AirAsia, the Malaysian budget carrier, has unveiled AirAsia Food delivery services, as part of its plan to build a super app similar to existing competitors Grab and Gojek in this space. The platform will initially feature 80 restaurants including Swee Choon Tim Sum Restaurant and NoSignboard Seafood, before onboarding another 300 vendors subsequently.
Lower Commissions, Lower Prices And Greater Cost Savings
Currently, AirAsia charges restaurants a 15% commission per delivery, much lower than those offered by its main competitors —GrabFood, Foodpanda and Deliveroo— ranging from 25-35%. This makes the app an attractive proposition for food vendors who have thinner margins and are looking to diversify revenue streams and reduce their costs at the same time. These cost savings are also expected to spill over to end-users, who will be able to enjoy lower prices on their food and delivery fees.
At the same time, the lower commissions will also likely attract small to medium-sized restauranteurs who are disgruntled with the incumbents in the space gobbling up their margins. After all, how much can you make selling mee pok when the delivery service is currently taking $1.35 off every $4.50 bowl you serve?
This is part of AirAsia Food’s market penetration strategy: run promotions and burn cash to acquire new vendors and customers until the business reaches critical mass. This is also why you should try out AirAsia’s food delivery platform before it reaches scale; early birds can enjoy greater cost savings on food delivery.
Cheaper Does Not Mean Better; User Experience Matters Too
Beyond cost structures, AirAsia Food also needs to ensure that the user flow is smooth, and its end-to-end food delivery process is fuss-free. On this end, Tony Fernandes, AirAsia’s CEO, plans to lower costs by getting rid of maps to track riders and food, opting instead to use Whatsapp to handle orders for vendors.
This bare-bones method of food delivery management means that AirAsia can cut down on technology development costs, and vendors do not need to struggle to learn how to use mobile devices or P.O.S. (Point-Of-Sale) systems to manage orders.
On the end-user side, however, it remains to be seen if this food delivery system works better than the existing incumbents’, now that people (users and riders) are used to the ability to view and track their food the moment an order is placed.
Read Also: Price Guide To Confinement Food Delivery Services In Singapore
Will Singaporeans Be Okay With A One Hour Wait Time?
The average waiting time for AirAsia Food is currently an hour, notably longer than its competitors. This is because the platform only has 500 riders at the moment, with plans to onboard more riders as the service expands.
Comparatively, the other 3 food delivery platforms boast around 10,000 riders each that provide faster deliveries, on average half of AirAsia’s.
If you have the bandwidth to order your food early, you can negotiate the longer waiting times that may also plague the Big Three platforms during peak hours.
Delivery Fees: There’s Only So Much You Can Squeeze
Food delivery platforms make money off commission from vendors and delivery fees, but they still need to pay their riders and staff. This means that costs can be lowered, but not by much.
The biggest of the Big Three, GrabFood charges $3 to $5 per food delivery but may charge more if distance increases. Grab also levies a $0.20 platform (service) fee ($0.30 from 22 April 2021)and a small order fee. Similarly, Deliveroo charges $3 to $5 per food delivery depending on demand and distance and levies service fees ($0.20) and small order fees. Foodpanda delivery fees can vary, starting at $1.99 for certain locations but can go up to $4.99 or more.
AirAsia Food delivery fees start at $2.99 but expect them to go up the farther away you live from vendors.
You may not find much of a difference in terms of delivery fees as riders have to make a living too.
Limited Variety For Now, But Smaller Restaurants And Vendors Are Getting Interested
Compared with existing competitors, AirAsia Food’s 80 vendors (expanding to 300) may look more like a dessert bar rather than a buffet of choices, but smaller vendors are getting on board the train due to lower costs.
If AirAsia Food can successfully carve out a niche market of smaller vendors, it can potentially outmuscle its larger rivals and provide alternatives to the current choices afforded to consumers.
Read Also: 7 Alternatives To Food Delivery Platforms For Greater Variety And To #SupportLocal
If you are looking for a no-frills app for cheaper food and you don’t mind long waiting times, AirAsia may be the food delivery service that fills the gap for Singaporeans who are looking for greater value for money.
