FoodpandaChangingtheWayBangladeshisEatMeals PDF
FoodpandaChangingtheWayBangladeshisEatMeals PDF
FoodpandaChangingtheWayBangladeshisEatMeals PDF
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Case Authors: Jashim Uddin Ahmed and Asma Ahmed, Publisher: SAGE Publications Ltd
DOI: http://dx.doi.org/10.4135/9781526444561
__________________________________________________________________________
Abstract
This case study investigates the key competitive advantages, marketing strategies, and
challenges of Foodpanda, an online food delivery service in Bangladesh. Foodpanda operates
globally and started operations in Bangladesh in 2013, currently operating in Dhaka,
Chittagong, and Sylhet. Online food delivery service has a huge potential in Bangladesh with
the rapid growth of e-commerce and extensive use of social media sites such as Facebook and
Instagram. The target customer groups are busy urban people. With changing food habits in the
society, high internet usage, and a mobile based easy ordering system, the future of Foodpanda
seems promising. However, Foodpanda is facing fierce competition from local players in the
market, mainly HungryNaki. This case highlights how Foodpanda is focusing on various
strategies to: 1) retain their market share, 2) deliver food on time through busy city traffic, and
3) be more aggressive in addressing the competition.
Keywords:
Bangladesh, online food delivery, Foodpanda, urban consumer, e-commerce business
Learning Outcomes
Through completing this case study, students should obtain a stronger understanding of:
The relationship between early business practices and the medium and long-term
challenges and opportunities faced by companies
The challenges start-up companies confront in highly competitive emerging industries
The importance of having a clear customer service and retention strategy for the long-
term success of new businesses
The significance of implementing customer service, customer retention, and marketing
strategies in a fast-evolving and highly competitive marketplace
Introduction
The massive and fast-growing €90 billion food delivery market is driven by global
trends, including booming smart-phone usage, younger populations of “digital natives” in
emerging markets, and a growing global middle class (Foodpanda, 2017).Online food delivery
services are the newest addition to this sector. These services in Bangladesh began in mid 2013
with HungryNaki, a local entrepreneurship. Soon thereafter, global organization Foodpanda
joined the competition in late 2013. Following these, three more companies have joined the
market of online food delivery service. Online food demand depends on internet availability and
usage. Internet usage has great impact in flourishing e-commerce, as internet users of
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Author’s copy Foodpanda: Changing the Way Bangladeshis Eat Meals
Case Authors: Jashim Uddin Ahmed and Asma Ahmed, Publisher: SAGE Publications Ltd
DOI: http://dx.doi.org/10.4135/9781526444561
__________________________________________________________________________
Bangladesh grew enormously in the past 5-7 years. In February 2017, the Bangladesh
Telecommunication Regulatory Commission (BTRC) pointed out that approximately 93.87
percent (63.120 million) of internet users use the internet through mobile networks, and 6.13
percent (4.125 million) use broadband internet (WiMAX and ISP+PSTN). This significant
growth in internet usage helps users to place online orders quickly, and also to receive
promotional information instantly.
The continuation of this growth will expand the online food delivery service in
Bangladesh within the next few years, which will benefit market players. Moreover, monetary
value offered to customers is also improving radically as technological advancement reduces
marketing costs, effort, and time. The higher internet usage has resulted in increased usage of
social media websites and mobile applications, such as Facebook, Instagram, and Snapchat.
Similarly, the extreme usage of social media sites results in increased value of online food
delivery services. Compared with other promotional broadcast and print media, a Facebook
promotional rate of USD 7 per day is cheaper. Facebook guarantees that these promotions reach
narrowly defined target markets. Shares, likes, and comments on Facebook spread information
and offers rapidly from one customer to another. In addition, Facebook facilitates the ability of
a firm to select their target market precisely, using tools that guarantee that a firm will receive
hits on their offerings and promotional activities. Currently, Foodpanda has over 2.5 million
followers on its Facebook page. Alongside Foodpanda, there are other local competitors that
provide online food delivery service such as HungryNaki, Justknockbd, Mojadar, and
Foodmart. These companies offer customers an online ordering system from partnered
restaurants with the option of online payment followed by delivery service. As such, online is
the rudimentary platform for customers to place orders through these sites.
