vietnam’s food services market size as twice that of Singapore – it is not that surprising to see Singapore consumers spending much more on food delivery than their Vietnamese counterparts. A few factors here:  

  1. Singapore is a market of 5M+ people, with GDP per capita of about US$ 60K, and Vietnam is ~100M people, GDP per capita of ~US$ 3K. So if you look at the nominal GDP – the two countries are actually very close to each other; 
  2. Most players in Vietnam concentrate on Hanoi and Ho Chi Minh City, with a combined population of about 15M. GDP per capita of these cities are in the US$5k-US$6k range, which means the combined economy of both cities is about 30% of that of Singapore;
  3. The average order size in Vietnam, in our estimate, is about US$3, far smaller than Singapore’s 

Vietnam has a huge growth potential – in 2022 it was already growing significantly while Singapore declined. But it takes time – food delivery growth can’t leap ahead of consumption power growth. Therefore, players in Vietnam need to be patient and look at the end game rather than subsidising their way for quick gratification (no pun intended). 


3. How did you get the estimate for GMV? Instinctively, it’s surprising to see that SG and PH are the same.

As above (answer to question 1). 

Similarly, the Philippines is a market of ~110M population, with GDP per capita of US$ 3.3K. Among that, 26M of the population is in metro Manila. Franchises are much more developed in the Philippines compared to a few other SEA peer countries (we mentioned the importance of that to food delivery in our first Food Delivery Platform report). Again, reasonable for Singapore and the Philippines to have similar food delivery market size. 

The question for the Philippines, same as Vietnam, is how fast can it grow further. Here we advocate for patience and the end game as well. 


4. Does your GMV include orders like mart or groceries?




5. Do you expect further GMV decline in Singapore?

We would not. 

We talked to different practitioners and industry stakeholders, and the seasonal shift in F&B and food services have largely recovered to pre-covid level. The only factor that has not come back is the Chinese tourists, which is quite a big contributing factor to F&B in city areas. 

It has been three years that Chinese tourists have not come out – but even before the pandemic in 2019 they were so accustomed to ordering food delivery. How many of them will come? How has their consumption pattern shifted (will they only check in at places recommended by Weibo and Xiaohongshu, or actually order a lot of deliveries while in Singapore)? Will they impact the city area lunch supply, which forms a significant portion of the delivery volume? 

Either way, the delivery players now are more efficient compared to the beginning of 2022, which means that for the same level of GMV, their profitability is probably better. 

But of course, at the beginning of 2022 nobody foresaw the war, the inflation and the decline in ecommerce demand. What we need to do is to have some understanding of the market and the factors shaping the market and make adjustments along the way – so that when shifts happen we have a reasonably good gauge of how these shifts will move the market. 


6. What is your forecast of the total GMV growth for SEA in 2023?  

We would not expect GMV to accelerate much from 2022; it will be at slower growth, as the capital environment will probably remain and companies continue to focus on profitability.  


Macro trends

7. How does inflation factor in the food delivery sector?

Inflation impacts a few things – first is consumer spending power. Inflation will disproportionately impact the lower tiers (in terms of wealth) of society. These tend to be people working as food delivery drivers or owning small food stores (not the ones regularly ordering food delivery) – this will shift some spending patterns. 

The larger question is whether this impact can be felt by players – as the supply of F&B in most Southeast Asia is still all but abundant. 

We have observed in ecommerce Q3 and Q4, many platforms in Southeast Asia recorded flat / negative growth. However, it is very hard to attribute that  precisely when different factors are at play. How much is because of inflation, how much is because of an increase in logistic cost, and how much is because of reduced spending by platforms? Same can be said for food delivery. 

Maybe the real impact on food delivery in Southeast Asia came not from inflation in this region, but from the United States. That caused the Fed to raise rates, which in turn caused turmoil in the capital market, and forced players to reduce spending/rationalise. 



8. Question on riders – so, for Singapore, it’s the exception when it comes to delivery riders, how is demand for them going to be affected since Singapore’s restrictions are all but gone? And how can they evolve or skill-swap to stay relevant?

Many of the riders in Singapore especially during the surge of food delivery demand are transitory. For example, some who lost their job at the beginning of the pandemic did delivery as a temporary way to make a living until the economy recovers, some others were on holiday from their studies or waiting to be enlisted for national service and took up the short-term gig.

The second cohort (the students and would-be national servicemen)will probably move up and will not stay in delivery. The first cohort would prefer a stable income with benefits unless gig work gives them a much higher income. 

