When The Drum spoke to Foodpanda in 2016, the likes of UberEats and local online grocery service HonestBee had yet to enter the food delivery market in Singapore. In just over a year, that has changed with Honestbee launching its own food delivery service and UberEats’ entry.
Foodpanda has also made major moves, as by the end of 2016, it had quadrupled the orders it received and expanded its reach to 40 countries after being acquired by Delivery Hero.
We caught up with Foodpanda’s new managing director Luc Andreani and head of marketing for Singapore, Laura Kantor to reflect on the company’s growth from a startup to a global company, on the sidelines of the company’s rebranding party to mark its fifth year anniversary.
One of the company’s initial challenges, Andreani explains, was when Foodpanda was building its mobile application a few years ago, it realised that in developing Southeast Asian markets in Vietnam, Thailand and Philippines, customers discovered the Internet through mobile. But in Singapore, which is more developed, the share of desktop users was very high.
“So for us, switching from a majority of orders coming from desktops to our mobile application was also a big challenge, because we needed to build a more solid app than what we had in the beginning,” the Frenchman says, declining to provide any specific figures on its delivery figures.
In spite of its global expansion, Singapore and Asia still holds a great deal of significance for the company, adds Kantor, as it is where a lot of the brand’s strategy is developed. “We have also taken a lot of insights from here and we found that a lot of the trends started in Singapore, which we then replicate in other markets.”
Even though both Andreani and Kantor agree that the start-up mindset is still present in Foodpanda, they admit that the company cannot behave like one anymore because it has reached adulthood.
“In terms of spirit, we are super flat, the hierarchy is there, but we have an open office, where everyone can speak to everyone, interns can speak to me,” says Andreani. “There is no restrictions, rules or barriers and we strongly encourage people to take initiatives and proactively come up with their own ideas, spot problems, propose solutions and drive them from the beginning to the end.”
“I always say a month in Foodpanda feels like a year in any other company. We move at such fast speed, it is crazy!” quips Kantor, who previously held the role of account director at Ogilvy. “We are very hands on and one of the things I love about Foodpanda is we make decisions very fast, which is one of the things that was missing from my days in MNCs and agencies.”
“We have a meeting, we talk about something and if we decide to do it, we do it immediately. Most of the time it works out and if it does not, great, we learn from it and move on. That's one of the things that keeps us ahead in the market as well, is that we do not have to seek approval from 10 different people in different timezones. Luc can say go for it and we go,” she adds.
It is also very important to keep the start-up culture alive, Andreani explains, as when a startup grows, there is always a tendency to overstructure things from an organisation standpoint and to reach a stage of a lack of flexibility and adaptability. “I really do not want that, I want us to keep growing and maturing, but retaining the innovative and proactive features of a start-up.”
That said, the MD asserts that Foodpanda cannot behave like a start-up anymore as it does thousands of orders every month. “It is not a small business anymore because we have a lot of responsibilities in terms of quality of service to a lot of customers. With that comes a certain level of maturity, stability and processes that do not put us at the level of a start-up anymore. We cannot mess it up,” he says.
Andreani adds that Foodpanda is moving away from the early years where it was only firefighting all the time, which is a sign that the company is also getting more mature. Even though its processes are now well established, he says, there is still have a lot of work to do to meet immediate targets and achieve long-term improvements.
Kantor agrees with her boss, and notes that as a global business now, Foodpanda has to really focus on building its strategy and long-term marketing campaigns. “You are trained to do both because we are moving at such a constantly fast speed, and that has really been challenging for me because we have small, but efficient teams.”
“The business sets very challenging KPIs to hit as well, so every month we are trying to increase new customer numbers, loyalty of our customers and promote our newest restaurant vendors. So there is a lot of different priorities that we are trying to juggle, which is challenging, but fun,” she adds.
Even though it has a bigger budget for marketing and advertising spend now, Foodpanda takes a prudent approach when it comes to promoting itself, say both executives.
