Digital economy: Foodpanda eating its way into online ordering business

Arrival of 3G mobile spectrum to spur growth even further.

KARACHI:

With Pakistan recently embracing mobile broadband technology, the country’s internet penetration, as experts predict, will increase manifold and so will the opportunities for internet-based businesses.

However, there are some ventures – early movers who did not wait until the auction of third-generation (3G) mobile spectrum – that look set to benefit the most as the country transforms to mobile broadband technology.

One such name is foodpanda.pk, an online food-ordering portal that is bullish on Pakistan’s digital economy, which is all set to take off.

Entering the Pakistani market in January 2013, the food-ordering website has significantly expanded its footprint in what industry sources estimate to be a $15-million market.



The online portal is recording more than 60,000 visitors a month, according to its officials who refused to disclose their monthly revenue and the number of orders received in a day. They, however, said their mobile app is doing very well.

“We receive more than 65% of daily orders via the mobile app, which is ranked number one in the ‘Food and Drinks’ category on the App Store and 12 in the ‘lifestyle’ category on Play Store,” Foodpanda’s co-founder Aminur Rehman said in an email.

With a strong financial backing from its holding company Rocket Internet, one of the world’s largest internet incubators based out of Germany, the website plans to expand across Pakistan.

“The idea is to focus and build a solid traction first in the primary cities we operate in, and then expand successfully into other cities,” the co-founder said. Foodpanda currently operates in Karachi, Lahore, Islamabad and Rawalpindi, with limited presence in Hyderabad, Faisalabad, Peshawar, Multan and Sialkot.

Though important, Pakistan is only part of a bigger strategy for Rocket Internet’s local venture – the website is apparently on a journey to become a leading portal in the online food-ordering world.

“Foodpanda wants to be the Facebook of food ordering,” foodpanda.pk quoted its global managing director Ralf Wenzel as summing up the company’s game plan. The company, already operating in more than 45 markets, wants to be present in 50 countries by the end of this year.

As part of this strategy, the online food portal has acquired deliYami in Ecuador and Delivery Club in Russia. “Although we’re expanding aggressively on a global scale, the objective is to tap into undiscovered customer base by joining forces with leading players,” officials say.

Moreover, officials say foodpanda has raised more than $48 million in funding to date from renowned investment firms alone, which include Investment AB Kinnevik, Phenomen Ventures and iMENA Holdings.

Responding to a question about their business model, the co-founder said, “We work solely on a pay-per-performance model. The industry is very competitive and restaurants usually do not pocket more than 35% of the order value. So we work with them on attractive commission slabs between 15-20%.”

Though foodpanda.pk has already emerged as one of the top food-ordering websites in this niche market segment, there still a long way to go before it can reap the benefits of what is potentially an attractive market for businesses related to food.

The telecom service providers need to build the infrastructure that can provide sustainable and high-quality service all over Pakistan, officials say.

“With 10% to 12% of total mobile phone users now using smartphones, and more than 3 million broadband subscribers, the future looks even brighter and we’re ready with our 3G enabled next gen mobile app,” the co-founder said.

Published in The Express Tribune, August 4^th, 2014.

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