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Putra Muskita · · 7 min readWill ShopeeFood bulldoze its way into Indonesia’s food delivery scene?
The motorcycle jackets are out and so are the Instagram ads – Shopee has quietly launched ShopeeFood in Indonesia.
Food delivery is not new territory for its parent firm Sea Group, as shown in its US$64 million acquisition of Vietnam’s Foody Corporation in 2017.
Foody operates Vietnam’s popular food delivery platform Now, which has been locked in a fierce competition with Grab in the country. Now reportedly failed in its expansion to Indonesia several years ago, and ShopeeFood appears to be a second chance for Sea Group.
Photo credit: Tech in Asia
It’s not yet clear how much of a threat ShopeeFood, which is built within the Shopee platform, will be to the incumbents: GoFood and GrabFood in Indonesia. The latter two companies have a head start and an edge particularly in terms of logistics. But if ShopeePay’s success in the country is any indication, the firm’s new food delivery unit is looking to make a mark.
“Shopee has a track record of winning market share in whatever they pursue,” says Sachin Mittal, a Sea analyst at DBS Bank in Singapore. “It’s a matter of concern for others.”
Sea Group declined to comment for this story.
Why food delivery
The overarching question here is why would Shopee enter food delivery at all?
First, the business is largely an efficiency game with thin margins – China’s Meituan-Dianping is profitable, but many players like Deliveroo, Uber, and Grubhub are not.
Second, existing players GoFood and GrabFood already own a large swath of Indonesia’s market share, having kicked Rocket Internet’s Foodpanda out of Southeast Asia’s most populous country in 2016.
Still, that does not mean Sea isn’t looking for new growth outside gaming and ecommerce, its two largest businesses.
In 2020, Sea Group was EBITDA positive, but that is largely thanks to its gaming arm Garena. Shopee – already the ecommerce leader in Indonesia – continues to see and expect strong growth, but its EBITDA loss did widen in 2020.
“Their numbers are there for the world to see, and what do investors want to see from a business that’s not profitable [like Shopee]? They want to see top-line growth,” says a source who closely monitors one of the region’s ride-hailing unicorns.
Should Gojek and Grab worry?
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ShopeeFood is expected to come with Shopee’s customary cash burn and incentives blitz. But GoFood and GrabFood may have enough to withstand the onslaught.
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