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Deliveroo entered Singapore in 2015 to a highly competitive food delivery landscape.<\/p>\n
Analysts CNA spoke to noted the difficulties of Singapore’s market for a subscale competitor like Deliveroo.<\/p>\n
“Delivery platforms are fundamentally density-driven businesses, where the profitability depends on having high order volume within the same area and time window to keep costs low,” said NTU’s Asst Prof Lee, who is from the Nanyang Business School’s College of Business.<\/span><\/p>\n “In a geographically compact and highly competitive market like Singapore, where two platforms already hold significant scale, it is difficult for a smaller player to build and sustain an advantage in the same area.”<\/p>\n NUS’ Prof Wirtz said the market was highly competitive and promotion-heavy, with compressed margins.<\/p>\n “Riders pick the platform that offers a higher pay, and customers pick the platform that has lower costs. Switching between platforms is just a click away,” he said.<\/p>\n Experts pointed out that Grab\u2019s super-app ecosystem – spanning ride-hailing, payments and rewards – allows it to cross-promote across services and generate additional revenue through advertising.\u00a0<\/span><\/p>\n Prof Wirtz pointed out that while Foodpanda was not a super app, it monetised ads and retail media, especially via Pandamart and fast-moving consumer goods brand partnerships.<\/p>\n “Deliveroo had sponsored listings and co-funded promos, but with a smaller audience and fewer surfaces, its ad monetisation was relatively limited,” he added.<\/p>\n Last year, DoorDash acquired Deliveroo with a view to growing its market share in Europe.<\/p>\n “Given Deliveroo\u2019s limited growth trajectory in Singapore, it is likely that the market was not considered a strategic priority within DoorDash\u2019s broader global portfolio,” said Asst Prof Tsai from NUS.<\/p>\n SMU’s Assoc Prof Ramaswami noted that the industry could be entering a slower growth phase following the pandemic-era surge in demand, and may even decline.<\/p>\n Challenges remain even with only two competitors. They still face headwinds in the form of price-sensitive consumers, rising operating costs, as well as the ongoing challenge of maintaining reliable rider supply and service, NTU’s Asst Prof Lee said.<\/p>\n Asst Prof Tsai said that the platforms may shift away from simple user acquisition, and that it was no longer sufficient for a platform to maintain market share in food delivery alone.<\/p>\n “Platforms increasingly rely on ecosystem bundling (eg integrating delivery with ride-hailing, payments, subscriptions, or loyalty programmes) to retain users, increase order frequency, and improve overall unit economics,” she said.<\/p>\n “In such a mature market, profitability, customer retention, and ecosystem integration become more important than the rapid expansion strategies observed in the earlier growth phase.”<\/p>\n Assoc Prof Ramaswami raised the possibility of new entrants who may see an opportunity to differentiate themselves from the two remaining players.<\/p>\n Other delivery services, such as Lalamove, are also in a position to enter the food delivery market, as they have delivery fleets and the logistics infrastructure.<\/p>\n<\/div>\n