Food delivery is the next big frontier for archrivals Go-Jek and Grab in Indonesia.
Go-Jek’s Go-Food quite comfortably ruled the space in the past, but it has to take GrabFood’s competition seriously.
The latter is late to the party but now has the advantage that users and merchants already know what to expect: There’s no need to explain how on-demand deliveries work, which makes it easier to onboard new customers and merchants.
Grab also has massive amounts of venture capital at its disposal and seems determined to chase after this lucrative business. After all, the demand for food and beverage products and services (the latter encompasses cafes, take out and dine-in restaurants) is continuously on the rise in Southeast Asia.
Online food delivery is set to be worth US$13 billion in two years, GrabFood’s regional head told KrASIA in a recent interview.
For local services startups like Go-Jek and Grab, food delivery is one category that can propel them towards profitability, because profit margins here tend to be better than on the core ride-hailing services.
That’s why the category is so hotly contested.
Go-Jek: Food In Its DNA
In early 2015, Go-Jek first released its smartphone app.
It was often called an “Uber for motorcycles”, but from the start, Go-Jek was designed to offer more than transportation. It also had food delivery and courier services, all in one app.
In some ways, it was similar to Uber.
Independent contractors fulfilled orders on their own motorbikes. But having a variety of services meant that the same drivers could pick up and drop off passengers, packages, or food.
Smooth allocation across these categories took Go-Jek some time to get right, but it eventually increased efficiency in the system.
By 2016, just more than a year into the launch of Go-Jek’s app, this concept had caught on so well that is was eating away market share from startups like Foodpanda who were doing food delivery the old way: with a fleet of motorcycle drivers that was idle if there were no orders.
Combined with Indonesia’s traditionally low basket sizes per order, Foodpanda’s model didn’t add up because overhead costs are too high to make it worth it.
The startup eventually pulled the plug on Indonesia.
Go-Jek, meanwhile, was already the largest food delivery network outside of China, or so it claimed in a press release at that time.
This article was written by Nadine Freischlad, and first appeared on KrAsia.