2018 was a big year for Foodpanda Bangladesh. Delivery Hero owned food delivery company has made a host of moves to grow its business while also dealing with the growing competition in the food delivery market in Dhaka. It has expanded coverage within Dhaka - it now covers most of Dhaka and has expanded to Chittagong and Sylhet. It has introduced a host of new features to improve user experience as well as build new demands in the market.
Toward the end of 2017, Foodpanda launched a new recommendation engine that shows a personalized recommendation feed to each of its users based on their past order pattern, search history and other behavioral data points on the site. It has proved to be a game changer. In an upcoming interview with Future Startup Foodpanda Bangladesh Managing Director Zubair Siddiky says, “we have seen a spike in the number of orders since we introduced the Swim link. Because it is now easier for a customer to order from a restaurant they want to order from. People don't want to go through 500 restaurants to find what they want to eat. Now since they can easily find the restaurants they like and can easily place an order, they do it. The decision making has become a lot easier for the customers with the recommendation feed.”
From mid-2018, Foodpanda slashed its delivery charge to zero allowing customers anything and then get it delivered for free. It has also slashed its minimum order value to 100. These moves have proved to be a game-changing strategy for the company. The order number has gone up. Retention has gone us as well. “We have made pricing adjustments - there is no delivery fee now on the platform for the last three-four months,” says Zubair. “We have slashed our minimum order value to 100 taka only. It is now very easy for someone to order. These changes have helped us to grow significantly.” It is a logical move because the delivery fee often works as a mental barrier for a lot of customers when it comes to ordering online. “It also makes sense for our customers,” says Zubair. “What could have been better for a customer than having no opportunity cost of ordering food online? Customers now have no opportunity cost for ordering online. They don't have to pay extra in the form of delivery charge. On top of that, many a time we provide discounts and bring deals working with our restaurant partners. We are trying to give you better pricing than what you get in a restaurant. That's our goal.”
These moves, slashing delivery fee to zero, introducing recommendation engine and slashing minimum order value to 100, have served Foodpanda well at a time when competition intensified in the market driven by companies like Pathao and Shohoz. In the long run, it should allow Foodpanda to build a loyal user base. But in order to continue keeping it that way it has to improve its efficiency in other areas of its operation to make up the lost revenue.
Food delivery market has become a lot more competitive in the last two years. Not only that ride-hailing companies entered the market with new force, but also a lot of niche food delivery startups have also entered the market creating a lot of commotion in the space. While players like Foodpanda Bangladesh and Pathao have seen meaningful growth in the past years, the market is far from mature.