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24 Jun 2022

Econ Digest

Subsiding of COVID-19... poses challenges to the food delivery business

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               During the time when Thailand was facing a severe COVID-19 situation that led to a lockdown in the country, it is undeniable that the food delivery business stepped up as a prominent star business that responded well to the lifestyle of people in such times. However, this year the COVID-19 situation began to subside, and people returned to almost normal lives, resulting in less need of food delivery, while fuel prices are rising. Therefore, it has become a challenge for the food delivery business to adapt to the current situation.

#KResearch views that the food delivery business in 2022 is expected to total around THB77-80 billion, or growth of THB1.7-5.0, slower than the 46.4% growth in 2021, which may result in a greater impact to the food delivery service providers or riders. The survey finds that most riders are affected by the following factors:

  1. Rising fuel prices has led to an increase of THB69 in the average daily fuel cost for food delivery.
  2. Increased number of riders. According to data from LINE MAN Wongnai, it was found that the number of rider applicants increased by more than 4.7 times as of May 2022, compared to January 2020 (before COVID-19). The increase in the number of riders is partly due to the nationwide expansion of markets and service areas by online food delivery platform providers.
  3. People's daily lives and behaviors have returned to near normal. More than 94% of riders believe they have been affected by a drop in daily orders. The average number of orders per day is 13 orders.

        Moreover, riders are also affected by intense competition between platforms and the use of programs to assist in getting orders, leaving them to find ways to cope with the decline in their net income. More than 70% of the riders surveyed spend more time working and getting orders to meet expenses, register with other platforms to increase their chances of getting orders, earn additional income from other occupations to offset reduced income, or may switch to other occupations.

        As for online platform providers, they also must make adjustments to address the impacts that occur, including expanding the business to new markets such as parcel delivery, supermarket purchasing, to increase riders’ access to orders; adjusting their work assignment system by using an auto-assign system to increase the equality in allocating orders to riders; granting more incentives to riders who complete the specified number of delivery rounds; and randomly verifying riders' identities to reduce the number of cases where riders use another person's name to get orders.

Source: LINE MAN Wongnai and KResearch’s survey results

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