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Overview of Vietnam’s food delivery market

Overview of Vietnam’s food delivery market

Thursday 12, 03 2020
Although Vietnam’s food delivery market is still new, it is quite exciting as more and more businesses have entered this field. It is expected that by 2020, this market will be worth about USD 38 million and maintain an average growth of 11% in the next 5 years.

Rat race for market share

As a pioneer in food delivery since 2014, Now had achieved success and rapid growth thanks to the new and exclusive delivery service at that time, along with good communication channel In addition, reasonable fees and the participation of about 20,000 stores providing food and drink offering many attractive promotions have helped Now quickly attract customers. In mid-2017, CEO of Foody once shared that Now had nearly 10,000 orders every day.

However, Now's delivery service has struggled to maintain its delivery team. In addition, the delivery is quite manual as more than half of the stores do not use FoodyPOS (sales management software for food service stores developed by Foody), when an order is made, the operator will call the store to order in advance and trouble frequently occur when foods are out of stock.

Accordingly, Now’s goal of 25-minute delivery has gradually been taken over by new comers such as Grab and Goviet. Not to mention, when the food delivery market is growing, the giants will be in the race of promotion, which has made Now suffer from losses for years. Foody's financial report showed that cost of goods sold in 2018 was VND 441 billion and recorded a loss of over VND

As for GrabFood, although it officially entered the food delivery market in June 2018, it has become a formidable opponent. Recently, Grab has launched GrabKitchen, bringing together 12 popular restaurant brands on GrabFood platform. According to Jerry Lim, Director of Grab Vietnam, through this model, Grab wants its restaurant partners to have access to new user data using an online platform, especially in “prime” areas with high demand for specific dishes.

According to a survey of Kantar TNS, GrabFood is the most popular order application in two big cities, Hanoi and Ho Chi Minh City, accounting for 68% of orders. Following are GoViet, Now and some other applications. It can be seen that, in the first half of 2019, GrabFood reached a total transaction value of 400%, recording an average daily number of orders processed up to 300,000. This success of GrabFood was contributed by the number of transport partners up to more than 175,000 people and the experience gained from the food delivery segment in Thailand and Indonesia.

A major competitor of GrabFood is Goviet. With strong promotions for users as well as preferential policies for shipping partners, and often offering free delivery within a radius of 5 km, Goviet has successfully captured certain market share in this segment.

Overview of Vietnam’s food delivery market

Attractive market

According to Euromonitor International, the food delivery market in Vietnam was worth USD 33 million in 2018, and is expected to reach around USD 38 million in 2020 and will maintain an average growth of 11% in the next 5 years

According to market research firm Kantar TNS, Vietnam's online food delivery market is estimated to reach USD 449 million in 2023. However, compared with other countries in Asia such as India or Japan, the size of this market in Vietnam is still very small, accounting for only 0.2% market share in the world food delivery market.

Because of its small size, the food delivery market is considered a "golden" market that attracts many domestic and foreign investors. Currently, the fast pace of life and the development of the modern urban wave have led to significant changes in the eating habits of many people. On the other hand, the use of smartphone applications is increasingly popular, along with the fact that users can pay on MobileBanking and e-wallets, which makes it very convenient for both buyers and sellers, especially for shippers.

It can be seen that in 2019, the food delivery market in Vietnam welcomed more investors than ever before. Specifically, in early 2019, Beamin from South Korea officially entered the Vietnamese market after successfully purchasing Vietnammm food ordering application. This is considered a new breeze as it has made the food delivery competition more exciting. Despite being a newcomer, Beamin is considered a non-trivial name when possessing good financial strength, technology and 9-year experience of "competing" in Korea.

Recently, Zalo has quietly put ZaloFood into operation with many restaurants, dishes and promotions up to 40%. Facing the battle for market share, Now had partnered with Shopee to increase orders from shoppers on this e-commerce platform.

According to many experts, the expansion of the food delivery market in Vietnam is not only convenient for consumers but also creates opportunities for many restaurants, small eateries, even housewives who have a knack for cooking yet are not able to establish a restaurant, creating a diverse food market, appealing to not only local but also foreign customers.

​>> Overview of Vietnam’s connecting system 

Compiled by VietnamCredit

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