Saying Goodbye: Why Did GrabFood & ShopeeFood Fail in Vietnam?

After launching in February 2021, Andale went on to onboard 64 local restaurants in Ho Chi Minh City—the only city it’s present in so far. It charges restaurants a lower commission than Grab and Shopee—18%, which was increased from the initial offer of 10%. “We give each restaurant a choice of doing delivery with their own drivers or a third-party company. Or they can choose our system, which will call an Ahamove driver to deliver the food,” Arizaga said.

Ahamove is one of a number of restaurant-facing logistics companies, like Hong Kong-headquartered Lalamove, which fulfils delivery orders made directly through Facebook or by phone. “We saw the market opening, we saw the difficulty a lot of foreigners have with Grab or Baemin since they aren’t English-first apps, and also the quality of restaurants that people are familiar with and want to order from,” Arizaga added.

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A slightly older startup also operating in this space is Ho Chi Minh City-headquartered Loship. Founded in 2017, Loship is a quick commerce startup that offers one-hour deliveries for a number of categories, including food, groceries, medicine, flowers, and business-to-business (B2B) supply of raw materials and ingredients for F&B merchants.

After Covid hit, Loship moved towards supplying essential goods such as instant noodles and cooking oil at wholesale prices, while also expanding its customer base to include industrial kitchens, hospital canteens, and charity services, said CEO Trung Nguyen.

“During the lockdown, we noticed that many merchants were struggling to keep their business afloat. In such cases, Loship helped some of them embrace new models to transition from ready-to-eat meals to fresh food and essentials, and continue their business on our platform,” he added.

Loship’s commission fee for restaurants varies from 15-20%, depending on the vendor’s scheme. Currently present in 12 cities and provinces, the platform aims to expand to 25 by the end of 2022. In August last year, it raised US$12 million in a pre-Series C round at a valuation of US$100 million.

Understanding The Shift in Retail

Andale and Loship may be small players still, but Woods sees space for them in the sector. “Andale has potential as a niche, sort of premium option for western and higher-end places. Loship is really a logistics company that is sort of moving backwards to a food delivery app, but I think they have potential as more of a copycat brand of Grab and Gojek. They have some capital, and their whole thing is around speed.”

But the potential endgame for someone like Loship, said Woods, would be to build something that major players like Grab decide is too hard to do themselves, and they’d rather buy out the smaller competitor instead. Just like Shopee’s acquisition of Now and Baemin buying out Vietnammm.

Jianggan Li, founder and CEO of Momentum Works, sees consolidation as a possibility as well. “Some of the exit options for these companies could be acquisition by major players, or expanding their delivery infrastructure to the entire ecosystem itself.”

And that presents an opportunity for someone like Andale. “Some may laugh it off, but if they can build a solid base among expatriates, and the likes of Loship take other market fragments, that’s actually a pretty big risk for Grab,” added Woods.

However, Li also believes that the next major battlefield for delivery platforms and services is not food delivery. It’s groceries.