What we do know for sure is that the government has been trying to upskill this population and platforms are supporting that. How that will exactly play out to the dynamics of food delivery rider supply depends on a number of factors – but do not expect Singapore to ever have the stable and low-cost supply as other Southeast Asian capitals would enjoy. 



9. What are the factors that would impact the performance of the sector this year? 

There are many – and we will get a better picture as we go deeper into 2023. Just to name a few at the beginning of the year: 

The economy and the capital environment for sure, We don’t expect that to change for the next one to two quarters. 

The second will always be government policies. For example, subsidies in Thailand have spurred the demand (the withdrawal of which actually reduced the demand, not unexpectedly). The gig worker welfare and social security policy will probably impact as well, but we do not expect Western level of drastic policy shifts and legal battles on this front – as the governments in the region are acutely aware of the economic consequences of such to the low end of the society. 

Thirdly would be the strategies of key players e.g.: Shopee’s internal debate about whether food delivery would be their focus or not. They might withdraw completely – and that will surely impact the competitive dynamics and market landscape. 

Lastly, Meituan’s entry into Hong Kong, reported to be in Q2 this year, will have some impact as well. It will not be easy but if Meituan can prove that they can function effectively outside Mainland China, other players will probably need to adapt their strategy to this potential foe. 


Funding & investment

10. How do you see the fundraising for food delivery companies this year?

This is a macro question about the whole funding environment – there are different predictions, but the general consensus is that there will be a recession in the US, whether this is good or bad for funding is being debated amongst the investors, because the investor sentiment often  goes ahead of the economy. For example, if people know that the US economy has swung into a recession and inflation is under control, they start to plan for the future. They expect in two / three quarters we’ll be out of the recession and investors will already be more aggressive. 

The general sentiment for Southeast Asia is that for large platforms, at least for the first half or even the second half, it will be tough to tap into the capital market for more money. This means that it becomes very important for platforms to achieve self-sufficiency. 

Grab is in a lucky position because they have raised a lot of money during its public listing. That will give them more flexibility compared to many of its peers.They will need to, however, use this opportunity (of reduced spending by competitors) not to grab more market share, but really consolidate operations to build more efficiency (and thus a moat).  


11. Any predictions on M&A market in this space? 

There have been talks about Foodpanda selling its business in Thailand to LINEMAN Wongnai and Deliveroo exiting Singapore (after exiting Australia in H2 2022). 

With Meituan’s expansion into Hong Kong this year, how it will impact Foodpanda and Deliveroo (who are currently leading in Hong Kong) remain to be seen. If Meituan manages to penetrate the market, it will impact players’ strategies and how things will play out in Southeast Asia, as mentioned above.  

DeliveryHero, which is in a net debt position, will probably need to divest more nonperforming countries. South Korea is more than 70% of the group’s Asian volume, and probably the entirety of the group’s operating cash flow. Focusing attention on a few key markets (such as Taiwan) probably makes much more sense than spreading itself thin in smaller markets like Laos and Cambodia. 


Competitive landscape

12. How many companies do you think will survive in the South East Asian market given the slowing growth rate?

Food delivery platforms landscape per se, at the end of the day, will become 1-2 large platforms that can cover the whole sector because only they would have sufficient volume and density to be competitive. 

In China and the US, you will see one platform owning the majority of the market share, while a smaller second player survives because the whole ecosystem does not want to see a monopoly. We won’t be surprised to see similar dynamics play out in Southeast Asia. 

Also, there is room for small specialised players – delivering just Japanese food in Bangkok or just mainland Chinese food in Singapore for example. But they are of very different scale (i.e, much much smaller) compared to the likes of Grab and DeliveryHero. 


13. May I know how many players you expect will remain for each key SEA market in order to achieve sustainable profitability?

As above. 

Ultimately, the question comes down to – how much volume and density can Southeast Asia sustain, and how can platforms keep optimising operations to maintain profitability. 


14. How will that be achieved? (Exit? Sell? but there are limited buyers?)and what’s the timeline?

Unilateral exit and trade sale are all possibilities for players who conclude that it does not make sense to conclude for the long term in this market. There are many factors that will impact the timeline – for example, GoTo will need to raise more money this year, how successful they are at doing that will probably have some impact on the viability of GoFood; and what will cause Shopee decide to keep, expand or shut down ShopeeFood?

You can check out Part 2 of this Q&A and the full Food Delivery Platforms in Southeast Asia 2023 report here.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].