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Author’s copy Foodpanda: Changing the Way Bangladeshis Eat Meals
Case Authors: Jashim Uddin Ahmed and Asma Ahmed, Publisher: SAGE Publications Ltd
DOI: http://dx.doi.org/10.4135/9781526444561
__________________________________________________________________________
task often allotted to women culturally. Thus, the usage of online food delivery services offered
by Foodpanda alleviates this task.
Lifestyle Segmentation
Urban consumer lifestyles have evolved over the last decade, with more women
participating in the labor force and people spending more time at the workplace. In this “time
poor, cash rich” society, there will be an increasing tendency towards fewer traditional meals
cooked at home and an increase in demand for convenience foods and pre-prepared meals, with
more meals eaten outside. It is likely that this convenience pattern and on-the-go snacking will
continue, driven by time pressures and busy schedules.Foodpanda has a narrow customer base
demographic, mostly targeting people living in urban areas. Moreover, it is targeted towards
those customers who have sufficient purchasing power to afford food from the renowned
restaurants of the city which can be overly expensive for most residents. Mid-level earners
cannot afford to be a continuous user of Foodpanda due to their financial constraints.
Lack of time creates demand in the food delivery market. The growing working
population and emerging middle class, in addition to increased women in the workforce,
decrease the amount of leisure periods and lead to busier lifestyles. As a result, a large portion
of Bangladeshi consumers have shifted their preferences to food that is easy to prepare or
readymade, or simply food that can be ordered. This can be seen in the recent rise of
departmental stores in the cities as people choose solutions that save time. In Bangladesh,
though ordering food online is not widespread among the people, the concept is thriving and
growing into a trend that is expected to intensify in the future.
Household Segmentation
In Bangladesh, the rate of urbanization is very high, exacerbated by the high population
growth rate and rapid rural-to-urban migration (The Daily Star, 2016). The trend of urban
growth in Bangladesh is about 3.55 percent per annum. The urban population represents 34.3
percent of the total population. Major urban areas as of 2016 include Dhaka, with 17.598
million, Chittagong, with 4.539 million, Khulna, with 1.022 million, and Rajshahi, with
844,000. Likewise, the small family trend is also exaggerating this effect as average family size
has been decreasing for the past several decades. Household Income and Expenditure Survey,
Bangladesh Bureau of Statistics (BBS) shows, in 2014, family size decreased to 4.40 people,
which confirm that large family size is diminishing and people prefer smaller family sizes.
Foodpanda: An Overview
Foodpanda is a global online food ordering company headquartered in Berlin, Germany.
It was established in May, 2012 with the support of Rocket Internet, a German venture capital
company also based in Berlin. Foodpanda was cofounded by Ralf Wenzel and Benjamin Bauer,
the former being the current chief executive officer and the latter being the current chief
marketing officer. The organization is active in 580 cities around the globe, operating in 22
countries (as shown in Table 1). However, the primary customer base of Foodpanda is in Asia
and Eastern Europe as the company focuses on emerging markets. With partnerships with over
26,000 global restaurants, it employs over 2,500 staffs worldwide. The global start-ups were
primarily funded by Rocket Internet followed by other top-tier investors such as Goldman
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Author’s copy Foodpanda: Changing the Way Bangladeshis Eat Meals
Case Authors: Jashim Uddin Ahmed and Asma Ahmed, Publisher: SAGE Publications Ltd
DOI: http://dx.doi.org/10.4135/9781526444561
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Sachs. However, Foodpanda was acquired by its German competitor, Delivery Hero, in early
December 2016. Headquartered in Berlin, Delivery Hero is regarded as the global leader in
online food ordering and delivery. Through the acquisition, it added 20 more countries in
Eastern Europe, Middle East and North Africa, and Asia to its portfolio, thereby increasing the
company’s global footprint. As a result, Delivery Hero now operates in 47 international markets
and processes over 170 million orders per year. Moreover, the acquisition of Foodpanda further
established Delivery Hero’s global leadership position in the international food delivery
industry.
