Week in Review: foodpanda’s focus on profitability is something to chew on

  • IPO more likely route for investors to exit than trade sale
  • Unlikely that India’s startup feeding frenzy will hit SEA

Week in Review: foodpanda’s focus on profitability is something to chew onHAVING built itself a US$310-million runway, it was interesting to see how the Rocket Internet-seeded foodpanda is now talking up its path to profitability.
 
In fact, I was quite stunned to note its senior executives claiming that every single order is profitable, on a variable cost basis, across all its South-East Asian markets, and that most of those markets are on the brink of profitability.
 
This journey to profitability is even more impressive in Singapore where foodpanda has a pool of 2,500 riders (most, if not all, part-timers though), and 12 competitors with similar business models!
 
And wait till some of the players add surge pricing as well. That’s going to be really interesting.
 
As I highly doubt the Singapore-headquartered startup will be able to execute a trade sale, I am really looking forward to it going for an eventual listing so that we can all dissect its numbers and find out the recipe for its profitability secret sauce.
 
What’s also interesting is that you can already hear the language of a dominant platform player in some of the comments made in the article.
 
It may have started out as an online food ordering and delivery service, but as it gets more restaurants on its platform in each country, and more users, the mobile-focused foodpanda is clearly aiming to become a platform player where it can set the rules as well.
 
An early harbinger of this is that it already screens restaurants for ‘quality,’ which can only mean how their food tastes.
 
I wonder how restaurants will take to a food delivery service that approached them with a value proposition of expanding their customer base, now telling them to improve the quality of their food and overall service!
 
Meanwhile, reading into the tea leaves of foodpanda’s focus on profitability, I am wondering if investors in startups targeting emerging markets, South-East Asia and greater Asia – who used to have seven- to 10-year horizons for their investments to mature – have tightened their visions now.
 
The Brexit fallout that now adds to slowing global growth doesn’t help much either. And while just a year ago Khailee Ng of 500 Startups had predicted a feeding frenzy among investors for startups in South-East Asia, I now seriously doubt that will happen.
 
It’s not that the money is not there, it’s just that investors will be more circumspect before making their bets – which means, the funding bar has just got higher for startups.
 
Have a restful weekend and a productive week after, and for those still in the Eid al-Fitr mood this weekend, enjoy the festivities!
 
Editor’s Picks:
 
Millions of Asean jobs at risk from automation: UN body
 
foodpanda says it’s on the path to profitability in SEA
 
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Review: BenQ W2000 projector, IMAX in your home
 
Digerati50: Turning broadcast TV on its head
 
 
Previous Instalments:
 
Week in Review: Telco challengers to the fore
 
Week in Review: SEA e-commerce claims another high-profile victim
 
Week in Review: More moolah for SEA startups, and Digerati50 2.0 is up!
 
Week in Review: Should the CEO be a chief pivoting officer?

 
Week in Review: Adapting to the digital reality

  
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