Thailand's Food Delivery Apps Face Uphill Battle in Cutthroat Market

With Thailand's reopening, consumers are returning to pre-COVID routines, leading to a decline in delivery orders. The Kasikorn Research Center predicts a 0.6% contraction in the market value of food delivery businesses this year compared to 2022.

Thailand's Food Delivery Apps Face Uphill Battle in Cutthroat Market

In the bustling streets of Bangkok, a fierce battle is unfolding in the digital realm as Thailand's food delivery apps struggle to stay afloat in an increasingly competitive market. Once hailed as pandemic-era success stories, these platforms now face a harsh reality as consumer habits shift and economic headwinds intensify.

The latest casualty in this digital food fight is Robinhood, a homegrown app that rose to prominence during the lockdown era. Despite securing funding from Siam Commercial Bank, Robinhood has announced its imminent closure on July 31, succumbing to a staggering cumulative loss of over 5 billion baht ($140 million). This development underscores the challenges facing even well-funded players in Thailand's saturated food delivery market.

Industry giants like Grab and Line Man Wongnai are not immune to these pressures. While Grab led the market with 12.7 billion baht in revenue in 2021, it continues to grapple with profitability issues. Line Man Wongnai, despite a recent 10 billion baht funding injection, faces high operational costs and reported losses of 3.4 billion baht.

Food Delivery Apps

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The market's volatility is further exemplified by Foodpanda, which registered a staggering 4.7 billion baht loss in 2021[4]. These figures paint a sobering picture of an industry where growth no longer guarantees success.

As the dust settles from the pandemic-induced boom, food delivery apps are confronting a new reality. With Thailand's reopening, consumers are returning to pre-COVID routines, leading to a decline in delivery orders. The Kasikorn Research Center predicts a 0.6% contraction in the market value of food delivery businesses this year compared to 2022.

This shift has had a direct impact on delivery drivers, the backbone of these platforms. Drivers report significant drops in earnings, with some seeing their daily income plummet from 2,000 baht to as low as 900 baht. The influx of new drivers has further intensified competition for available orders.

In response to these challenges, platforms are pivoting their strategies. Grab is focusing on profitability and diversifying its services to include financial products and customized delivery options. Line Man Wongnai is leveraging its connection to the popular Line messaging app to integrate with other digital services.

However, these efforts may not be enough in a market that industry experts believe can only sustain three major players. Anantaporn Lapsakkarn, a senior researcher at Kasikorn Research Center, predicts that "at least one player may have to exit the market next year".

The struggle of food delivery apps in Thailand serves as a cautionary tale for the tech industry. It highlights the challenges of achieving profitability in the gig economy and the volatility of consumer-driven digital platforms. As these companies navigate the path forward, they must balance the needs of their stakeholders – from investors demanding returns to drivers seeking fair compensation – all while facing the prospect of market consolidation.

In this high-stakes game of digital delivery, only those who can adapt to changing consumer behaviors and achieve operational efficiency are likely to survive. For now, Thailand's food delivery market remains a crucible of innovation and competition, where even well-funded players must fight for every baht in an increasingly unforgiving landscape.