Foodpanda - Delivery Woes

A few weeks ago I posted on Facebook about a series of poor experiences with Foodpanda orders. In response to my post on social media, I got a call from a member of the Foodpanda management. As part of the conversation, I made a commitment to the gentleman to place 3-5 orders on FP over the next ten days – My logic was simple. If all of the orders were delivered on time, the overall score for Foodpanda would be 5 delayed deliveries in 10 orders, which would be a passing score (50% orders delivered on time), and hence something to work on, going forward. Here is my review of the data (please note this assessment is purely on efficient and timely delivery, not on food quality):

Sept 14 – OMG – Dinner: Stated delivery time of 45 mins, food was delivered in 30 mins in good order

Sept 17 – Soi – Dinner: Stated delivery time of 45 mins, food arrived after 60 mins. Food was a little cold by the time it reached.

Sept 19 – OPTP – Lunch: Stated delivery time of 45 mins, order arrived on time, no issues.

Sept 26 – Xander’s – Lunch: Placed the order around 12 noon (45 minute stated delivery time). Order arrived a little over an hour later. Sandwich had gotten quite soggy by the time the food arrived.

Sept 28 – Shola BBQ – Lunch: Delivery was 10 mins late, food arrived after 70 mins of order (stated delivery time of 60 mins). One of the items ordered wasn’t available and I got a call from the restaurant within 5 mins of placing the order on the app asking if it was ok to substitute something else

Oct 6 – Pantry – Lunch: Food delivered in 30 mins (stated delivery time of 60 mins) and everything was in good order.

Prior to this experiment, 5 of the last 7 orders had reached me with significant delays (by this I mean a stated delivery time of 60-75 mins, and orders reaching 90 mins or more later). In the above sample, 50% of the deliveries were late.

Conclusions:

In this (non statistically significant) sample, although 50% of the orders did not meet their promised delivery time, there were no significant (>15 minute) delays.

Howver, there are still some serious issues in delivery times and expectation management with Foodpanda. Management seems to care about the customer experience, but this small sample of data suggests there is a long way to go.

I don’t know how representative these statistics are. Foodpanda declined to share any data with me in our earlier phone conversation, although they said they are quite committed to analyzing data patterns to try and improve customer experience.

They also claim to have a robust process of performance review with their restaurant partners, but I have not seen this in action or seen any hard data on what performance management measures they take, or indeed how many restaurants have been dropped from the roster due to poor customer service performance.

Again, my suggestion to Foodpanda users would be to make sure they are flagging late deliveries in the app so that they come up in the analysis the company is doing.

The gentleman I spoke to made me an offer to come visit their office to see how they deal with these issues. I told him there was little value in making a visit as a tourist, but if the Foodpanda team was interesting in a free management consultancy session with me, based on my professional skillset, to identify performance gaps and form action plans to address the same, I was willing to make myself available for a few hours. I am yet to hear back on this offer. 

Final Thoughts:

All external indicators are that the Foodpanda team knows what it's doing. Over the years, they have built a virtual monopoly in the 'food delivery aggregator' segment and, once that dominant position was in place, they have steadily introduced delivery fees at various levels (and in the bulk of cases these fees are in place even though delivery is managed by the restaurant, so it's not a pass-through of third party delivery operator costs). As any technology company with a dominant position would, they are clearly now using their dominant position to tweak aspects of the experience to maximise revenues, and frankly there is nothing wrong with that.

Where the conflict arises, is that their utility is dependant on having a critical mass of restaurants on the roster. This means, naturally, that there would need to be a very serious issue in order to trigger a de-listing of a restaurant, particularly a popular one (80/20 says that the top 50 or so restaurants probably generate 80% or more of the orders). Most customers wouldn't be too bothered if their orders arrive 10-15 minutes late anyway, what with Karachi traffic having the reputation that it does.

I would suspect that, as is common in the tech-based aggregator business model, Foodpanda charges the restaurant a percentage of the order value as a commission, and likely a further percentage if they process the credit card transaction. Does this make Foodpanda-sourced orders less lucrative for restaurants? Yes. Would it tempt a restaurant to prioritise direct, and hence more profitable, orders first? Possibly.

At this point, restaurants probably need Foodpanda so, apart from someone as big as McDonald's, its unlikely that the others will show them the door. The power rests with Foodpanda to drive performance with their partners. I am yet to see that manifest in the customer experience.

The other interesting aspect of this is how hands off Foodpanda's app, which otherwise gives you at least one push notification a day, is with delivery related issues. So far Foodpaanda is clearly content in being reactive when it comes to timely delivery of orders (no push notification to ask if you received your order, no button to press to log delivery time so their algos can dynamically track delivery times etc). Based on this, it isn't too much of a stretch to assume that this reactive approach is a deliberate strategy