In Focus: Luc Andreani, Managing Director, foodpanda

In this issue, Lucy Haydon discussed the maturing landscape of Southeast Asian e-commerce with Luc Andreani, Managing Director of foodpanda Singapore, and how that differs from European and US markets. They also delve into big plans for 2018, following foodpanda’s recent rebranding.

This article was first published in the Orient magazine #64, 13th December 2017.
By Lucy Haydon
 
E-commerce is currently on an upwards curve with the introduction of major players such as Amazon PrimeNow. How is the infrastructure setup in Singapore?
 
I joined Lazada about 4 years ago in Vietnam, spending 2 years there before moving to Indonesia and covering departments from operations through to commercial. This gave me a good understanding of ecommerce in the region. I joined foodpanda as Managing Director at the start of this year and have had the opportunity to see the evolution of e-commerce over the past few years to a more mature, structured environment. 
 
When both companies started in 2012, the main hurdle in South East Asia was not internet penetration. The region had high penetration, particularly on mobile. The challenge was mainly in educating people to have confidence in buying online and meeting customer expectations in delivery experiences. Building trust over time in a market new to online shopping requires offering convenience to customers, such as cash payment on delivery - this remains important in this region especially. This is a key difference with the more established European and US e-commerce markets. South East Asia has a particularly high percentage of first time users preferring cash payments, eventually moving to cashless options as their confidence grows.
 
The quality of the delivery experience in South East Asia is key. We have moved towards internalising delivery services, as the third party supplier infrastructure is not sufficiently mature to cope with the requirements and volume at high standards. We initially started with vendor direct deliveries but this resulted in a loss of control on the customer experience, so we invested in building our own fleet and are now 100% self-sufficient. This is paramount to controlling the quality of our customer service.
 
Companies such as foodpanda are in a strong position to leverage on new technology and continue to innovate to succeed. Since the buyout from Delivery Hero in late 2016, what are the plans for future strides forward?
 
Over the years, expectations of product quality and personalisation in e-commerce have grown, prompting companies to look into catering the online or mobile experience based on prior search or purchase decisions. The main challenge at hand is enhancing the user experience to the maximum to achieve a simple, effective market-leading tool; taking into account personal preferences and requirements in a seamless and consistent omni-channel design. This is made possible with data collection, analytics and design, and we have achieved this in our customer service response process. 
 
In the past, we would dedicate multiple people to provide customised responses to queries, which proved to be sub-optimal to productivity and costs. We now leverage on customer data. When a customer calls or chats with us online, an agent will quickly classify the issue into broader categories. An algorithm will assess the severity of the issue and correlate this with the customer’s recency of orders, frequency of orders and typical spend level. The algorithm will then automatically issue a voucher appropriate for the individual customer, provided within a tailored response.
 
We recently released our new branding with a new website and mobile app and we have plans to tailor customer experiences using data to recommend choices and restaurants, which will ultimately increase the order conversion rate. The new app features more content and visual appeal to showcase our partners’ food. 
 
 
What are the key levers for success you anticipate as we approach 2018?
 
I am often asked how we differentiate ourselves in such a competitive market. We don’t do so in terms of a business model, as all players in this market offer the same service, but we have some unique services and offerings. We offer a high inventory of relevant choices for our customers and good delivery service. These are our focuses for 2018, strengthening our excellence in these areas and building on these high standards for the future.
 
The choices of restaurants and customer demographics differ across the different zones in Singapore, which gives us a varying inventory to manage. For delivery, the indicators are delivery time and percentage of delays, both of which we measure and monitor closely in the logistics of our 2,500-strong fleet and the quality of the customer experience. 
 
The key to success is not simply focusing on these basics but doing so as efficiently as possible. The food delivery market provides stable patterns in terms of peak order times throughout the days, weeks and months, allowing for logistical planning and absorption of sudden spikes in demand. Less established competitors will face higher costs as they’re pricing aggressively and not yet optimising for efficiencies. Flooding streets with more riders may achieve quick results in customer service, but it’s certainly not optimal for long-term cost management.
 
Price differentiation in minimum order values is a point of competition within the market. This is a trade-off between growth and profitability, as individual, low price orders will be a loss for companies to fulfil. It is important to cover operational costs and remain sustainable.
 
Our ultimate goal is to offer the same wide inventory of choice across the island for zero delivery fees and with high quality service, by achieving sufficient efficiencies to support this for our customers.
 
Our members are operating increasingly within the gig economy. How has this new workplace culture helped you to achieve your company goals?
 
All of our riders are freelance, so we are deep in the gig economy! We choose to operate this way as it allows flexibility for both our company and riders. There’s demand in our market from the riders – to allow them to work for other companies and giving them the freedom of choice. Salaries are not compared in the typical format within our industry, but in some cases by the volume of orders or price per order. The advantage for foodpanda is in absorbing order demand levels. We have a pool of active riders who are then ranked according to past efficiency, length of service, and compliance. We forecast order levels days ahead in trenches of time and create shifts which are optimised for supply and demand. These shifts are then opened to riders to accept for work, with the highest ranked riders seeing more available and lucrative shifts than those of the lower ranked riders. This system allows us to have the best and most efficient riders ready to service peak order times and open up additional slots as spikes appear in demand.
 
Regardless of operational excellence, you are ultimately reliant upon the inventory partners (restaurants) to deliver quality food in a timely manner. How do you manage this relationship effectively?
 
We are in a triangle in our marketplace – customers, riders and partners, where all are reliant upon each other. 
For partners, the driver is to show them incremental growth as a result of the collaboration with foodpanda. We must continually improve search responses to enable smaller partners to increase visibility and achieve a good distribution of orders across the providers. Although we allow for premium placements in search results, we will never allow this to override the experience to ensure variety for customers and fairness for all partners.
 
It’s also important to ensure that partners do not see the growth provided by utilising our platforms as orders taken away from walk-in customers, which is a common concern before partners begin using an aggregator such as foodpanda. We carefully monitor pricing and margins to ensure that we are not viewed as a more expensive option to dining out. Instead of trying to compete with the lower price outlets, we aim to integrate them onto our platform for the wider benefits to all.
 
What do you see as the future of ecommerce in the short and longer term?
 
For foodpanda, the next few years are about excellence in CX and delivery as we have discussed. It’s critical to remember the fundamentals of choice and good customer service.
 
We are exploring further use of data and automation in customer retargeting and dispatch of orders, as well as looking into the use of chatbots for basic customer service questions, though we would only implement such technology if it meant improvement to the customer experience - a further step forward. 
 
We are in early research conversations with the Singaporean government about major industry disruptors such as the use of drones. Such a step change could lead to extensions of the inventory choice across the different zones in Singapore. 
 
These technological conversations are interesting explorations for foodpanda but our priority will always be the user experience and inventory choice for our customers. We are not a start-up anymore – we are a substantial sized SME, which brings new levels of service quality expectations that we are determined to meet and exceed.  
 

 

About the company:

 

foodpanda is dedicated to bringing food lovers around the world their favourite meals from curated local restaurants. Since its creation, the on-demand food delivery service has grown to more than 14,000 partner restaurants in more than 30 cities across 9 Asian countries globally. foodpanda is active in Hong Kong, Singapore, Thailand, Malaysia, Pakistan, Taiwan, Philippines, Bangladesh and Brunei. It belongs to Delivery Hero, worldwide leader of the food delivery industry.
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