The new phase of the "Khon La Khrueng" co-payment scheme, scheduled to start next month, is expected to spark fresh competition in online food delivery services with leading market players Grab, Line Man Wongnai and Foodpanda rolling out campaigns to reduce their commission fee, known as gross profit (GP), throughout the duration of the programme.
The fifth phase of the co-payment scheme offers 800 baht per registered person for a period of two months, starting Sept 1.
Grab said restaurants registering with the platform during Aug 17-19 will receive a reduced GP rate of 9%.
Merchants registering from Aug 20-Oct 31 are still eligible to receive a commission reduction to 15%. The condition applies to orders made during the two-month scheme, which ends Oct 31.
Alejandro Osorio, country head of Grab Thailand, said the move is aimed at lessening the financial burden of merchant partners and consumers during the slow economic recovery.
Grab participated in the third and fourth phases of the campaign, which received favourable feedback from users and merchant partners, he said.
The maximum sales growth of restaurants joining phase four of the programme with Grab increased by 13 times, he said.
Line Man Wongnai also announced a reduction of the GP rate to 9% for food merchants registered with the co-payment scheme and the platform during the campaign.
Some 200 million baht has been allotted for marketing campaigns linked with the co-payment scheme, said Yod Chinsupakul, Line Man Wongnai's chief executive.
"The move is aimed at stimulating merchants' sales and mitigating the living cost for customers," said Mr Yod.
More than 70,000 merchants engaged with Line Man Wongnai's campaigns in the third and fourth phases of the co-payment scheme, accounting for 75% of all the platforms' vendors registered with the co-payment scheme.
The last phase saw more than 31 million campaign-linked orders for Line Man Wongnai with an increase of 140% in customer base, said Mr Yod.
Additionally, the platform recently unveiled Urassaya "Yaya" Sperbund, a popular Thai actress, as its brand presenter, and vowed to gear up its marketing campaigns through the end of this year.
Foodpanda vowed to collect a GP rate of 5% from vendors registered from Aug 18-19 and 9% from those registered from Aug 20-31, throughout the duration of the programme. A promotion of zero GP rate was also offered for merchants registered on Aug 17.
Users will also be subject to free delivery in September, the platform indicated.
SUSTAINABILITY MODE
Purple Ventures, the operator of food delivery and hotel booking platform Robinhood, is gearing up to find strategic partners to raise funds to strengthen its services.
The platform also aims to become a super app by the end of this year, when it expects to gain 4-5 million users for its services with the firm's estimated value of 15 billion baht.
Thana Thienachariya, chairman of the board of Purple Ventures under SCBX Group, said food delivery has become a daily usage that can attract people to on-demand platforms.
Even though food delivery business still does not see profit now due to significant discount promotions and subsidy measures, it could support platforms to become super apps in terms of the number of users, he said.
Mr Thana said three players are suitable for the food delivery market in Thailand.
"There would be two main super apps and one alternative, which could be Robinhood," said Mr Thana.
"Food ordering business is growing in Thailand even though operators are spending hugely in this segment," he said.
According to Mr Thana, in the long run, he believes competition will be more sustainable as regional operators are not seeing good operating results with their share prices falling and they tend to spend more cautiously.
Food Ordery, the operator of food delivery platform eatsHUB, indicated it is creating a new standard for the food delivery business with a low GP rate of 8%, compared with the standard of up to 30% collected by other major operators.
The platform was launched early this year in collaboration with the Digital Economy Promotion Agency.
Thammanit Khamwangyang, chief executive of Food Ordery, said the platform supports eateries to have their own customer data to communicate directly with users. They can also use drivers from those who are not registered with the firm's platform.
"We are not burning cash for massive marketing campaigns. We select delicious food for customers and empower eateries to use digital technology and gain customer insight to stay competitive," said Mr Thammanit.
He said eatsHUB aims to provide the services across 18 provinces in the first year with the participation of more than 20,000 eateries.
"The firm aims to be listed on LiVE Exchange for startups in 2023 and the Market for Alternative Investment in 2024," he added.
FINDING A BALANCE
According to Kasikorn Research Center (K-Research), the online food delivery business is expected to grow 1.7-5% year-on-year to reach 77-80 billion baht in 2022, down from growth of 46.4% seen last year.
All food delivery driver partners earned an average of 13 billion baht per annum from 2020 to 2022, the research unit said.
Anantaporn Lapsakkarn, a senior researcher at K-Research, said the battle in food delivery business will continue for a long time due to the new players and the fight of super apps.
The competition is seen as a zero-sum game and the operators are gearing up efforts to lure customers to the platforms by injecting a lot of subsidised marketing, discounts and incentives for driver partners, which need high capital.
"To survive in the long-term competition, they can no longer compete to dominate the market but should focus more on a sustainable way. Online food delivery operators need to find a balance between platforms, drivers, users and food merchants," said Mr Anantaporn.
In the competition, the operators may have to focus more on increasing the number of subscription-based customers.
The platforms and restaurants may need to fine-tune their strategies, he said. Apart from price competition, they may need to think about delivery route planning as well as boosting the quality of food and services.
The restaurants may have to think about food at entry-level prices that are in line with the low purchasing power of people at present, he said.
