Wednesday, 2024 April 24

Unraveling the q-commerce blitz: Foodpanda’s Raphael Zennou on the emergence of quick commerce in Asia

There are few sectors that can be as significantly enhanced by technology and innovation as commerce. The trajectory from retail to e-commerce highlights this perspective. In the pursuit of speed and immediacy to keep up with evolving consumer trends, commerce companies have innovated in recent times to deliver goods more quickly and conveniently to their customers, most notably through doorstep deliveries.

While the world has largely embraced e-commerce, the paradigm shift in commerce has not halted. Instead, commerce appears to stand at an inflection point, now taking a relentless turn toward the realm of q-commerce, short for quick commerce. Consumers are no longer consistently satisfied with the convenience of receiving their purchases within days—the demand is growing for swifter deliveries.

Foodpanda (stylized as “foodpanda”) understands this transition well. As one of the leading food and grocery delivery platforms in Asia, the company responded promptly to the recalibration of consumer expectations with the introduction of Pandamart (stylized as “pandamart”) in 2019. Pandamart is the hybrid of a cloud-based grocery store concept and an on-demand delivery service, and it is ostensibly a pioneer of q-commerce, promising to fulfill deliveries as quickly as 25 minutes.

In a recent interview with 36Kr Global, Raphael Zennou, vice president of quick commerce at Foodpanda shares insights into the transition toward q-commerce, how Foodpanda has approached the concept, and upcoming developments we can expect in the q-commerce space.

The following interview has been edited and consolidated for brevity and clarity.

36Kr Global (KR): Pandamart was launched over four years ago. How have expectations for q-commerce changed during this period, and how has Pandamart evolved accordingly?

Raphael Zennou (RZ): Foodpanda and our parent company Delivery Hero pioneered the concept of quick commerce globally. Q-commerce is at the center of our growth strategy in Asia. In 2019, even before the pandemic, Foodpanda launched its first Pandamart cloud grocery store in Singapore and Taiwan, and partnered with thousands of retailers and small and medium enterprises.

Within four to five years, we’ve invested significantly in and grown q-commerce. Today, Foodpanda operates Asia’s largest q-commerce network, with around 180 self-owned Pandamart cloud stores in 11 markets, and 45,000 retail partners across the region.

With customers returning to physical stores post-Covid-19, there is an expectation for the online shopping experience to be enhanced, with an easier user journey and a wider availability of options. To meet evolving consumer demands and offer more convenient access to essential items, Foodpanda recently launched the self pick-up feature in Pandamart. Currently available in Hong Kong, Malaysia, and Singapore, this feature enables customers to self-collect their groceries or have them delivered within the hour—providing customers with flexibility in how they receive their orders.

What we’ve also learned is that customer expectations have evolved and most of them are satisfied with a delivery time between 30–45 minutes. There is a shift toward buying more fresh produce, instead of snacks and beverages.

Giving customers the option to self-collect their orders is part of our wider strategy to advance online-to-offline (O2O) commerce and continue creating new shopping experiences that address evolving customer preferences.

KR: What’s the criteria used to determine which retailers Foodpanda works with, and which products (or product categories) specifically?

RZ: Across our partnerships, our criteria is relatively simple: how can we collectively offer our customers more choice and convenience, and quicker access to the items they need?

In other words, we look for partners who can offer a strong value to our customers in terms of large assortments, competitive pricing, and also great customer service.

Our latest partnership with DFI Retail Group aims to offer consumers a one-of-a-kind shopping experience that is fast, fresh, and fuss-free. We now offer delivery within an hour for nearly 20,000 grocery items from Cold Storage, CS Fresh, and Giant, reaching nearly 95% of Singapore customers. The Yuu Rewards Club is part of this partnership, to help customers in Singapore earn points for benefits when they shop online. Together, we can cater to a wider variety of customers, support their needs for different products and delivery preferences, and increase access to the same items offline and online.

A few years ago, we started partnering with Unilever to provide on-demand deliveries, round the clock and within 25 minutes. Pandamart customers in Singapore, Malaysia, Thailand, Pakistan, and the Philippines can choose from over 20 varieties of ice-cream products from major brands like Ben & Jerry’s, Magnum, and Walls. Ice cream is a common impulse purchase and one of the most expandable categories—it was a clear opportunity. Through offering on-demand deliveries, our partners cater to more customers and their different needs, while also improving the shopping experience by providing shorter wait times.

Our partnerships should benefit our retailers too. For instance, being able to provide faster deliveries helps them meet a wider range of customers’ demands, such as last-minute ingredient refills, or urgently needed items like medicine. With Foodpanda, retailers are able to leverage q-commerce infrastructure without needing significant investments to set up a delivery ecosystem from scratch.

KR: What recent milestones have Pandamart achieved, and what future achievements is it looking forward to?

RZ: Since our first cloud stores were established in Singapore and Taiwan, Pandamart has become Asia’s largest network of cloud grocery stores, offering thousands of items from local brands and grocers. We are continuing to increase the number of cloud stores in all countries and aim to eventually cover every city and zone, reaching all potential customers.

In addition, we’ve also invested in Foodpanda Shops (stylized as “foodpanda shops”), our retail marketplace, where customers can access over 50,000 stores and have their orders delivered within an hour. Earlier this year, more than 200 major retailers with a total of over 2,000 outlets have gone live on Foodpanda Shops, including Robinsons Easymart in the Philippines, Giant Mini and Aeon in Malaysia (Aeon Maxvalu, Aeon Wellness, and Daiso).

