TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Lack of competition lets food delivery giants take large cuts
While a latecomer has entered the market with a slightly lower commission, high fees charged by the biggest names in the business are deemed overly burdensome for merchants.
Change Size
Food at your doorstep: During the COVID-19 pandemic, food delivery services helped ride-hailing firms like Gojek survive. (JP/Arief Suhardiman)
A
lack of competition has been blamed for helping food delivery companies charge high fees, hurting micro, small and medium enterprises (MSME) that rely on such platforms.
Ride-hailing and financial services company Gojek, a subsidiary of tech giant GoTo, charges 20 percent with an additional Rp 1,000 (7 US cents) for every transaction on GoFood, its food delivery platform.
GrabFood, the food delivery service of ride-hailing company Grab, takes 30 percent in commission for every transaction.
“When fees are relatively high, there should be new players offering lower fees. That is the case in a market with healthy competition, but because the competition tends to lead to an oligopoly, it is very hard to bring down the fees,” Bhima Yudistira, an economist at the Institute of Development for Economics and Finance (Indef), told The Jakarta Post in a phone interview on Tuesday.
Indonesia’s food delivery service market was estimated at US$3.7 billion in 2020, larger than those of neighboring Thailand, Singapore, Malaysia, the Philippines and Vietnam, according to Momentum Works. Grab accounted for 53 percent of that and Gojek for 47 percent.
Read also: Indonesia’s $3.7b food delivery market largest in region
The market previously had another major player, Berlin-based Foodpanda, but tight competition with then-newcomers like GoFood forced it to close its business in Indonesia in late 2016, after operating since 2012 and partnering with thousands of restaurants.
