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Discounts spoil online food delivery market, experts warn
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App battle: Gojek, Grab, Airasia, Shopee and Traveloka are among several technology companies looking to offer superapps. (JP//Eisya Eloksari)
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pecial offers and promotional pricing in the online food delivery (OFD) industry have gone too far, industry analysts say, urging platforms to look for more sustainable ways to attract and retain customers.
Handyanto “Handy” Widjojo, research fellow at Jakarta-based think tank Tenggara Strategics, said on Wednesday that too much of a reliance on discounts and promotional pricing could be unsustainable for the platforms, as the so-called “investments” were actually expenses depleting profits.
Moreover, a prolonged heavy reliance on discounts could be bad for the ecosystem as customers were conditioned to seeing the price as all that mattered, rather than values in the services offered.
“If discounts were the only main factor for a market to grow, I do not think that would be healthy for the industry,” Handy told the audience at an event hosted by the think tank to publish its OFD survey.
“Reflecting on other industries, of course, you all know what the consequences would be if an industry were built upon all-out price competition. We had better not do it again,” he added.
Read also: Indonesia food delivery industry grows 24 percent
Handy did not mention what industries he meant.
