Super app players in the food delivery industry are shifting their focus towards non-food delivery businesses as they seek new avenues for growth. The profitability of food delivery services remains a challenge, with operators subsidizing delivery costs for drivers and allocating significant marketing budgets while facing high fuel prices. According to data analytics firm Creden Data, the combined losses of the four major players in Thailand—Line Man Wongnai, Grab Thailand, Foodpanda, and Robinhood—exceeded 8.6 billion baht in 2021.
In 2022, Line Man reported a loss of 2.7 billion baht, according to information from Creden Data. Anantaporn Lapsakkarn, a senior researcher at Kasikorn Research Center (K-Research), noted that Thailand’s online food delivery business is reaching maturity. As people resume normal life and food prices increase, consumers are dining out more frequently, resulting in reduced spending on food orders through digital platforms. K-Research predicts a decline of 0.8% to 6.5% in the value of Thailand’s online food delivery market in 2023.
Although the market value is expected to reach 81-86 billion baht in 2023, surpassing pre-pandemic levels, food delivery operators need to diversify their revenue sources beyond food as consumer spending has not fully recovered. Yod Chinsupakul, the CEO of Line Man Wongnai, mentioned that while the food delivery market may not perform strongly, Line Man’s gross merchandise value grew by 33% from January 2022 to April 2023. Mr. Yod expects the market to grow further in 2024.
Line Man witnessed a 25% increase in orders and a 27% growth in users in Bangkok and the metropolitan region, while other provinces experienced a 17% growth in orders and a 10% growth in users. The company plans to invest in marketing to attract more users and expand restaurant options throughout Thailand. To enhance customer convenience, Line Man introduced new features such as group ordering, allowing users to place orders with friends or family in a single order.
Mr. Yod emphasized that the market is no longer heavily influenced by subsidies due to the reduced number of players compared to last year. Line Man intends to focus more on non-food businesses, which have shown consistent growth. The messenger and taxi services offered by Line Man have also demonstrated promising potential. Line Man Messenger, which provides urgent delivery services for goods, documents, and bill payments, experienced double usage nationwide and quadruple usage in certain provinces. Line Man Mart, a service for ordering urgent goods, witnessed a 1.6-fold increase in orders and expanded to include over 11 leading brand stores with more than 2,000 branches nationwide. Line Man Taxi, a taxi-hailing service, saw continuous high demand with double-digit growth in 2022.
Line Man is leveraging technology to improve the efficiency of job assignments for taxi drivers. The company aims to expand the use of point-of-sale solutions in dine-in restaurants nationwide, enabling restaurants to leverage technology for better management. Grab Thailand, another major player, focuses on building sustainable growth through operational efficiency, innovation, and technology across mobility, delivery, financial, and enterprise solutions.
As the food delivery market faces challenges, players are diversifying their offerings and capitalizing on non-food delivery services to sustain growth and navigate the evolving landscape.