Year of Partner
Sl. Country Areas of Operation
Expansion Restaurants
Kingdom of
6 Saudi Jeddah, Riyadh, Dammam, Al Khobar, All restaurants in
2013
Arabia Dhahran, Al Ahsa, Mecca, Madinah, Yanbu KSA
(KSA)
2014 Hong Kong Central Hong Kong, Shatin, Causeway Bay, Information Not
9
Tsim Sha Tsui and Kwun Tong. Available
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Author’s copy Foodpanda: Changing the Way Bangladeshis Eat Meals
Case Authors: Jashim Uddin Ahmed and Asma Ahmed, Publisher: SAGE Publications Ltd
DOI: http://dx.doi.org/10.4135/9781526444561
__________________________________________________________________________
United Arab
17 Dubai, Abu Dhabi, Sharjah, Ajman, Al Ain, All restaurants in
2015 Emirates
Fujairah, Ras Al Khaima. UAE
(UAE)
All restaurants in
18 2015 Bahrain All major cities.
Bahrain
All restaurants in
2015 Jordan Amman, Aqaba, Irbid, Madaba, Salt, Zarqa.
19 Jordan
As previously stated, Foodpanda has a focus on emerging markets due to the vast
opportunities they present. It has a strong foothold in Southeast Asia in markets such as
Singapore, Hong Kong, Malaysia, Taiwan, Thailand, India, and others. In Bangladesh, the
online food ordering company expanded its operations in 2013 with the initiatives of the
managing director and co-founder of Foodpanda Bangladesh, Ambareen Reza and Zubair B. A.
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Author’s copy Foodpanda: Changing the Way Bangladeshis Eat Meals
Case Authors: Jashim Uddin Ahmed and Asma Ahmed, Publisher: SAGE Publications Ltd
DOI: http://dx.doi.org/10.4135/9781526444561
__________________________________________________________________________
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Author’s copy Foodpanda: Changing the Way Bangladeshis Eat Meals
Case Authors: Jashim Uddin Ahmed and Asma Ahmed, Publisher: SAGE Publications Ltd
DOI: http://dx.doi.org/10.4135/9781526444561
__________________________________________________________________________
per-thousand (CPM) make up another 10 percent of the company’s profits. The advertisement
fee is generally charged per page, per advertising unit served per page, and per page redirection.
Order Process
The food ordering and delivery process takes place in two phases – food ordering by
customers and food delivery by Foodpanda. The customer places the order online or through a
direct phone call after which Foodpanda processes it.
The Foodpanda online platform has all the tools customers need to search, choose, and
pay – all filtered to the customers’ needs. The online platform includes the company’s own
website and the free Foodpanda mobile application for iOS, Android, and Windows phone
devices. Search is easy with filters based on cuisine types, restaurants, and price range. The
website or mobile application allows customers to select their location to have a list of nearby
restaurants and choose from their menu items. Restaurant index includes the address and
delivery hours of the particular restaurant. Moreover, customers are able to sort through the
index of restaurants based on their popularity, ratings, delivery fee, minimum order value, and
fastest delivery, thereby making food selection easier. Additionally, there are ratings and
reviews on the partner restaurants. The diverse options allow customers to choose according to
their tastes and preferences, thus serving the customer needs. Furthermore, the customers are
able to access promotional offers available online at the time of purchase. Once selection from
the preferred restaurant is completed, customers can place their orders for their desired food
online with the option to make an online payment or pay cash on delivery as well as choose the
delivery point. Likewise, in a direct phone call to Foodpanda, the same process is followed with
the guidance of a customer support service personnel.
Upon receiving the order, Foodpanda begins the delivery process. First, the customer
order details are immediately transmitted to the selected restaurant. Next, a delivery personnel is
dispatched to that restaurant to pick up the order and deliver it to the delivery point. In the case
that the customer chose to pay cash on delivery, the delivery person collects the cash payment
(as shown in Figure 1).
