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AirAsia has expanded into food delivery, but what can it do to stand out?


Think about life with out meals supply providers at your fingertips — can you reside with that? 

Utilizing meals supply apps to resolve one’s starvation wants would possibly simply be the on a regular basis lifestyle for a lot of as of late, particularly for the rising middle-class in Singapore and Southeast Asia (SEA). 

The meals supply trade has boomed during the last yr, partly as a result of Covid-19 pandemic which accelerated the expansion of the meals supply market within the area.

A examine by Google and Temasek confirmed that meals supply has grow to be widespread for busy professionals and households alike. Such providers “spare shoppers the inconveniences of humid climate and site visitors jams, (and) has grow to be notably widespread in metro areas.”

Based on an trade report from tech enterprise analysis agency Momentum Works, SEA’s meals supply’s complete gross merchandise worth (GMV) surged 183 per cent from the earlier yr to succeed in US$11.9 billion in 2020, offering proof to replicate this fast-growing trade.

Seize is a significant meals supply supplier in SEA, and AirAsia is a newcomer to the trade / Picture Credit score: Soyacincau

There are at the least six main gamers within the area: Seize, foodpanda, Gojek, Deliveroo, LineMan and Now.

The area’s meals supply market is anticipated to develop much more, from US$2 billion in 2018 to an estimated US$20 billion by 2025, in response to the Google and Temasek examine.

In Singapore, meals supply GMV was at US$2.4 billion final yr, taking on 20 per cent of SEA’s complete worth.

With excessive development areas comes immense competitors. That is backed by the emergence of a newcomer: AirAsia.

The agency is extra famously often called an aviation firm, however has made a pivot to land-related actions as a result of affect of Covid-19 on the aviation sector, which has grounded most of its planes.

In just some months, AirAsia has been seen aggressively increasing its meals supply choices in varied international locations in SEA, together with Singapore. Simply this month, it introduced that it’ll take over journey hailing big Gojek’s enterprise in Thailand, value a mixed US$50 million.

AirAsia stated that it’ll faucet on Gojek’s current enterprise to launch its personal superapp there, providing meals supply, groceries, magnificence objects, and extra.

Busy professionals and households in SEA are ordering their day by day meals through meals supply apps / Picture Credit score: Vulcan Put up

As well as, the airline firm can be working its meals idea into different international locations. It entered Singapore below airasia meals in March this yr, after its debut in Malaysia final yr.

Nevertheless, is there room for AirAsia to enter this trade and the way can it discover leverage as a newcomer among the many greater gamers? We take a deep dive into the meals supply trade and discover out if it has what it takes to outlive this aggressive panorama.

The meals supply wars

The meals supply trade in SEA is very aggressive because of its quick development and promising projections.

For instance, in only a small city-state like Singapore, there are already many gamers reminiscent of Seize, foodpanda, Deliveroo and Grain.

“For an rising and more and more time-conscious center class, the comfort of getting piping sizzling meals delivered to 1’s doorstep is very valued. Such shopper behaviour has grow to be the norm, notably amongst dual-income households,” acknowledged the Google and Temasek report.

Singapore’s demographic measurement could also be small — with a inhabitants solely two per cent of Indonesia — however it generates 65 per cent as a lot GMV because of beneficial circumstances to assist meals supply operations like an built-in web community, excessive smartphone utilization, in addition to excessive spending energy.

Seize took up virtually 50 per cent of the area’s meals supply GMV in 2020 / Picture Credit score: Vulcan Put up

For SEA’s meals supply providers as a complete, the chief of the pack is at present Seize, reigning in 5 out of six of the markets within the area in 2020, like Singapore, Indonesia, Malaysia, and Thailand.

Seize contributed almost half (49 per cent) of the area’s meals supply GMV for final yr at US$5.9 billion.

One nation within the area that Seize didn’t get its palms on to be first place in was Vietnam, the place Sea Group’s meals supply service Now’s the market chief and Seize is ranked second.

Meals app Now belongs to cash-rich tech big Sea Group who can be within the tussle to get a number one share within the area.

Sea Group’s Now has a first-mover benefit. It was already operational in Vietnam in 2015, earlier than it was purchased over by Shopee in 2017.

It has about 80,000 retailers on its platform, whereas Seize’s variety of retailers should not disclosed.

Sea Group can be rising its meals supply providers in new markets. Its e-commerce platform Shopee jumped into the hype with the launch of its meals supply vertical ShopeeFood in Indonesia in April. Final month, ShopeeFood was stated to be getting into Malaysia too.

Thailand, Singapore, and Indonesia are SEA’s largest meals supply markets / Picture Credit score: Vulcan Put up

In the meantime, after promoting its Thailand enterprise to AirAsia, Gojek plans to concentrate on competing with Seize in its homeground in Indonesia. It holds a 47 per cent market share within the nation.

Gojek’s new collaboration with AirAsia (after forming GoTo with Tokopedia earlier) was strategic for Gojek because it confronted stiff competitors with Seize and ShopeeFood within the on-line transportation and meals supply providers sector in Indonesia.

