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Executive summary

This paper analyzes the challenges posed to Foodpanda Pakistan by the entry of a competitor

delivery service (Careem Now). Using frameworks such as the SWOT Analysis and Porter’s

Five Forces this paper assesses the various aspects of Foodpanda’s operations that may be

threatened by the presence of Careem Now. In the last section, objective and actionable

recommendations are provided to Foodpanda based on insights drawn in the prior sections.
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Table of Contents

Executive summary.........................................................................................................................1

Table of Contents.............................................................................................................................2

Introduction......................................................................................................................................3

Strategy for growth..........................................................................................................................3

SWOT analysis of Foodpanda.........................................................................................................5

Strengths:.....................................................................................................................................5

Weaknesses:.................................................................................................................................5

Opportunities:...............................................................................................................................6

Threats:.........................................................................................................................................7

Porter’s five forces analysis.............................................................................................................8

Competitive rivalry:.....................................................................................................................8

Supplier power:............................................................................................................................8

Buyer power:................................................................................................................................8

The threat of substitutes:..............................................................................................................8

The threat of new entry:...............................................................................................................9

Challenges posed by Careem Now..................................................................................................9

Works Cited...................................................................................................................................12
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Introduction

Foodpanda Pakistan is the country’s most established food delivery application. It

operates in over 30 cities and has a roster of 15000 restaurants and eateries within Pakistan.

Although Foodpanda has tried to differentiate towards being a Food and Grocery delivery

business, the major chunk of its operations is still predominantly geared towards being a Food

Delivery Business. This paper will analyze and advise Foodpanda on how to modify their

operations in response to a new entrant in the industry.

Strategy for growth

Since Foodpanda holds most of the market share among third party businesses, its current

model for growth is geared towards competing with restaurant-based applications for their share

of customers. To do so it enters into partnerships with such restaurants and offers deals to

customers exclusive to the Foodpanda application. Moreover, Foodpanda is trying to increase its

market share among the vendors by encouraging more and more eateries towards becoming a

part of its roster. To protect its market share, Foodpanda should try to sign exclusive delivery

rights to as many of these eateries as possible, so that Careem Now may not be able to lure them

away in future. Restaurants whose delivery services are currently below par should also be

targeted and enlisted.

Foodpanda started using TQM to provide small-scale eateries (without access to mobile

devices) with customized POS machines which have a built-in interface for eateries to view

orders. Hence, Foodpanda should continue to invest in its core competency which is its variety of

vendors. It may take a step further and educate potential vendors on how to use its POS devices

as many restaurants have an undereducated staff. Such TQM actions would help uplift the
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quality of Foodpanda’s entire value chain, allowing it to maintain its position as the superior

Food delivery platform.

Moreover, it also commenced its “GharKaKhaana Initiative” in which it encourages

Home Chefs to register themselves on the Foodpanda application and gain access to online

customers. To make this segment more profitable, Foodpanda should market its home chef

segment as being a healthy alternative for customers as compared to fast food avenues.

In comparison, Careem Now’s growth strategy is to target customers of established third

party applications such as Foodpanda and Cheetay. Unlike most new food delivery businesses,

Careem Now already has an established reputation as being a quality driven business (owing to

their taxi service) (Baig). Thus, there is little inertia among customers when it comes to

switching their loyalty to Careem Now.

Moreover, being a subsidiary of Uber, Careem Now has a substantial volume of capital at

their disposal to invest in their pursuit of increasing their market share. To counter this,

Foodpanda needs to step up its marketing, especially through social media channels. Its current

social media presence is minimal, especially on platforms such as Twitter, Instagram, and

Snapchat. Given that all its consumers are smartphone users this is a missed opportunity for

them. Instagram, in particular, should be targeted given that it is a platform that greatly

influences lifestyle preferences.

SWOT analysis of Foodpanda

Strengths:

Foodpanda is an established brand with great prestige and goodwill owing to its success

globally and dominance in the online food retailing market of Pakistan.

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Foodpanda provides convenience to their end-users with the availability of multiple

payment options.

They also provide flexibility to their customers by giving them various options to order

including pre-orders, and recently they added the takeaway option to their portfolio.

Furthermore, Foodpanda also offers a hint of customization to their customers when it

comes to placing orders based on their requirements and tasting habits. This operational

innovation is another core competency of Foodpanda which it needs to maximize further

through features such as allowing people to compare shopping carts from different restaurants.

Strengths can be increased further through lean management of service staff. Currently,

riders have to wait for extended periods before having anything to deliver. Using better

forecasting tools as well as by loaning employees to other organizations during off-peak hours

can help to revamp Foodpanda’s service delivery into a leaner JIT model.