For example, for the its rebranding, where it changed its colours from orange to pink for its logo, its Singapore office, and uniforms and delivery bags for its 3,000-strong rider delivery fleet, it worked with Havas and W Communications for its out-of-home media buys and takeover of public spaces.
However, as it does not have a creative agency partner, all the rebranding creatives were done in-house, tapping into Kantor and Cindy Layardi (senior marketing manager, brand and strategy) experience from their previous agencies. Most of its creatives now comes from Berlin and it also has a design and creative team based in Bangkok.
Foodpanda also refuses to sell banners and ad space on its app, to keep the platform as clean and lean as possible. Instead, it makes up for the loss of ad revenue though selling ‘top spots’ on its app to vendors, financing services, data of its consumers purchasing behaviour and building partnerships with brands to provide unique offerings to its customers.
Explaining this approach, Andreani reveals that in the past years, Foodpanda engaged in inefficient online marketing where it splurged a lot on vouchers with very little optimisation.
While vouchers are something that Foodpanda still provide today, the Frenchman says the company only sends them to its most loyal customers. “Generally speaking, a healthy marketing setup means you need to focus your marketing dollars on acquiring customers, getting them to try your service and platform, and then, if they feel it is good enough, they will come back.”
“You cannot make them come back because you just keep offering them crazy vouchers. That is not organic, healthy and sustainable,” he adds.
Kantor jumps in at this juncture to point out that Foodpanda are not averse to working with agencies. “We love agencies, but it really depends on the brief and we will pitch it out if we need a fresh perspective.”
Looking ahead, the food delivery market looks set to get only more crowded and competitive for Foodpanda, with the likes of Deliveroo, HonestBee and UberEats now in the space.
However, while Andreani remains unworried by the competition and praised UberEats for bring on McDonald’s, he remarks that Foodpanda has already signed the likes of Starbucks, Burger King and Subway.
Highlighting the fact that Foodpanda will be launching its own digital wallet in Singapore very soon, he argues that as Foodpanda has always made investing in innovation and customer experience the core of its business, it will always be in demand.
It currently already has a similar wallet for its delivery riders. “We are the only player in Singapore that offers cash on delivery as a payment option and it is great for customers, and they love it,” says Andreani. “However, it is a nightmare for us from a logistics perspective because once the rider collects the cash, you need to collect it back, which takes a lot of time and effort.”
“So we launched a new development which allows us to connect directly to our riders' accounts and take the money that they picked up in cash, right away from their accounts. That solves the problems on both sides, which is an example of internal innovation.”
In addition, Foodpanda is also working on chatbots that can chat with customers because during peak periods it is hard for them to reach their call agents, so the the chatbot will answer at least 90% of the questions posed by customers while call agents are unavailable.
That said, Andreani is quick to stress that Foodpanda will only be launching the chatbot if improves customer experience, but if customers get frustrated because they are talking to a robot, they will not do it.
The Frenchman also reveals that Foodpanda is working on drone deliveries and while there are no fixed timelines, it is looking launching it at end 2018 to early 2019. “The idea is to use that to massively expand the offerings and choice for customers in the heartlands because most of our vendors are located in central Singapore,” he explains.
“These vendors do not deliver everywhere, to Tuas, Woodlands and the far east like Changi. But if we have drone deliveries, we can actually bring the food from anywhere to everywhere.”
What is really going to differentiate Foodpanda from its competitors is efficiency, says Andreani. “A lot of our competitors in the market now are achieving a high level of customer service by having an oversupply of riders, which is extremely costly and not sustainable in the long term.”
“The future of industry is consolidation and the winner will be the biggest but also the most sustainable. If you have a lot of orders, but they are inorganic because you spend a lot on marketing and your logistics set-up is highly inefficient. That is a fight between competitors that customers do not see.”
He points to Honestbee as an example, noting how they are spending an ‘insane’ number of vouchers for customers, charging very low commissions to vendors and paying their riders a lot amount of money even though they only have an average of orders per rider. “It looks great and attractive for customers, but is absolutely not sustainable,” he asserts.