Why delivering your takeaway pays for platforms – but it’s expensive

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Hi readers,

One of the things I enjoy most about my gig with Tech in Asia is that I’m always learning something new.

While I studied finance and have worked in the industry, I had never come across the concept of negative revenue before. Negative profit? Par for the course in the tech industry. Negative EBITDA? Sure, that happens too. But I must admit to doing a double take when I saw Grab’s deliveries business reporting negative revenue (US$638 million) in 2019.

Turns out that this was the result of accounting rules, which require excess incentives for Grab’s driver and merchant partners (i.e., incentives beyond what it earns from them) as well as incentives for consumers to be deducted from the company’s adjusted sales figures.

For consumers, the proliferation of these platforms has been terrific, especially amid these pandemic-induced lockdowns. But the story gets more complicated when it comes to drivers and restaurants.

Drivers are not considered employees, so they lack many of the protections that they would otherwise be entitled to. Restaurants, on the other hand, complain that platforms take too high a commission. But as we can see from the numbers, it does require heavy investment to build a food delivery platform.

Happy reading – and eating!

— Simon Huang, journalist at Tech in Asia

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