Food delivery services: From odd job to the most in demand

The minimal contact and social distancing behaviours have forced people to adjust their preferences and go for services that provide digital solutions and options


ONCE considered an odd job, food delivery services flourished in 2020 and have become a significant part of the new norm.

As Malaysia struggles to grapple with the massive economic disruption caused by the Covid-19 pandemic, businesses that are digital-oriented gain momentum.

Notable companies like Grab Holdings Inc and Foodpanda Malaysia Sdn Bhd have been serving Malaysians for many years now, and their importance has elevated during the pandemic.

An Essential Service

When the Movement Control Order (MCO) was implemented in March, food delivery riders were hailed as frontliners, keeping what was left of any economic activity running.

By April, over 40 companies were allowed to operate as usual during the MCO period in Ramadhan.

It was seen as an emerging force, as the demand for related services is expected to remain high even after the pandemic.

While the country’s unemployment rate jumped to 3.9% in March, the freelance digital-based services saw an uptake, said economic analyst Dr Aimi Zulhazmi Abdul Rashid.

“The adaptation and adoption rate to the digital economy or gig economy now has been tremendous by all levels,” he said.

The minimal contact and social distancing behaviours have forced people to adjust their preferences and go for services that provide digital solutions and options.

Foodpanda MD Sayantan Das said there was a 7.5% increase in new riders during MCO and a 37% increase in rider applications.

He believed the demand for online delivery service will continue to rise.

Protecting Workers

With the sector thriving, there is a need to provide more protection to gig workers.

The Malaysian Employers Federation ED Datuk Shamsuddin Bardan said the lack of protection can be addressed by creating awareness and promoting best practices among various stakeholders.

“The government must introduce new laws or an insurance scheme for independent workers to contribute towards the Social Security Organisation (Socso) and the Employees Provident Fund (EPF),” he said.

“Companies have to be stricter and only let those dedicated to contributing to the EPF and Socso to join them,” he said.

In response to Covid-19, Grab introduced its “Partner Protection Fund” and “Partner Relief Fund” to help active partners with their daily household expenses.

Presently, Grab offers EPF contributions of 5% on the amount contributed by selected driver-partners, subject to a maximum of RM80 a year.

Both the EPF and Socso allow gig workers to contribute voluntarily under their Voluntary Contribution with Retirement Incentive and Self-Employment Social Security Scheme respectively.

Growing Trajectory and Expansion

During the Recovery MCO, Dahmakan CEO and co-founder Jonathan Weins said as employees return to workplaces, the platform has been recording more deliveries.

GrabFood has also been enjoying a surge, with deliveries increased 30% compared to the previous week before the MCO.

“Merchant partners recorded a 25% increase in online revenue through GrabFood, while over 8,000 merchants signed up,” a GrabFood spokesperson said.

Over 100,000 GrabCar drivers supported deliveries as the transport business was heavily affected, with a 90% decrease in rides.

In September, almost 25% of food deliveries were completed by GrabCar drivers and over the period, the platform created earning opportunities for those in need with over 10,000 people joining Grab as drivers and delivery-partners.

The company has seen double-digit growth quarter-on-quarter.

Grab has expanded GrabCar, GrabFood and GrabMart coverage in several small towns in Peninsular Malaysia in the same month.

Meanwhile, Foodpanda revealed that between March and June, the total of its new riders had doubled compared to previous months.

“From March to July, over 20,000 new riders joined us.”

Foodpanda has ventured into daily grocery deliveries, called Shops, from over 3,500 vendors nationwide.

Vendors on Shops include Tesco, 7-Eleven, FamilyMart, Marks & Spencer, Watsons, Shell Select and Petron.

The service is also a launchpad for small and medium enterprises (SMEs) that are looking to move their businesses online.

Earlier this month, its new grocery delivery service Pandamart said it is set to have a warehouse in every major city nationwide.

It currently delivers out of warehouses to 25 locations, also known as dark stores, which are not open to the public.

Foodpanda dark stores director Ashutosh Gandhi said Pandamart offers over 3,500 items from over 100 local and international brands.

The platform will expand to Seremban, Negri Sembilan; Ipoh, Perak; Johor Baru; and Melaka this month.

New Players

With no signs of slowing down, more players are turning up to shake the ever-growing food delivery services scene.

New player EatLokal was developed to be a community-focused group that can disrupt the digital landscape while improving the quality of service, pricing and approach to food delivery services.

Its CEO Stephen Francis said the platform began offering early access to the public across the Klang Valley in July within a 5km radius of the restaurant.

Some of the famous eateries onboard include YMT Healthy Vegetarian, W1 Dining & Cocktails, Concubine KL, Asian Rice Pot, The Locker & Loft and The Accidental Bakers.

In October, Perak became the first state to launch the Warong Rider delivery service in an effort to support SMEs and help generate employment opportunities for youths.

The initiative was launched by the state government in collaboration with the Federation of Malay Hawkers and Petty Traders Association, Idea Creative Technology and Digital Perak Corp Holdings.

The move is expected to create 1,200 jobs for Perak residents, especially the poor and those in the B40 group.

Warong Rider service differs from other delivery services as the fee imposed is far cheaper at only RM2 for the first 2km and 60 sen for a subsequent km.

Point-of-sale service provider StoreHub Sdn Bhd’s Beep Delivery is designed to make taking orders, accepting payments and finding drivers easy for food and beverage businesses.

StoreHub co-founder and CEO Fong Wai Hong believed that the platform can compete with GrabFood and Foodpanda through some of its key offerings including taking a lower percentage cut from stores for deliveries, as opposed to the current industry standard of 30% to 35%.