Zooming in on newcomer AirAsia

AirAsia bought Gojek’s ride-hailing and cost companies in Thailand this month to assist it expedite its foray into the non-travel Thailand market.

It plans to soak up Gojek’s operations into its personal tremendous app, which will likely be launched there in August.

Gojek has a seven per cent share of Thailand’s US$2.8 billion meals supply market. It holds a smaller market share in comparison with GrabFood (50 per cent), foodpanda (23 per cent), and LineMan (20 per cent).

airasia food
Getting into the Thai market will likely be good for AirAsia to study the ropes of the trade / Picture Credit score: airasia meals

Regardless of a smaller market share, the entry level is an effective place to start out from and the collaboration will present a great way for AirAsia to know the operations, technique and mindset of a number one superapp, famous Joshua Chong, Singapore-based fintech analyst at consulting agency Kapronasia.

He added that Thailand makes for a great take a look at mattress — it’s a market with development potential, sizeable inhabitants, low banking penetration, and low SME digitalisation.

Will AirAsia survive on this aggressive market?

To higher perceive the worth that every meals supply firm can deliver to shoppers, a projected rankings scale on shopper expectations was drawn up, with partial assist from Momentum Works information.

The evaluation displays feedback from customers who’ve additionally tried out airasia meals, which helps paint an image of how AirAsia’s general meals supply providers is perhaps like.

Client expectations primarily focus on 4 principal wants: meals choice of eating places and menu objects, fulfilment velocity, high quality of meals and reliability, and costs.

Momentum Works notes that for a meals supply platform to stay, it wants to offer at the least two out of the 4 talked about factors to be “constantly and higher than its rivals”.

The rankings benchmark confirmed that by way of pricing, Seize is at a six out of 10, whereas foodpanda is at an eight out of 10. The AirAsia-Gojek tie-up is rated at a 5 out of 10 and the pricing for air asia meals at a seven out of 10. This brings the mixed rating for AirAsia’s meals platforms to 6 out of 10.

Based on on-line critiques, airasia meals supply charges appear to be decrease than different platforms as charges can price as much as S$4 cheaper than different platforms.

If AirAsia needs to succeed, it’ll want enhance its buyer expertise quick / Picture Credit score: Vulcan Put up

As for meals supply reliability, airasia meals was ranked fairly low, since critiques spoke about getting late deliveries for many of the orders.

Some shoppers commented concerning the delays airasia meals takes to reach, including that the WhatsApp messaging system and the shortage of a tracker to replace on meals orders makes it onerous for anxious and hungry prospects to know when their meals will arrive.

Some prospects additionally lament the early closing time for meals orders at 8pm on airasia meals. That threw some off-guard once they wished to order a late-night meal.

Therefore, the mixed rating for reliability was a 3 out of 10. This can be a slight enchancment from airasia meals by itself as we predict extra enhancements to return after AirAsia’s take care of Gojek Thailand.

The latter’s enterprise is probably going so as to add worth to the airline firm’s meals supply arm by offering some insights on bettering processes.

The decision: If AirAsia needs to achieve this competitors, it’s going to want enhance its buyer expertise quick, because the rankings are at present hovering round a close to go or beneath requirements.

Based on Momentum Work’s score log, such rankings might imply that the meals supply platform won’t “stick” with customers.

It should enhance its service provisions because it continues to develop its enterprise, in any other case prospects — who’re already spoiled for selections with the varied meals ship apps round — will transfer on to the following finest supplier.

Deal with distinctive choices, funding to feed development plans

Specialists counsel that for newcomers trying to enter this area, a solution to edge out the competitors is to contemplate offering customised providers for eating places which have restricted sources.

It’s additionally essential to have a big warfare chest to spend money on enough infrastructure to handle market variations and supply tech capabilities.

AirAsia is seen taking a threat getting into much less acquainted territories and embarking on a totally new enterprise mannequin on such a big scale.

Because of the lack of expertise, it should supply totally different incentives to face out positively and/or rent skilled individuals who know their stuff because it competes with different skilled meals supply gamers within the area.

airasia food
The trade is capital intensive, and AirAsia appears to be in search of funding now to assist its development / Picture Credit score: The Star

Based on AirAsia Group CEO Tony Fernandes, Gojek Thailand final yr reported a income of 235.6 million baht (US$7.2 million) and a internet lack of 565.3 baht (US$17.3 million). This underscores that Gojek was dropping cash within the nation.

It’s clear that AirAsia is aware of it must deliver out the massive weapons to compete on this area. The corporate stated it plans to lift as much as 1 billion ringgit (US$238.7 million) by means of a rights challenge, to assist its working capital wants because it grows its digital enterprise models.

The digital arm of the low-cost provider can be reportedly contemplating itemizing within the US through a special-purpose acquisition firm or SPAC to lift at the least US$300 million.


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Featured Picture Credit score: airasiatravels





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