Traditionally, online purchases could only be delivered the next working day at the earliest, but with q-commerce, waiting times have become significantly shorter.

Foodpanda aims to continually invest in our Pandamart stores and expand our partnerships with retailers on Foodpanda Shops in the near future. We are committed to scaling up q-commerce across the region so that more customers can easily access groceries and everyday essentials.

KR: Pandamart promises deliveries within 25 minutes. How was this benchmark decided and how is it actively upheld?

RZ: The need for speed is the new norm, especially in Asia, where consumers typically live fast-paced lifestyles. Therefore, our service prioritizes swiftness, accessibility, and variety.

Customers can purchase items and receive deliveries on-demand. We want to use even smarter technology to power q-commerce. Be it food or groceries, that entails delivering anything customers need within an hour to their doorstep by leveraging efficient infrastructure and our reliable fleet of riders.

KR: There have been instances of customer dissatisfaction recounted online. While no service can be perfect, what adjustments or improvements have been made to address commonly faced issues?

RZ: As we deliver millions of orders every month, occasional issues are unavoidable, and a few of them may even become public knowledge.

While it’s true that no service is perfect, that does not mean that we don’t strive to be. And for Foodpanda, given the many externalities involved, the effort required to ensure a seamless order—from discovery, all the way to delivery—is immense.

Take Pandamart for example. Pickers will need to correctly (and quickly) pick the items ordered by the customer, and pack them accordingly (frozen items in chiller bags, fresh produce and food to be separated from non-food items). Our delivery partners will need to collect them at the right time—not too early so that riders don’t end up waiting for prolonged periods unnecessarily, and not overly late such that the freshness of items ordered becomes compromised. They then need to send the orders to the correct address, taking into consideration specific instructions that customers may have.

On top of these, there are also additional order-related elements to account for such as deals and discounts, voucher applications, and payment methods. All it takes is for one thing to not go as planned, and the customer experience will be imperfect.

We consistently work to improve the end-to-end experience, and this includes improving the ease of browsing and searching for products, enhancing product information and images to help customers make informed purchase decisions, and expanding the assortment of products available.

Additionally, we’re also continually enhancing our operations by improving our systems for picking and inventory stocktaking, and raising the standard of quality checks of products. Through these proactive measures, we’ve observed a continuous decline in reported issues, demonstrating that our efforts are benefiting our customers and that we’re on the right track.

KR: What role does technology and innovation play in enhancing the overall Pandamart experience for customers, merchants, and delivery partners?

RZ: Technology and data intelligence form the foundation of every Foodpanda offering. For Pandamart, this starts from determining a store location, to the products carried in each store, and how inventory is arranged for maximum picking efficiency, so groceries and household essentials can be efficiently packed and delivered on-demand to consumers. With location intelligence and data trend insights, Pandamart locations are strategically chosen to make grocery deliveries accessible to communities in both major cities and suburban areas.

Furthermore, consumers’ attention spans are getting shorter, so we use technology and innovation to simplify the average customer journey. For example, in mature markets like Singapore, consumers are generally spoilt for choice, so our tech focuses on brand differentiation for merchants, building and driving loyalty, and helping shoppers quickly find the items they need.

Being able to use the latest technology and innovation to offer better experiences comes from having a tech team tailored for the region. Singapore serves as our headquarters in Southeast Asia and is at the heart of our product development so that we can customize offerings in each market. Our intention is to not only ensure that Foodpanda services are available across all platforms (Android, iOS, and the web) but also as simple as possible. This includes constantly gathering customer feedback on changes or enhancements that they want us to implement, and how they can be realized. Listening closely to what customers want is important, and feedback can be a true gamechanger for fast-moving industries like ours. With our tech, we can be one step ahead of customers’ needs and continuously innovate to serve them better.

Foodpanda offers the Pandamart service in various Asian markets, including Singapore, Malaysia, and Hong Kong, among others.

KR: Describe the outlook for quick commerce in 2024 and beyond, and how Pandamart anticipates navigating this evolving landscape?

RZ: Q-commerce is the next generation of e-commerce and will only grow in demand—delivering anything our customers may need in 30 minutes or less. The Foodpanda Shops platform presents tremendous opportunities for retailers, big and small, and it is the first time that such a platform can offer direct access to retailers and enable them to sell “on demand” within 30 minutes.

2023 marks a turning point for Foodpanda and the on-demand delivery industry as a whole, as we shift from hypergrowth to sustained growth, with a focus on enhancing our unit economics.

In 2024, we expect our q-commerce vertical to continue seeing healthy growth. We have stayed attuned to the market, closely monitoring our customers’ preferences, and plan to develop new categories such as health and wellness, which we anticipate high demand for.

KR: Do you use Pandamart, and if so, what products do you typically purchase using the service?

RZ: Pandamart has been a lifesaver for my entire family! We buy all of our household essentials, from fresh produce like meat and seafood to pantry items, through the Foodpanda app. It offers remarkable convenience: just place an order, and everything arrives within 30 minutes, eliminating the hassle of hauling groceries from the supermarket.

Our house brand’s offerings under the “Bright” label are also a hit with the family, as it provides excellent value for money. I also turn to Foodpanda Shops for more unique needs, such as indulging in my favorite French delights or for grooming and personal care products.

36Kr Global Writers
36Kr Global Writers
The tech ecosystem is roaring. Unicorns valued at billions of dollars have emerged worldwide, while venture capital and strategic investors are constantly on the lookout for the next big thing. 36Kr Global is committed to establishing ties between global stakeholders and providing the most vital information about China’s tech scene and capital markets.
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