o name a few. While the superapps operate in multiple segments that can be mutually supportive (typically, food delivery, e-commerce, ride-hailing and financial services), the local players can have advantages in other respects, for example, superior knowledge of their markets, longer-established reputations, and possibly indirect support from their governments in the form of regulatory regimes that smile on the local players to ‘keep the playing field level’.  The pressure is building, even in Vietnam Inevitably, despite an apparent large and growing food delivery market in the region, the competitive pressures are beginning to bite. Delivery Hero, the German company that owns Foodpanda, is looking to deep-six it in Southeast Asia and Grab might well be the beneficiary. In Vietnam, Foodpanda isn’t a factor but Baemin, a joint venture of Delivery Hero and Korea’s Woowa Brothers has about 10 per cent market share, while GrabFood and ShopeeFood have each cornered more than 40 per cent of the market. After those three, that leaves probably around 5 per cent to be divvied up among the minnows. But now Baemin itself is getting squeezed out: it is downsizing its operations and laying off staff, following the resignation of CEO Jinwoo Song in September. It is on the cards that Baemin will completely exit Vietnam in due course (as by the way, Foodpanda did in 2015), leaving its 10 per cent or so market share for GrabFood and ShopeeFood to fight over. GrabFood delivers in 19 cities in Vietnam and continues to expand its reach. ShopeeFood delivers in 16 cities. The two parent companies are differently focussed: Grab is a classic superapp while Shopee doesn’t do ride-hailing but has a huge e-commerce business, making it easily Vietnam’s market leader. How much upside in Vietnam? To see how much upside there is, it is worth comparing Vietnam to other countries in the region in terms of its consumption of food ordered online. It is worth cautioning the reader though that estimates of market size (GMV) differ wildly so the following numbers should be taken as rough indicators only. According to one popular estimate, by Momentum Works, the Vietnam food delivery market (gross merchandise value, or GMV) was worth US$1.1 billion last year, but other estimates put the number much lower. Whichever estimate you like to use, it seems clear that Vietnam’s 97 million people are among the lowest consumers of online food per capita in the region (anywhere from $7-$11 per year). Singapore’s 5.5 million people spend about $450 each per year ordering food online, Malaysia’s 34 million people spend about $65 each, Thailand’s 72 million spend $50 each, and Philippines’ 114 million spend $20 each per year with their food apps. To gain a better perspective, it is important to adjust for other factors, particularly income and internet penetration. If we do that, the Philippines offers an interesting comparison because its income per capita is not too dissimilar to Vietnam’s, yet spending on online food delivery in Philippines is at least twice that of Vietnam. Thailand’s income per capita is a little less than twice that of Vietnam, but Thais spend about five times more. Malaysians bring in three times more income per person than the Vietnamese, but spend six times more with their food apps. There are other complex factors of course and looking only at total spending, population and incomes doesn’t tell the whole story. Internet penetration is also important. According to the World Bank, that metric stood at 74 per cent in Vietnam in 2021, which would have been a high watermark because of the pandemic. In comparison, it was just 53 per cent in Philippines and only a bit higher — 85 per cent — in Thailand. The message from these headline metrics is clear: Vietnam’s online food delivery market is underpenetrated and there is substantial upside to be had relative to its peer countries in the region. This makes the retreat of Baemin look much more like a competitive failure than a lack of opportunity in the market. Baemin only entered Vietnam quite recently, in May 2019. It doesn’t have ride-hailing but has tried to innovate in other areas, such as introducing a beauty brand and piloting electric motorcycles for its food deliveries. Grab strengthens its market position and Shopee’s parent runs at a profit The potential for upside though is good news for both GrabFood and ShopeeFood. Grab in particular has an advantage because it also operates a ride-hailing service and its drivers are able to switch between the two services pretty seamlessly. According to Grab, in Thailand and Indonesia as well as Vietnam, 7 out of 10 of its two-wheel drivers also performed food delivery duty in 2022. The flexibility improves the efficiency of deliveries and offers the riders an opportunity to increase their incomes. (Commissions are low and riders are apt to cause mayhem on the roads trying to meet the aggressive delivery schedules.) Company GMV across Southeast Asia reached an all-time high in the second quarter of US$2.57 billion. Revenue on deliveries (Grab’s cut of the GMV) were up 118 per cent to $292 million. Net loss for all company operations including ride-hailing narrowed to $148 million, from $572 million last year. Shopee’s parent company, Sea Ltd, doesn’t separate out its online food delivery results from its e-commerce business. Revenue from e-commerce grew by 11 per cent to reach $1.9 billion in the second quarter (the third quarter results will not be announced until mid-November). Company net income was $331 million, reversing a $931 million loss in the second quarter last year.