Super App platforms: The battle impossible to defeat

14 October 2020 Startups

Today while customers have made a quick transition to digital platforms when ordering food and shopping online, giant players or “Super App Platforms” are now pouring their money on marketing and promotion in the fourth quarter in spite of the tough economic times and the fact that no companies have achieved break-even results. 

In the region, rumors circle around Alibaba. It’s speculated that the e-Commerce giant from China will be pouring US$ 3 billion into Grab and that the major shareholder of Grab and Gojek is pushing for a merger of two ride-haling companies. 

The “Super Apps” market also attracts AirAsia. With its database of 60 million customers and high investment in new technology, the airline company will be more than ready to battle it out with other key players in the South East Asia region and will completely transform into a lifestyle platform, providing several type of services such as food delivery, shopping, digital payments, entertainment and of course travelling.

At present, Grab has the largest market share, given that it has incessantly pumped up marketing budget, expanded its business horizon and offered financial services and on-demand everyday goods delivery service, or Grab Mart to its app users. Following the race is Foodpanda. The firm has the competitive edge since it’s the first player that has entered the market since 8 years ago, successfully expanding services across the country.

The best strategy for each key players to survive and thrive is to maintain ultimate customer experience and satisfaction as well as having the enough amount of working capital. This is the kind of game in which winners take all. Gaining the upper hand, they can increase customer base and driver partners while expanding business through new products and offering food solutions, financial services, restaurant business loans, loans for rider partners, insurance sales as well as B-to-B sales service that delivers fresh ingredients to restaurant operators.

Line Man-Wongnai consolidation to gear up for the war 

Thanks to capital investment worth US$110 million (around 3.46 billion baht) funded by BRV Capital Management in July, Line Man is now merging with Wongnai Media Co.,Ltd to battle it out with major players in this ferocious food delivery war. However Line Man-Wongnai announced it will chiefly focus on the Thai market for now, aiming to become a Unicorn startup in three years. It will seek the opportunity to raise funds via the Stock Exchange of Thailand (SET). 

Yod Chinsupakul, chief executive officer of Line-Man Wongnai noted that food delivery industry still has ample opportunities to grow. In the U.S. and China, online food delivery accounts for 20-30% of total restaurant business market value while in Thailand it only represents 5% (worth 35,000 million baht) of total market value of around 700 billion baht.

The Covid-19 pandemic has inevitably speeded up changes in app user behaviors, leading to the market’s skyrocketing growth in 1-2 years and raging war between key players in the next 3 years during which the market will be going to grow by 30%.  It’s hard to tell who will survive, considering there are two main players left in the U.S. and four in China.  

After the successful and seamless merger, Line Man/Wongnai plans to be Thailand’s No.1 food platform in three years by building end-to-end food ecosystem and using its sophisticated POS system and restaurant management solution. It will increase a restaurant database of 250,000 entries to 400,000-500,000 entries nationwide and expand its presences in 13 provinces to 20 by the end of this year.  

There will be an improvement for electronics payment system and, to attract app users, free food delivery within 3 km distance will be offered.   

The restaurant system and commission fee (GP) are the sources of revenue for the company which plans to provide B-to-B services delivering ingredients to restaurants within next year. Previously, Line Man had already teamed up with Happy Fresh for online grocery business.

Gojek pumping up budget to compete in Thai market

The Unicorn startup from Indonesia is getting ready to fully have a strong presence in Thai market. The Thai unit of Indonesian ride-hailing giant has strategically changed its local brand “Get” to the regional brand, Gojek and given the app a face lift with fresh look and feel. In addition, the company has heavily pumped up its budget on marketing while giving away 2,500 baht discount e-coupons per app users in hope of attracting old users.  

Pinya Nittayakasetwat, country general manager of Gojek Thailand said the big move to rebrand the Thai local unit will strengthen the brand identity. The company has tested the market, using GET as the local brand for 18 months. In the region, Thailand and Vietnam units had operated under the local brands and were recently re-launched as Gojek. These changes result in seamless back-end system with Indonesian headquarters, enabling app users to use international services just by adding and converting money into a currency of the country they are traveling to.    

According to the survey, Thai app users reveal what they want most are 1) user-friendly app (10%), fast delivery (13%), special discount (27%) and a variety of deals from partner restaurants (35%). Taking this into account, the company thus creates new exciting features such as chats, saving or sharing favorite restaurants to friends and liking.  

During the Covid-19 lockdown, a survey reveals 55% of Bangkokians use food delivery services. Today Gojek has approximately 50,000 driver partners and more than 30,000 restaurant partners while operating in Bangkok and its nearby provinces.

Foodpanda’s expansion to Quick Commerce   

Thomas Buchan, the director of new verticals at Foodpanda Thailand, said that food delivery platforms will mainly compete for customer satisfaction, delivery cost and convenience.

Gaining the competitive edge, Foodpanda was operating in 72 provinces in September and expected to be in 77 provinces by October. It has millions of app users and more than 50,000 restaurant partners, altogether with two cloud kitchens at On Nuch and Lad Prao 116 and will introduce many more by the end of this year. The latest addition to its services is Pandamart which sells online grocery. Pandamart’s storage facilities currently cover 7 areas in Bangkok such as Lad Prao, Sathorn and Bangna. Population and traffic density are the key factor to strategically determine its storage facilities locations. By the end of this year, the company expects to have 30 facilities.

Having provided food delivery services in Thailand for more than 8 years, Foodpanda creates two models for Pandamart. The first is a retail business model with more than 2,500 items selected and sold on its platform, so the revenue is generated through normal trading business. As for the second model, the company will partner up with around 1,000 top merchant partners, supplying products for delivery. For this very model, commission will significantly generate revenue for the company.