Dominated Grab and Gojek, GMV Food Delivery Services in Indonesia Reaches 52 Trillion Rupiah

Food delivery service (food delivery) experienced a growth spurt during the pandemic. According to research conducted by Momentum Works, the GMV of this service in six Southeast Asian countries reached $11,9 billion in 2020. In Indonesia alone, the total value recorded was $3,7 billion or equivalent to 52 trillion Rupiah -- dominated by two big players. , that is Grab and Gojek, holding 53% and 47% of the total market share, respectively.

It was also conveyed, this achievement actually only contributed 1% of the potential food delivery in Indonesia whose value is projected to reach $61 billion as of 2019. The main indication is that so far the penetration of players is still focused in big cities, while in the tier-2 and tier-3 areas, business has not been optimized much.

Momentum Works CEO Jianggan Li said that most of the growth in food delivery services that occurred in 2020 was permanent. Given the trend of digitization and changes in consumer behavior towards digital.

"We are optimistic about the prospects food delivery service in Indonesia, although it will likely take several years before the sector can be mass-adopted. Food delivery service players must have a long-term strategy in order to optimally take advantage of opportunities in this huge market," he said.

growth factor

The main factor that makes Indonesia the largest food delivery service market in the region is none other than the large population in this country. Data from the 2020 population census states that the current population of Indonesia is around 270,20 million people. Of this total, 27,94% of them are Gen Z and 25,87% are millennials. In addition, several other factors are also supported, such as economic growth, urbanization, and smartphone penetration.

The research results also highlight several steps taken by the players to achieve long-term profitability and sustainability. Platforms need to control acquisition/retention costs, maintain economic units, and generate additional revenue which may include advertising, financing, and other B2B services. The option is based on a case study of the success of Meituan, one of China's major food delivery services. In Q2 2020, the company listed net profit up to $420 million.

Meanwhile, from the consumer's perspective, several things to consider when choosing a food delivery service include: the number of choices, speed, quality/reliability, and cost. According to Momentum Works, each player must (at least) excel on two factors, because leading in all of these variables is said to be impossible.

Potential that can be explored

Apart from Indonesia, some of the major service markets food delivery in Southeast Asia are Thailand ($2,8 billion), Singapore ($2,4 billion), the Philippines ($1,2 billion), Malaysia ($1,1 billion), and Vietnam ($0,7 billion). The research also analyzes several potential strategies that can be taken to increase the value of this business transaction every year. First, focus on increasing transaction volume for the upper middle class consumer segment.

Second, reduce costs to offset low food prices and order value. Then it is also important to improve digital literacy so that merchant (restaurants, food stalls, SMEs etc.) can adopt delivery applications. And lastly, players must also invest in the necessary infrastructure to drive service adoption in tier-2 and 3 cities.

Grab and Gojek Indonesia has also been seen executing this strategy, one of which has been realized through initiative cloud kitchen. The shared kitchen allows SME partners to find it easy to sell their products, as well as expand their market; because basically various productive facilities are provided and integrated into the ecosystem great app each service. On the consumer side it also allows them to get more food choices at lower delivery costs.

-

Header Image: Depositphotos.com