World University of Bangladesh

INTRODUCTION TO E-COMMERCE
(CIS 316)
Case Study

Submitted by:
Tashfeen Ahmed
Roll # 1425
Batch: 46/A
(Department of English)
The services, profit making strategy, purchasing process and limitations of
Foodpanda.

Among the different e-commerce businesses and companies I have decided to do

my case study on Foodpanda. The results are as follows:

Services: Foodpanda is a recognized web service from Rocket Internet based in

Berlin, Germany. It is a tech startup incubator, founded by three brothers:
Alexander, Marc and Oliver Samwer (Mustary, 2016). It is a business that has a
marketplace accessible by 13 countries which offer mobile food delivery services.
Through this service, users are allowed to place order from local restaurants using
the mobile applications other than websites. The company has partnered with over
60,000 restaurants in 580 cities around the world (Mustary, 2016).
The services offered by Foodpanda can be accessed by customers from 11am to
11pm via a direct call line, or online platforms of their website or their free mobile
application, with the option of online payment. Moreover, payment can also be
made in the form of cash on delivery upon receiving the ordered items from
Foodpanda’s delivery staff. A delivery charge is placed upon the order which
varies from restaurant to restaurant and the distances covered. Initially, Foodpanda
outsourced its delivery service but now the company has its own delivery support
and transportation. With part-time and full time delivery staff equipped with
motorcycles, delivery is possible within 60 to 90 minutes.

Purchasing process: Foodpanda orders are directly processed & send to partner’s
restaurants, then; the meals are delivered to customers by delivery riders. This
service is available via websites and also mobile applications (Lomas & Wee,
2013). This platform helps restaurants to engage with customers by offerings food
delivery in local area by choosing a menu, order and pay online.

To order, customers need to enter their postcode on the site or app, browse for food
from restaurant’s list and select the items they want to order, entering the current
address to be delivered and proceed to checkout. An SMS will be sent by
Foodpanda to confirm orders and estimated delivery time.

Figure: Foodpanda services via the application

Profit making strategy: Foodpanda’s revenue is mainly generated from the

commission they receive from the partnered restaurants, based on the number of
orders. Similarly, the restaurants also receive various benefits through the
partnership. The restaurants are able to increase sales by using analysis and user-
generated recommendations of Foodpanda. Additionally, they are able to generate
awareness without investing a large amount in promotions. Moreover, the
participating restaurants are able to increase their efficiency and utilize their
services by partnering with Foodpanda. Without the direct usage of the space in
their physical locations, the restaurants are able to make profits. At this time,
Foodpanda is more concerned about delivering quality service and earning
consumer loyalty, providing different offers to attract new customers and retain
existing ones. The launch of Happy Hour campaign where customers are waived
the delivery charge during 3 pm to 6 pm has been successful in gaining more
customers. Moreover, the service also offers a 10 percent discount to a customer’s
next meal if the customer refers a friend. As a result, Foodpanda as well as the
partnered restaurants generate further brand awareness. With a focus on online
marketing and web marketing rather than offline marketing, Foodpanda attempts to
improve their customer service and food ordering technology.

Foodpanda orders are directly processed & send to partner’s restaurants, then; the
meals are delivered to customers by delivery riders. This service is available via
websites and also mobile applications (Lomas & Wee, 2013). This platform helps
restaurants to engage with customers by offerings food delivery in local area by
choosing a menu, order and pay online. To order, customers need to enter their
postcode on the site or app, browse for food from restaurant’s list and select the
items they want to order, entering the current address to be delivered and proceed
to checkout. An SMS will be sent by Foodpanda to confirm orders and estimated
delivery time.

Foodpanda has strong brand recognition when it comes to online food delivery
services, where it has wide restaurant coverage so that they could have a variety
menu on their app or site. Since, this is a delivery businesses, Foodpanda are well
aware that they must make a quick delivery in timely manner to stay competitive in
the market. Thus, they have their rider to be well trained in using the Foodpanda
mobile application in handling the order, and deliver it to the right address
accordingly.

