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Predict the Growth Rate of "Food Delivery" Service on Ride-Hailing Applications

Wednesday, 22 April 2020     View: 9755

Before the development of the Covid-19 outbreak in Indonesia, Google together with Temasek and Bain & Company in 2019 released a report on internet-based economic growth covering several industrial sectors, including e-commerce, media, ride-hailing, travel and finance. services in the countries of the Southeast Asia region. The report states that the ride-hailing sector or what is commonly referred to as application-based transportation or online transportation in Indonesia has the highest growth rate in the Southeast Asia region.

Indonesia in 2019 recorded a total GMV (Gross Merchandise Value) of US $ 5.7 billion and is predicted to reach GMV of US $ 18 billion in 2025, where this number has an average annual growth of 34%. One of the drivers of the rapid growth of ride-hailing in Indonesia is the growth of “food delivery” services that are available in almost all online transportation services, for example the Gojek application has Gofood services and the Grab application has the Grabfood service. Along with the outbreak of the Covid-19 outbreak, there are doubts about market predictions and optimism regarding the growth rate of ride-hailing applications in Indonesia. Is this growth rate able to reach 34% per year as predicted by Google?

The outbreak of Covid-19 in Indonesia and Government Policy

Given the growing spread of the Covid-19 virus in Indonesia with the number of positive cases increasing every day, the government has implemented several policies, including social distancing, physical distancing and even in several big cities such as Jakarta and Surabaya, Sidoarjo and Gresik, PSBB (Social Restrictions) have been implemented. Large Scale). This government policy resulted in a decrease in community activities outside the home because all business, school and government activities must be carried out at home, even some social activities such as wedding celebrations, meetings and seminars were asked not to be carried out as long as the policy was enforced. In general, by referring to the business model run by ride-hailing apps, in particular the “food delivery” service, by implementing application-based services, the policy made by the government has little impact. On the other hand, the existence of "food delivery" services in online transportation applications can be a solution for the community to fulfill logistics and food needs.

Consumer Behavior in the Covid-19 Era

Let us take the example of the Gojek phenomenon in Indonesia. So far, several sources including news and official press releases from Gojek state that in the Gojek application, the Gofood service is the service that provides the largest contribution to Gojek's revenue and this goes beyond Goride or Gocar services which are actually the core business of the business run by Gojek itself. . This makes it clear how the current society's behavior has shifted to meeting daily needs including food with a minimal effort.

In other words, people in general prefer to buy food through the Gojek or Grab application because by using Gofood or Grabfood services to get food, they can break down the sacrifices of business to get food by not having to leave the house, not having to buy fuel for vehicles, no. must bear the risk of hot or rainy weather and do not have to bother with parking the vehicle.

Therefore, it is not surprising that one of the drivers of the growth rate of ride-hailing apps is the widespread use of “food delivery” services by people in Indonesia. So, the implementation of several government policies that have been mentioned above can further encourage consumer behavior in Indonesia to increasingly take advantage of the use of "food delivery" services on the ride-hailing application.

Fluctuation of Supply and Demand Problems

However, if we look at it from a supply and demand point of view, the growth rate of the use of "food delivery" services on ride-hailing applications can be far from the predictions issued by Google and colleagues. Why is that? New issues related to supply and demand will arise as a consequence of the implementation of several government policies related to Covid-19 such as social distancing, physical distancing and PSBB. On the supply side, not a few food products sellers reduce or even stop their production because they are worried that their production will not be up to the market.

In addition, some food producers are staffed so they cannot operate their businesses normally. Meanwhile, on the demand side, people's purchasing power weakens because many people have decreased levels of income and income. Even more extreme, many people are affected by layoffs from the company where they work. Therefore, the fluctuation of problems on the supply and demand side can be a factor inhibiting the rate of use of "food delivery" services on ride-hailing applications in Indonesia.

Growth Rate Will Move Slower

Under normal conditions, the "food delivery" service on the ride-hailing application has a business model that can keep up with shifting consumer behavior changes and of course will be able to show positive performance. However, seeing the developments currently taking place in the midst of the Covid-19 pandemic, where government policies by implementing social distancing, physical distancing and PSBB have an impact on supply and demand problems, the growth rate of “food delivery” services will potentially move slowly.

Author: Abu Amar Fauzi, S.S, M.M.

Lecture Marketing at STIE Perbanas Surabaya dan PhD Student di Departemen Administrasi Bisnis, National Taiwan University of Science and Technology

 

Source: https://swa.co.id/swa/my-article/menerka-laju-pertumbuhan-layanan-food-delivery-pada-aplikasi-ride-hailing

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