KUALA LUMPUR – High discounts offered by new service applications can generate a buzz in the market, but the attractive prices do not necessarily convert to long term-profits, said food delivery platform Foodpanda’s Asia Pacific chief executive, Jakob Angele.
Describing his latest competitor as “the new kid on the block”, Angele said the low prices the new industry player offered are part of a pattern which ten-year-old Foodpanda has long understood.
“We’ve seen this cycle happening many times where a new competitor with new market shares utilises high discounts to create excitement and attract customers,” he said during a virtual media session today.
“Based on what we’ve learned from past experiences, the reality is that while discounts are important and substantial, they are not the only thing customers care about.
“Other factors consumers look at are the assortment of goods offered by a platform, how consistent service is and the usability of the platform’s technology.”
Launched in Penang last week following the Klang Valley and Johor Bahru, the competitor is offering Penangites free deliveries, discounts up to 50% and flash sales up to 20% until June 20.
Unfazed by a potential rival, Angele pointed out that once a platform advances and amasses higher costs, it would become increasingly more expensive for them to offer substantial price markdowns.
“Continuing to offer high discounts in the food delivery industry is akin to burning more and more money but achieving fewer results.”
However, he said that the company continues to closely monitor competitors that crop out in a while, adding that he is pleased with how business is progressing in Malaysia.
He also said that while the company continuously strives to price their delivery fees below relevant competitors, the ecosystem of stakeholders involved in the food delivery industry must be considered.
Admitting that delivery fee is a sensitive topic for consumers, he said that Foodpanda recognises how customers appreciate low rates, coupled with fast and reliable delivery services.
“We try to keep our prices as affordable as possible but we also have to make sure that our riders are daily compensated and restaurants are not overburdened in terms of the commission they have to pay,” he said.
“Consumers might experience fluctuations in price but rest assured that we fully understand the need for great service at a great price.”
He also said although Foodpanda recognises food safety, especially in hotter climates, as being an important topic, he is unable to share concrete details on how the company will contribute to plans to upgrade the country’s Food Safety and Quality Division. – The Vibes, June 8, 2022
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