The tense and unpredictable online food delivery market in Vietnam

Updated: Aug 16

According to statistics released by Gojek in Ho Chi Minh City and Hanoi, F&B businesses had a significant recovery and growth in food ordering services through apps. the number of orders via GoFood (Gojek's ordering app) in Q1-2022 doubled over the same period. Especially in Hanoi, the growth rate is up to 220%. Notably, the frequency of online ordering increased by over 20% compared to the same period last year.


The online food delivery market in Vietnam was getting more active, with many new brands entering the market from different approaches. In 2018, Vietnam only had a few food delivery brands such as Now, Lala (disappeared from the market after a few months of operation), Vietnammm (later gained by Baemin), by 2022, there are at least 8 businesses in the industry.

Online food delivery developed well in urban areas, especially big cities such as Hanoi, Ho Chi Minh City, and Da Nang, with a high amount of drivers and orders. The F&B market is growing well, there were more and more restaurant with many types of services, giving users various choices.


Applications compete fiercely through promotions, marketing and media. As a result, users benefit from a variety of offers, can compare prices, and use offers they prefer among applications. Users benefited from this battle, but applications continued to suffer losses over the years because of the highly competitive market, low service fee revenue, small scope of service deployment, and the constant need to give promotions.





In 2021, there was a growth in the revenue of some new applications and the decline of some old enterprises. Grab, Gojek and Be are the three apps that reduced revenue due to fierce competition in the market. Thanks to the implementing of a series of incentives to attract new users, along with the non-stop expansion, Shopee food, Baemin and Loship have achieved growth in revenue.





In 2021, all enterprises in the market reported losses; The market also had a division in the growth of profits after tax of enterprises. Grab, Baemin, Gojek, Loship recorded increased losses in 2021, and Shopee food and Be had positive business results with reduced losses.

Vietdata would like to introduce to readers a detailed analysis and overview of the businesses in the market.


Grab GrabFood

After 12 years of operation and development, Grab application received many achievements in both Southeast Asia and Vietnam markets. Grab had over 100 million downloads on Google Play, ranked 1 in the top Food and Drink in Vietnam, and expanded its business to 43 provinces and cities in Vietnam. Although appearing after Now, GrabFood gradually rose and transformed at a dizzying speed. Grab is now a "super app" with many services including ride-hailing, delivery, bill payments... They allowed Grab to attract and keep customers at a very low cost, while they could bring more and more value to their shippers.


After a period of development and constantly offering promotions, Grab began to gradually reduce promotions and increase the minimum discount value per order to encourage users to order in groups, increasing the value of each order. Recently, Grab increased service prices and surcharges such as surcharges for rain, hot weather, night services, etc. However, users did not support it since there were no applicable standards, and the surcharges was not 100% transferred to the drivers.


Because of the impact of the Covid-19 epidemic along with competition from other brands, Grab's business results (including all Grab's services) in 2021 were not positive as revenue declines from over 3.7 trillion VND to just over 3.3 trillion VND. From a profit after tax of about VND 240 billion in 2020, Grab lost over VND 300 billion in 2021.


Now - ShopeeFood

After linking with Shopee in August 2020 and launched a series of promotions, Now is regaining its position in the online food delivery market. Now owns a system of over 160,000 restaurant partners spread across 16 provinces, with over 84,000 restaurants in Ho Chi Minh City and over 41,000 restaurants in Hanoi. After changing its name to ShopeeFood, Now will merge with the brand and take advantage of the e-commerce ecosystem (Shopee), payment (ShopeePay), delivery (Shopee Express) and gave the users more conveniences.


ShopeeFood app currently had over 5 million downloads on Google Play, ranked 3rd in the top food and drinks apps on the App Store. ShopeeFood also appeared on the Shopee app, which is ranked #1 for Shopping on the App Store and owned over 50 million downloads on Google Play. This association brought a strong effect for Now with the number of frequent Shopee users and the brand value that Shopee already had.


Since the successful association, Shopee Food's revenue had increased sharply (to over 40% by 2021) and gradually strengthened its position in the online food delivery market. The revenue of Foody (the parent company of Shopee Food) from over 860 billion VND had reached over 1.2 trillion VND in 2021. The company's profit after tax from -1,500 billion VND in 2020 decreased to nearly -590 billion VND in 2021.


Baemin

Baemin appeared in Vietnam later than other online food delivery applications, but quickly gained a strong stand in the market and made Grab and ShopeeFood wary. Baemin has a "slow but steady" business strategy that went against what other apps were doing. If other apps deployed across the market or a region, Baemin concentrated all their forces on a single area, developing district by district and then spread to other regions. Following this strategy, although Baemin has only been deployed in Ho Chi Minh City, Hanoi and most recently Da Nang, it had become a formidable opponent of other apps.


Although Baemin focuses 100% on food delivery, they surpassed other competitors and ranked 2nd in top food and drinks apps on the App Store, owning over 1 million downloads on Google Play. Using a marketing strategy with funny content and unique images, Baemin is loved by young people.


With the backing of the unicorn Woowa Brothers (parent company), Baemin has a solid foundation and many breakthrough opportunities in 2021. Woowa Brothers' revenue in 2021 increased by 70%, from about VND 440 billion up to nearly 750 billion VND. This was considered a high revenue for a company operating only online food delivery in only two cities, even higher than Gojek's total revenue. Although revenue increased sharply, Baemin's profit after tax did not change significantly, remaining at around 1,500 billion VND.


