SEA food delivery spending tops $16.3b in 2022: report

In 2022, Southeast Asia’s food delivery expenditure reached US$16.3 billion, growing by 5%, a report by Momentum Works showed.

For the first time in three years, this growth was largely driven by smaller food delivery markets, namely the Philippines, Malaysia, and Vietnam. Meanwhile, Singapore, Indonesia, and Thailand recorded a decline in gross merchandise value (GMV) in the past year.

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Among incumbents, Grab accounted for 54%, or US$8.8 billion, of  Southeast Asia’s food delivery GMV in 2022 – a 16% jump from in 2021.

Meanwhile, Foodpanda contributed 19%, while Gojek and Shopee maintained their previous year’s levels at US$2 billion and US$0.9 billion, respectively. Overall, the report suggests that firms are starting to prioritize profitability.

Image credit: Momentum Works

“[Food] delivery players are experimenting with a variety of strategies to improve delivery margins and strengthen consumer loyalty via advertising, subscription programs, and more. We believe profitability is attainable with volume, density, and operational efficiency,” Momentum Works CEO Jianggan Li said in a statement.

Besides this, the firm highlighted several other trends.

Companies have pivoted away from unprofitable markets and cost-intensive business models, including dark stores for groceries and dark kitchens for food delivery.

According to Momentum Works, this trend is expected to continue in 2023, with Shopee’s plans to focus on ecommerce and DeliveryHero’s potential exit from some of SEA markets.

In addition, incumbent players have been creating advertising products to attract merchant investments and diversify revenue streams. On the consumer end, companies are also looking at subscription models to increase orders of larger basket sizes.

See also: Oddle built a profitable food delivery business. Here’s how