Delivery is
Delivery
made and Immediately
personnel Receives
payment is notifies Foodpanda
collects order details
collected restaurant
ordered food
(if COD)
Selects Chooses
Opens
location and payment
webpage or Waits for
Customer orders food method and
mobile delivery
from nearby delivery
application
restaurant point
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Author’s copy Foodpanda: Changing the Way Bangladeshis Eat Meals
Case Authors: Jashim Uddin Ahmed and Asma Ahmed, Publisher: SAGE Publications Ltd
DOI: http://dx.doi.org/10.4135/9781526444561
__________________________________________________________________________
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Author’s copy Foodpanda: Changing the Way Bangladeshis Eat Meals
Case Authors: Jashim Uddin Ahmed and Asma Ahmed, Publisher: SAGE Publications Ltd
DOI: http://dx.doi.org/10.4135/9781526444561
__________________________________________________________________________
Foodpanda has an established delivery network and presents customers with more restaurant
offerings than the others.
With the growth of e-commerce, there are various start-up businesses in the emerging
market of Bangladesh. Thus, there are continuous new business ventures creating intense
competition in the e-commerce industries. Likewise, the online food delivery industry also faces
strong competition with global Foodpanda and local players such as HungryNaki, Foodmart,
Mojadar, and Justknockbd. As such, the threat of new entrants is medium to high due to growth
prospects, comparatively low requirement of capital, and lack of structured rules and regulations
in the market. However, established companies can act as a barrier for new entrants as the
former has strong brand image among the customers. On the other hand, the threat of substitutes
is moderate to high as there are several alternatives, including dining in the restaurants, using
catering service companies, visiting neighborhood restaurants, and more. Next, the bargaining
power of buyers is low to moderate. The online food delivery service industry in Bangladesh is
increasing rapidly while the demand is very high among the established and affluent income
customer segments who dominate the market. Consumers in urban areas, especially the younger
generation from single households, are more prone to order food online. The bargaining power
of suppliers is medium to high, as the food delivery service is solely dependent on the
restaurants from where it receives food to deliver to the customers. Even the time of processing
food in the restaurants sometimes generate troubles in the brand image. The industry is highly
competitive since food pricing information, menus from restaurants, and information about
service quality is readily available to customers and they can switch to other options at no
substantial cost.
Moving Ahead
As an emerging markets food delivery specialist, Foodpanda has developed a favorable
position and service offering in some of the world’s largest food delivery markets. Spanning
across 22 countries in Eastern Europe, MENA, and Asia, Foodpanda serves as the market leader
in 17 of them. Through acquisitions and mergers, Foodpanda is able to access an already
established delivery network and domain expertise. Thus, it continuously expands its portfolio
across the globe and consolidates market leadership in those regions. Moreover, the acquisition
by Delivery Hero further expands its global footprint and allows for greater investment
opportunities. The company is expected to benefit from the global capabilities and expertise of
Delivery Hero. With a stronghold in Southeast Asia, Foodpanda aims to further consolidate
market leadership and expand to more emerging markets in the region. In Bangladesh,
Foodpanda has introduced various promotional offers and looks to expand further into more
major cities of the nation in the future. Based on the company’s acquisition and merger history,
it is perhaps not unlikely that Foodpanda may venture into that path in Bangladesh as well.
Looking ahead, Foodpanda aims to focus its investment in technology in order to improve its
delivery operations, restaurant operations, and the overall customer experience.
Discussion Questions
1. What are strengths and weaknesses of Foodpanda in the online food delivery service market
in Bangladesh?
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Author’s copy Foodpanda: Changing the Way Bangladeshis Eat Meals
Case Authors: Jashim Uddin Ahmed and Asma Ahmed, Publisher: SAGE Publications Ltd
DOI: http://dx.doi.org/10.4135/9781526444561
__________________________________________________________________________
2. Discuss the business and revenue model of Foodpanda and how do you think the models can
be made more effective and efficient?
3. Going forward, Foodpanda needs to develop and implement a new, robust customer
retention and customer attraction (marketing) strategy. How would you design such a strategy?
How could the supply chain be optimized within such a strategy? What concrete steps should
Foodpanda be taking and on what time scale?
4. How does Foodpanda maintain its food quality and delivery service process?
Bibliography
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customer-insight-go-to-market-strategy-bangladesh-surging-consumer-
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