'E-com potential still untapped, needs more investments'

E-commerce businesses, including online food delivery ones, are still underpenetrated in Bangladesh and to unlock the unexplored potential the industry needs much bigger investments, Zubair BA Siddiky, co-founder and managing director of foodpanda Bangladesh, said in an interview with The Business Standard.

"There are multiple players in the market and all are competing for a small customer base," he added and referred to the fact that the Bangladesh market is big enough in terms of population but it is not so big when it comes to total addressable market thanks to less digital adoption.

In comparison, the Philippines and Pakistan, who have nearly the same size or smaller economies, have bigger addressable markets considering their population, said Siddiky.

Nine in every ten restaurant parcels in Bangladesh are taken away by customers themselves, while only one is being delivered by delivery platforms like foodpanda, he noted.

Industries need to invest heavily to augment the addressable market, instead of chasing the small set of consumers, Siddiky feels. "Efforts are needed to make people aware of digital inclusion and its convenience."

Sustainability of the food delivery industry will require significant digital inclusion, he realised from his experience in building a state-of-the-art technology infrastructure for a smooth operation of foodpanda across 64 districts in Bangladesh, with the support of his global parent company and investors.

"We need more investment for enhancing digital knowledge at mass levels and eliminating the persisting apprehensions surrounding technology," Siddiky said.

Mobile financial service market leader bKash, when their app was not popular, did the job well through mass training, awareness programmes and promotional campaigns and it worked well. Now millions of people are comfortably using the bKash app.

"Facebook-based commerce is popular in Bangladesh as consumers still prefer to talk with human beings buying anything, while completely automated and artificial intelligence-driven platforms attract more consumers abroad."

Collective investment needed for a better ecosystem

"We need significant investment in the startup ecosystem and one or two companies cannot do it alone," Siddiky said and added that there is a lack of trust among consumers and issues with internet speed and costs, which are barriers to e-commerce growth. 

Take India for example. E-commerce businesses there have experienced rapid growth when Reliance Jio introduced low-cost data plans that made it easier for people to access the internet and shop online, he explained suggested the policymakers address these at the earliest.

No monopoly in the food delivery market  

"We might be the largest company in this sector, but we definitely do not have a monopoly," said the tech entrepreneur.

The question of foodpanda's monopoly has come as two of the industry players, including UberEats, quit the business and Alibaba-backed Hungry Naki scaled down operations.

"Our biggest competition is with the offline market," said Siddiky, the managing director of foodpanda Bangladesh – a subsidiary of Singapore-based foodpanda owned by the German company Delivery Hero.

"The low digital penetration here should be taken into consideration before talking about monopoly," argued Siddiky, saying that e-commerce, including food delivery, penetration is still stuck at 3-4% of the population.

The question of a monopoly might be relevant for other industries such as telecom where customer bases are significantly higher.

Journey of foodpanda Bangladesh

In 2012, Siddiky along with his partners tried to build a daily deals site which later turned into an online marketplace. In the next year, he along with Ambareen Reza, another co-founder of foodpanda Bangladesh, managed to convince Rocket Internet to invest in foodpanda and help expand its business to Bangladesh. foodpanda launched in Dhaka at the end of 2013.

Soon after the launch, foodpanda quickly onboarded a few hundred restaurants in the neighbourhoods of Dhaka. Meanwhile, in 2016, global foodpanda was sold to Delivery Hero, which later brought huge automation to the business. By 2018, foodpanda Bangladesh had automated the majority of its operations, paving the way for rapid scale-up. 

During the crisis time of the Covid-19 pandemic, its daily orders increased rapidly, which also benefited 60,000 restaurants, small businesses and individuals. Currently, foodpanda has multiple verticals including pandamart, shops, pandapro, Cloud kitchens, homechefs, virtual brands, panda ads, foodpanda for business and pandago parcel delivery service. 

Inflation shocks and foodpanda's plans

"Our orders have dropped, especially from smaller merchants, due to consumers' struggle. But bigger value orders helped foodpanda maintain growth," said Siddiky.

"We, however, have been witnessing some improvements since February this year. This is not just in the context of Bangladesh, but also from an international perspective," he said, pointing at the breathing space in the global economy.

He further added that their primary goal for this year is to continuously innovate and experiment to improve customer experience. "We also want to expand the reach of pandamart and pandapro, alongside exploring value-added services like on-call delivery."