foodpanda to expand grocery delivery to Japan, South-east Asian frontier markets

FOOD-delivery player foodpanda will expand pandamart, its network of cloud grocery stores, to four new markets this year - Japan, Laos, Cambodia and Myanmar.

The company said on Thursday that the move is part of its aggressive push into the booming grocery delivery sector, Abhishek Sahay, director of new verticals at foodpanda, told reporters at a virtual press briefing. He declined to provide a specific timeline or details on the number of stores to be opened, citing that these were still in the works.

Explaining foodpanda's focus on grocery delivery, Mr Sahay noted that with Malaysia's Movement Control Order, the firm noted a 70 per cent month-on-month surge in grocery orders in January.

"What's really undeniable is that this space is beginning to explode. We think that 2020 was a tipping point for online groceries… We are very confident that it's going to be growing exponentially across all our markets," he said.

foodpanda already has food-delivery operations in the four markets where pandamart is slated to launch. It most recently started its food-delivery service in Japan in September, which means that the company will be growing both its food and grocery-delivery verticals there simultaneously, Mr Sahay said.

When asked about the impact of the political turmoil in Myanmar on its operations, he added that foodpanda is monitoring the fluid situation.

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A cloud grocery store is a small-scale warehouse purpose-built for grocery delivery with no retail front, from which items can be packed and delivered directly to consumers' homes.

foodpanda launched its first pandamart warehouse in Singapore in October 2019. Since then, it has expanded to 150 pandamarts across seven other markets: Malaysia, Thailand, Taiwan, Hong Kong, Bangladesh, Pakistan and the Philippines.

As The Business Times reported last month, foodpanda, alongside rivals Grab and Deliveroo, invested substantially in grocery-delivery capabilities in 2020. In Singapore, pandamart started out with five warehouses, and rapidly grew this network to 14.

When asked if demand for grocery delivery could fall with the easing of Covid-19 restrictions, Mr Sahay said that pandamart has a high customer retention. He also acknowledged that the cloud grocery business is investment-heavy, but said that foodpanda aims for efficiency.

"It's a bit different from our food-delivery business, where there's not a lot of capex involved. Over here, there is some element of capex involved but because of our operational efficiency, because of our tech infrastructure, we are able to really, really optimise every dollar."

"It's important to note that at the scale at which we operate, if you spread over the technology costs across so many orders, on a per order level, it's quite manageable. As a company we're always focused on sustainable growth and the path to profitability is quite clear for us; otherwise we would not be so bullish on the business."

When asked if foodpanda could move into opening traditional grocery stores, combined with delivery, Mr Sahay said: "Right now, our plan is not that; pandamarts are really purpose-built for delivery."

He later added: "But never say never."