Weaknesses:

One of the biggest concerns that consumer faces with regards to Foodpanda is its

inefficient customer service which results in customer dissatisfaction along with providing them

the opportunity to switch to its competitors. In response to such issues, there should be greater

investment on Foodpanda’s customer service when handling refunds and delays. Introduction of

a helpline or regional customer care centers are a few possible solutions to such issues.

As the FoodPanda’s business model is that of an intermediary in delivering food it has to

battle with some uncertainties such as delays from the food vendor or weather conditions. This

effect its quality of delivery service. In such a case, being honest and cooperative is perhaps the

best remedy.
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Moreover, some target segments find ordering from Foodpanda undesirable due to

minimum order constraint and their maximum delivery radius constraint e.g. only food vendors

within 4 km of your locality are displayed on the app, thus restricting the customer choice. To

counter this, it would also be valuable to introduce a feature where consumers can place orders

from restaurants outside their radius, even if it is for a higher delivery markup.

Foodpanda has a very strained relationship with its vendors. In September 2020, the All-

Pakistan Restaurant Association accused Foodpanda of anti-competitive behavior and announced

a 3 day boycott of Foodpanda in the city of Karachi (Hussain). It is imperative that Foodpanda

mends its relations with vendors before its competitors can capitalize. Initially Foodpanda can

begin by assuring its vendors that it will not modify the terms of their partnership without prior

notice. Incentivizing customers through bonuses for a high number of orders can also be a good

way of improving relations.

Opportunities:

Foodpanda has a vital opportunity to strengthen its stronghold in the Pakistani market by

making their app available in semi-urban and rural cities of Pakistan. Their immediate

competitors such as Cheetay and Careem Now have a long way to go before being able to exploit

these markets, as they aren’t as established as Foodpanda.

They can also build an AI mechanism to link their logistics directly to their internal

network so that in case of any logistical error (e.g. inconsistent weather, delays from food

vendors), the app simultaneously communicates with the customer about the delay and a realistic

expected time.

Foodpanda can also integrate better IT systems into its operations. This can help improve

both material resource planning and manufacturing resource planning. The advantage here is that
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it would allow Foodpanda to better forecast demand and seasonality of orders, as well as help

manage an optimum volume of staff.

Last but not the least, they have the opportunity to acquire competitive applications such

as Cheetay. Foodpanda made use of this strategy a few years ago when they bought EatOye and

it allowed Foodpanda to increase their market share immensely.

Threats:

The biggest threat to Foodpanda now is the increasing competition in the online food

retailing market of Pakistan. Cheetay is slowly integrating into the market and excessively

promoting their product & giving immense discounts to the end customers.

On the other hand, Careem Now can make use of Careem’s established transportation

network which ensures that it can offer a high-quality service delivery.

Moreover, the recent controversy over the allegations by the restaurant owners and food

vendors against Foodpanda for exploiting their profit margin has threatened its market position,

while leaving space for its competitors to capitalize on this opportunity.

Last but not the least, medical research & doctor's recommendations about obesity rates

and other diseases being correlated to consumption of junk foods have discouraged health-

conscious people to order from apps such as Foodpanda. This can be countered by entering into

partnerships with eateries that offer healthy food options, as it with help turn skeptical customers

into a new market opportunity.

Porter’s five forces analysis

Competitive rivalry:

Foodpanda’s competitors have thus far failed to match its level of service and most are

restricted to a particular region only. Thus, this is currently a low force.

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Supplier power:

Suppliers have shown that they can challenge the power of businesses such as Foodpanda

by uniting in opposition of unfavorable policies (Hussain)which is why this is a high force.

Buyer power:

Consumers preferences dictate how Foodpanda operates. Because of this, buyer power is

a very high force.

The threat of substitutes:

The major substitute to Third party applications are Restaurant based applications such as

KFC and McDelivery who have a superior delivery service in comparison to Foodpanda and are

able to deliver to deliver to customers in larger geographical radiuses. Thus, this is a very high

force as well.

The threat of new entry:

New entrants like Careem Now offer threat in future due to a better quality of service and

a better marketing strategy. Thus, the threat of new entrants is a moderately high force.

Challenges posed by Careem Now

The biggest challenged posed by Careem Now is its quality of delivery service. Careem

Now’s application is much more accurate when providing an estimated delivery time than

Foodpanda’s, something which helps their operations become leaner. To counter this, Foodpanda

should invest in superior geotagging systems, which would help their customers keep track of

their orders in real time.

