GLOBAL – Lockdowns and other coronavirus-related restrictions provided a significant boost to online food delivery players in 2020.
The surge in food delivery orders saw players hire more independent contractors as delivery couriers in an effort to cover more ground.
In addition, cloud kitchens, which deliver straight from the kitchen to homes, also gained traction in Southeast Asia in the last one year.
Food delivery platforms in all corners of the word experienced a surge in business, got higher valuations and attracted some of the largest investments in 2020.
Although the deal volume in the logistics and delivery space was not as high as in fintech and healthtech in Q3 2020, the sector had the third-highest deal tally at US$251 million.
The momentum is likely to continue this year as the emergence of a more contagious strain and the wait for a mass vaccine roll-out are likely to make consumers more cautious.
In India, food tech unicorn Zomato recently completed its primary fundraise worth US$660 million, earning a valuation of $3.9 billion.
The firm, which claims to have delivered more than 130 million orders since the first lockdown imposed in India in March 2020, is now looking to list in the first half of 2021.
In Thailand, the main contenders in the online food delivery space are Grab, Gojek foodpanda and Line Man Wongnai.
As a sign of investor confidence in the food sector, two leading food delivery companies Gojek and Grab raised over US$1 billion last year, funds which will be used to drive expansion plans in 2021.
In the next few years, the gross merchandise value (GMV) of the online food delivery market in ASEAN-6 is projected to grow at a CAGR of 11.3% between 2021 and 2024, according to Statista.
Of these countries, Malaysia is expected to record the highest growth at 15.4% CAGR to reach US$410 million in GMV by 2024.
Indonesia remains the largest market for food delivery services and is projected to reach US$3 billion in GMV by 2024.
Top contenders in the local market are GoFood and GrabFood. Based on a survey conducted by Rakuten Insight, about 78 per cent of the respondents in Indonesia stated that GoFood was the food delivery app they used the most as of June 2020.
Even as the online food delivery sector grows, regulators continue to keep a watchful eye on market players to protect consumers.
Last year, the Competition and Consumer Commision of Singapore concluded its investigation into the online food delivery sector after a player complained of being shut out by Deliveroo and GradFood.
More recently, South Korea’s antitrust regulator has asked Delivery Hero to divest its Yogiyo subsidiary in order to win approval for its US$4 billion takeover of Woowa Brothers.
As food delivery companies continue to mature and increase in size, increased oversight role is expected to continue in 2021.
Singapore’s watchdog has already promised to continue watching the sector closely to ensure fair play among players.
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