Will Vietnamese firms miss the food delivery bus?

By Vien Thong   July 23, 2018 | 10:00 pm PT
Will Vietnamese firms miss the food delivery bus?
The food delivery market is now a fertile ground for businesses in Vietnam. Photo by VnExpress
As foreign firms carve out large slices of the food delivery market pie, Vietnamese firms might have to settle for crumbs, experts say.

The Association of Vietnam Retailers says that there has been an exponential increase in the number of people ordering food online in Hanoi and HCMC in the last few years, and it is foreign firms that are cashing in on delivering it.

The food delivery market is now dominated by Delivery Now, and Vietnammm.com.

Delivery Now is a product of Foody Corporation, once a Vietnamese food service startup that was acquired by Singapore-based internet firm Sea LTD last year, while Vietnammm.com is a subsidiary of Takeaway.com, one of the world’s largest online food ordering websites based in the Netherlands.

Invested in by Ho Chi Minh City-based Scommerce Group, an information technology and services firm, Lala is considered a rising star in food delivery sector by industry insiders, having the advantage of hi-tech knowhow from its parent firm.

Lala connects its users directly with restaurants before its shippers from Ahamove, also a child of Scommerce Group, delivers food.

Delivery Now has already gained great popularity in the country and GrabFood poses a serious threat, Vu Hoang Tam, co-founder and director of Lala, said.

“Obviously, GrabFood is already equipped with an army of drivers, which makes it so easy for its delivery service” he said.

Two months ago, Malaysia-based ride-hailing firm Grab launched GrabFood in Ho Chi Minh City.

Apart from Malaysia and Vietnam, GrabFood is now available in six others countries in Southeast Asia: Singapore, Indonesia, Cambodia, Myanmar, the Philippines and Thailand.

But GrabFood also has certain weaknesses as it does not link customers with restaurants. Its drivers are simply hired to go to the restaurants and bring back the food requested by customers.

There is an element of risk involved for the drivers, who have to pay for the food first and collect payment from customers later.

Currently invested in by Hanoi-based tech firm VCCorp, eat.vn and chonmon.vn are the two names getting known in the food delivery market these days.

While chonmon.vn targets local customers, eat.vn focuses on serving expats and foreign visitors to Vietnam.

“If a fierce battle started around 4 years ago for the ride-hailing service in Vietnam, it is time now for a yet another battle in the food delivery market,” a company representative told VnExpress.

However there are fears that despite the strong growth of the industry, local firms could be pushed out of the game, leaving the field exclusively for foreign investors.

Do Xuan Quang, deputy head of Vietnam Logistics Business Association, said Vietnam was the fastest growing e-commerce market in Southeast Asia, and along with the strong growth of the logistics industry at 15-20 percent, a similar movement in the delivery market is not surprising.

In 5-10 years, the delivery market in Vietnam will be valued at around $10 billion, he said.

This is clearly a fertile ground for businesses but if Vietnamese firms do not prepare themselves for the race, they will repeat the failure of the logistics sector, allowing foreign companies to take over the market, he added.

U.K.-based market research firm EuroMonitor International values the food delivery market in Vietnam at around $33 million this year and at more than $38 million in 2020.

It also puts the annual growth rate of the market at 11 percent.

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