Careem Now does not charge a standard amount for deliveries, rather the charges vary

depending on the distance between the customer and the eatery. Because of this they are able to
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deliver food to customers from a much larger radius as compared to Foodpanda. This increases

convenience for customers who live far from their favorite eateries. As mentioned earlier,

Foodpanda needs to offer this option as well, even if it is at a higher delivery markup.

Similar to the Careem taxi services, Careem Now has very stringent protocols in place

when hiring delivery riders. It conducts detailed background checks and is very responsive to

customer feedback regarding the behavior of these riders. This creates a great deal of trust

between the customers and Careem Now as security is a very important concerns for people in

Pakistan. In comparison, Foodpanda’s riders are not considered as trustful and several

neighborhoods refuse to allow entry to these riders at night. For this reason, Foodpanda should

be more responsive to complaints regarding its riders and should also be more vocal regarding its

hiring and evaluation processes.

Additionally, riders need to be trained on how to operate efficiently and professionally to

match customer and industry expectations. For this reason, Foodpanda Pakistan should look

toward Foodpanda’s training and development procedures outside of Pakistan and use them to

design comprehensive training exercises.

Careem Now is also very efficient at swaying public opinion to its advantage. Recently,

when the APRA boycotted Foodpanda for its anti-competitive policies, the same body lauded

Careem Now for being considerate towards the needs of restaurants. Thus, every time

Foodpanda experiences a public relations catastrophe, Careem Now instantly capitalizes on the

situation. To solve this, Foodpanda should invest in better human resource management of

employees who negotiate with and interact with its vendors. It should outsource the training and

development of these employees to institutions such as Pakistan Institution of Management.

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Another challenge posed by Careem Now is its commission rates offered to restaurants.

Currently it charges restaurants 15-20% commission per order and promises to provide them

with advance notices when a change in policy is applied (Shahid & Hassan). In comparison,

Foodpanda is notorious for changing commission rates at will (Shahid). Foodpanda needs to

refrain from such unethical practices and exercise a reasonable level of professional courtesy

when conducting business.

Recommendations

Often times, market leaders lose their motivation to improve their value chain causing

them to become complacent. Incidents over the last year show that Foodpanda might be

susceptible of such incompetence as well. To overcome such behavior, Foodpanda such perform

an indepth value chain analysis to recognize the potential for value addition in its operations.

This would help it identify its operational Achilles heel which can then be addressed before it

becomes a liability.

Moreover, Foodpanda should benchmark the good practices of its competitors such as

Careem Now, which increase the satisfaction of consumers. By striving for continuous process

innovation, Foodpanda can incorporate the best operational practices into its business.

Foodpanda should try to make its operational strategy more flexible, so as to decrease the

inertia towards becoming a leaner organization. This can be done by use of KAIZEN and would

be beneficial as it would allow Foodpanda to strive for perfection, even when their competitors

are not offering as much of a challenge.

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Conclusion

A well reputed and financially commanding service like Careem Now poses an immense

threat to Foodpanda’s market share. Foodpanda can counter this threat using innovation in its

service delivery through use of superior geotagging, investments in MRP, as well as

customization in its mobile application interface. Additionally, better human resource

management also needs to be considered to improve the customer care, service delivery, and

vendor management operations. Using such measures would enable Foodpanda to counter the

advances of Careem Now whilst also allowing it to mend its strained relations with its vendors.
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Works Cited

Baig, Zeeshan. "Careem CEO Writes Open Letter To Restaurant Owners In Pakistan".

Techjuice, 2020, https://www.techjuice.pk/careem-ceo-writes-open-letter-to-restaurant-

owners-in-pakistan/. Accessed 12 Oct 2020.

Hussain, Bilal. "Karachi Restaurants Boycott Foodpanda Over Hike In Commission | SAMAA".

Samaa TV, 2020, https://www.samaa.tv/living/food/2020/09/karachi-restaurants-boycott-

foodpanda-over-hike-in-commission/.

Shahid, Araiz. "Restaurants Boycott Foodpanda After The Delivery Service Demands More

Commission". Bolojawan.Com, 2020, https://bolojawan.com/restaurants-are-boycotting-

foodpanda-after-pressure-to-increase-their-commission/.

Shahid, Ariba, and Hassan, Taimoor. "Careem Vs Foodpanda: Who Will Dominate The Food

Delivery Space In Pakistan?". Profit By Pakistan Today, 2020,

https://profit.pakistantoday.com.pk/2020/09/19/careem-vs-foodpanda-who-will-

dominate-the-food-delivery-space-in-pakistan/.