Gojek – Gofood

In other countries where Gojek is operating , Gojek has always been a strong competitor to Grab, but in the online food delivery market in Vietnam, GoFood is weaker than Now and is gradually being overwhelmed by Baemin.


In Vietnam, Gojek also achieved certain achievements. This super application had connected over 150,000 driver partners and 80,000 restaurant partners. Gojek reached over 100 million downloads on Google Play, ranked 1st in the top travel apps on the App Store. In 2021, Gojek continuously offers new programs to suit user needs. In Q1-2022, the number of new Gojek users increased sharply, the new user growth rate reached over 160% in Hanoi and 80% in Ho Chi Minh City. Gojek also recorded that the number of orders on GoFood increased over doubled in the first three months of 2022 compared to the same period last year, and the number of orders in Hanoi increased by over 4 times.


The great competition in the market and the influence of the social distancing period also make Gojek's business results in 2021 somewhat dismal (revenue and profit after tax as reported by Gojek, including all services). Gojek had a decline of about 19.2% in revenue and after-tax loss increased by 36.7%. Gojek's revenue from nearly 570 billion VND decreased to about 460 billion VND. The company's profit after tax was also strongly affected, from -670 billion VND to about -1000 billion VND.


Be - Befood

Officially launched in December 2018, Be quickly expanded its operation area to 27 provinces and cities in early 2021. From an application that only provided transportation services, Be had now developed a range of diversified services suitable for Vietnamese people, such as delivery of goods, food, buying airline tickets, mobile, 3G, 4G top up, insurance etc. and even selling lottery tickets directly on the app. In 2019, Be stopped the beFood service because of financial inefficiency, but officially resumed operations in 2022, after recovering and growing market share strongly after the pandemic.


After only 4 years of operation, Be had been downloaded on 15 million mobile devices with over 300,000 drivers. Became the 2nd application in the top navigation applications (following Google Maps) on the App Store. Be received the award "Best Open Technology Platform Vietnam 2022" from the international magazine Global Business Review. Besides, Be is also one of the applications with the most various payment methods, including cash, 5 e-wallets, cards, and VPBank's Cake digital bank. Be is constantly developing its ecosystem and combining with other businesses to integrate services into the Be application, aiming to become a super app soon.


In 2021, Be recorded a drop in revenue (-23.8%) and a drop in after-tax loss (21.9%). Be's revenue in 2020 was nearly 480 billion VND, equivalent to a profit after tax of about -490 billion VND. Be's revenue in 2021 was severely affected because of the epidemic's reduction to only about 366 billion VND but only lost nearly 380 billion VND in 2021.


Loship – Lofood

Unlike other foreign-invested enterprises mentioned above, Loship is a start-up from Vietnam. Although starting later than other businesses in the market, by launching a series of discounts and constantly expanding, Loship had quickly achieved initial successes. Loship had over 1 million downloads on Google Play, ranked 4th in the top food and drinks apps in the App Store.

Recently, Loship announced successful fundraising of 12 million USD in Pre-Series C round by BAce Capital. By October 2021, Loship was discussing with Japan's Daiwa Securities Group and other investors to raise $50 million in a Series C funding round. However, according to DealStreetAsia, Loship is seeking funding debt financing instead of a series C funding round. Loship's shift to seeking financial loans partly showed the caution of this startup itself, as well as venture capitalists, when the economy had many uncertainties.

As a rookie in this very competitive market, Loship still successfully doubled its revenue in the period 2020-2021. From VND 48.1 billion at the end of 2020, Loship quickly increased to over VND 143 billion. With the ability to raise capital quickly, the company also spent strongly to gain market share and increased its after-tax loss to 238% in the same period. The company's profit after tax in 2020 was -89.2 billion VND and increased to -301.6 billion VND by the end of 2021.


Ahamove – Ahamart

Only entering the online food delivery market since November 2021, Ahamove had a large driver team with over 30,000 drivers and strong capital from Giao hang nhanh. Lalamove previously entered the online food delivery market, but quietly withdrew after a few months. Will Ahamove successfully develop the food delivery business and compete with other brands?


Ahamove had over 1 million downloads on Google Play, used by over 100,000 business owners for deliveries in Ho Chi Minh City and Hanoi. Ahamove is well-regarded in the freight segment, but in the food delivery market, Ahamove needs a good strategy to not be left out.



According to the Report on Southeast Asia Digital Economy 2021 published by Google, Temasek and Bain & Company in 2021, the Transportation and Food industry in Vietnam is forecasted to reach a profit of $5.7 billion and grow 24% by 2025.


The food delivery market in Vietnam is a fertile land, but the market is in a fierce battle and only for businesses willing to spend money. In this fierce competition, applications are predicted to continue to suffer losses soon.


The faster businesses expand their service frameworks and restaurant partners, the more successful they are at building user loyalty. Cashless payment is constantly developing in Vietnam, online food delivery applications should work with e-wallets and digital banks, diversify payment methods for orders. User experience and application interface are also important factors that businesses need to invest in developing to better keep customers.


Source: Vietdata financial platform