Rapid development in technology and wide usage of internet open up an immense

opportunities to Foodpanda where there’s a way to be creative using technology by
adapting to technology advancement as such collaborating with other application
developer as well as such Facebook and Instagram to reach wider market share.
Through this, it helps in developing a product/service improvement when they are
striving to carry out further expansion in the market by widen its range into rural
area all around the state. By doing area expansion, it will lead to growing market
for potential customers in potential areas.

By having a technological advancement that helps in improving the Foodpanda

services, it somehow will help the company to manage a good food quality
checking and monitor a good delivery timing to ensure that the food is still hot &
fresh to be consume by the consumers. Other than that, this online delivery
services would open up Foodpanda to a new partnership opportunities with a
convenience shop stores which is other than restaurants. Instead of focusing on
restaurant, they can also get engaged with other retails company in expanding their
product line or services with new items from convenience shop. In other words,
Foodpanda is like a personal shopper for the consumer in buying daily groceries in
hypermarket, 7Eleven and Kmart.
Figure: Promotional profit making strategy of Foodpanda
Limitations: In developing and catch up with a technological advancement, a
company will always have a weakness with technological improvement. As such,
unknown bug that might bring failure in customer making order or restaurants
receiving an orders, failure in online payment via the app that might lead to delay
because it involving 3rd party to solve the issue stages by stages. Next, as we all
know the availability of interesting restaurants with a good internet connection and
wide application usage are mostly available in the center of each state, which is
city areas, thus, Foodpanda does not really cover the rural areas. Other than that,
Foodpanda also have a restricted availability in certain area which the orders are
available in the located zone area only.

Since this is a food delivery services, they making profit from delivering, the price
of the food using this service are quite expensive compared to the price buying the
food by walking into the stores where it include delivery charges, service charges
and others. Regards the delivery, it is also one of the Foodpanda weaknesses
where, Free Delivery only comes with certain amount paid as such Free Delivery
with RM20 minimum order. When it comes to online food delivery, during the
transit of the food from restaurants to the customers, the riders & restaurant’s staff
times will get confused and end up getting the order mixed up with each other that
lead to the wrong items and sometimes defect like the food and drink get messy in
the packaging.

In business, there’s a time where company will have its own up and down facing a
threat in the industry that affect the company operation and profitability. As per
stated in the PESTEL analysis and 5 forces by Porter, for example, economic
condition, environmental, rapid technology changes and threat of new entrants or
recent competitors advancing to the similar technology using the application. As
such, KFC, Pizza Hut, Dominoes and McDonald has been upgrading their
technology game by develop its own online food delivery services, while for the
new entrants or potential competitors like GrabFood, UberEats.

In a nutshell, by having variety company doing the same services, these delivery
service by Foodpanda might become less in demand due to the services are easily
substitute with competitors.

Conclusion: Foodpanda is an online business company that essentially focuses on

recognizing their internal and external environment in order to come up with their
business marketing strategies. Where based on the studies conducted, they will
implement a SWOT analysis to fully utilize their strength and opportunities while
preparing to face any challenge from the threat in external environment while
improving their business weaknesses. Other than that, Foodpanda believe that in
constructing their marketing strategy, it is crucial to focus on the marketing mix
fundamental which are product/service, price, promotion and place. If the
fundamental isn’t strong, the marketing strategies will collapse when being
implemented.

Technology focused is one of the main Foodpanda’s business operations

fundamental where they construct all of their business strategy all around
technology advancement. Hence, every marketing strategy will be implemented in
digital platform. Going digital is quite a big development for a Foodpanda to do by
keeping up with the fast changing trends, thus they will have to come up with also
a trending campaign involving influencer of their target market. Lastly, in fulfilling
customer’s satisfaction, most of the studies focus on customer behavior and
trending purchases but there’s lack of study where customer’s dissatisfaction come
from the supply chain process.
All in all, with the advance technology development in our current world,
Foodpanda has done an excellent job in keeping up with the vast changes by
digitalize their business from website platform into mobile phone platform via
application and essentially convert all the traditional analysis and marketing
strategy to be adopted into their upgraded internet and technology usage business.

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