Foodpanda doubles down on quick commerce with house-brand grocery products 

FOOD-DELIVERY platform foodpanda is making a fresh push into the online grocery market, with a new campaign for its house brand Bright kicking off on Monday (29 Apr).

The platform is doubling down on what’s been called “quick commerce”, which emphasises quick deliveries, typically in less than an hour. This comes at a time when competition in e-commerce is stepping up. Its investment in a house brand also comes on top of a wide range of groceries already available on its platform under a tie-up with retail giant DFI.

Rival food-delivery platform Grab also offers a version of quick commerce, with a range of name-brand groceries, packaged food and household essentials available for delivery within two hours. This is slightly longer than pandamart, which offers delivery within half an hour.

Kevin Zagolin, director of quick commerce, foodpanda Singapore, told The Business Times that the group’s Bright line will be defined by two key criteria: affordability and volume.

Inventory is stocked at foodpanda’s dark stores – hubs that carry stock for riders to pick up and deliver. Other rivals in the quick-commerce space have taken to finding supermarket partners rather than maintaining dark stores. Grab, for instance, shuttered its dark stores in Singapore, Vietnam and Philippines in 2022.

Data from foodpanda’s operations and commercial teams along with insights from the industry help to decide if a product can be launched under its Bright brand. Products should be “locally relevant” and convenient.

To test demand, the company has been putting out products in trial batches since 2021. This has led to Bright products such as durian being available all year round for the Singapore market, and best-sellers such as pre-cut coconut emerging. With Bright, foodpanda claims that customers can save up to 25 per cent compared with name-brand products.

The timeline for launching a product can vary from as short as three months for some food products. Volume is an important factor for viability. Foodpanda has killed off Bright products for not meeting expected volumes.

“We find which products to launch, which features it should have, which price points we need to hit – we need to hit all three principles before we determine which products to launch,” said Zagolin.

Bright has three sub-brands under its belt: Brightfarms for fresh produce and meat, Brightyums for packaged food and ready-to-eat meals, and Brightspots for cleaning and household essentials.

The line has been retailing on foodpanda’s quick-commerce offering, pandamart, and now stocks 250 products in Singapore. About the same number of products are available in the Malaysia version.

Across the Asia-pacific region, Bright carries over 1,200 products in eight countries, with Singapore and Malaysia having the widest range.

In 2021, the first three Bright products were offered – eggs, tissue paper and water. The idea was to test different products in different categories, and these represented low-risk products that would have high volume and could reach a critical mass in sales.

“These are also products where customers might care a little less about the brands. It makes less sense to enter products where customers care a lot about the brand, and won’t deviate from what they know,” said Zagolin.

These efforts have paid off for foodpanda. Bright is now the No 1 brand in pandamart, and 50 per cent of the platform’s orders include at least one Bright product.

Deepening foodpanda’s Bright product line might seem to be putting it in direct competition with its partner DFI Retail Group, whose supermarket stocks at Cold Storage and Giant stores are available on foodpanda for delivery within an hour.

But Zagolin said the brands are serving different purposes. With DFI, customers would be looking for the weekly or bi-weekly grocery trip with access to a wider range of products.

“With pandamart and the private label, we are going after the mid-week grocery top-up that is round the clock and hyper-convenient, with small to medium basket size,” he said.

Food-delivery players have an edge over e-commerce and independent players in quick commerce, noted Li Jianggan, founder of consultancy Momentum Works.

“They already have the local on-demand fulfilment infrastructure, including the fleet, technology, maps and routing as well as scale,” he said.

Private-label or house-brand products offer higher margins or up to two times compared with brand-name products for retailers, according to a McKinsey report. Such products could aid in foodpanda’s path to profitability, improving per-order economics, but the picture in quick commerce is more complicated, said Li.

“Higher-margin items might not be the most frequently ordered, and frequency is a key to make the fleet and warehouse efficient,” he said.

To make quick commerce sustainable, Li reckons that volume, density and operational efficiency are key factors. Foodpanda’s focus on volume for its Bright house brand appears to be on the right track.

“These three areas are correlated and quite often have to be figured out across the different demographic, infrastructure and topographic characteristics of each city that they operate in,” said Li.

The biggest constraint foodpanda faces with the Bright house brand will be the need to keep products affordable.

“Every time we launch a new product, we need to do research, get the right partners, and get the products right to hit the right price point we know that customers will be interested in,” said Zagolin.