Foodpanda Failure

FOOD DELIVERY FOODPANDA’S SERVICE FAILURE A Marketing Management Report

By - Group 12 Ajay R (MBA19170) ABHIJIT SAHOO (MBA19164) RAKESH T (MBA19221) RISHABH GOYAL (MBA19270) SUNIL SWAIN (MBA19235) YEDURU SOWJANYA (MBA19245) VAISHNAVI C (MBA19241)

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Table Of Contents 1. Acknowledgement ...............................................................................3 2. Introduction ……………………...................................................................4 3. Service Failure and Gaps.......................................................................5 4. How to Improve Service quality…………………………………………………………8 5. Way Forward.........................................................................................9 6. Lessons Learnt.......................................................................................9 7. Conclusion…………………………………………………………………………………………10

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Acknowledgement This project would not have been possible without the relentless efforts of our team members and those who gave their meaningful insight and made our primary survey a success. The opportunity to carry out this research was given to us by the institute and was part of our curriculum, but it could not have been such a great learning experience for us if the efforts of Prof. Somnath Chakrabarti were not so relentless. He showed us the way of how marketing research is the real learning path that students should follow. Also, he showed us through his lectures and insights on various companies, how customer insights have no limit and even the minutest of details matter.

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Introduction FoodPanda, a food delivery app-based service provider faced the heat in second half of 2017 and early 2018 when its own promotions and discounts got out of hand and resulted in delay, technical issues and slew of other problems. The problem began when Ola acquired Foodpanda for $200 million. Company went on promotions and discounts spree which quickly got out of hand as they were offering desserts for prices as low as Rs 9.00. This lead to an increase on orders which lead to delay in delivery timings, restaurants not getting paid and other technical issues.

This is one of the problems that lead to foodpanda getting out of food delivery business with various third party restaurants and focus on home grown brands. Other problems faced by foodpanda were poor motivation of delivery agents, not paying restaurants on time which lead to restaurants dropping foodpanda from their portfolio of online partners, abhorrent delivery times which sometimes went up to 1 hour and more. We will look at these problems from customer perspective going forward in this report.

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SERVICE FAILURE AND GAPS Offers: 

Foodpanda, like most of the other online food delivery firms doled out big discounts to acquire customers and increase market share.

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The biggest food campaign of foodpanda was called ‘the crave party’. The campaign started with desserts offered at Rs 9, followed by snacks starting at Rs. 19 and biriyani starting at Rs 79.

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But, foodpanda’s biggest competitors, Zomato and Swiggy were much ahead on their discount games. Zomato were offering a flat Rs 250 discount for its customers in Delhi NCR, Mumbai, Bengaluru, Pune, Chennai, Kolkata and Hyderabad. Customers could save Rs 150, and receive an additional Rs 100 paytm cashback.

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Market leader Swiggy, however, is selectively doling out introductory 50 per cent discounts on customers’ first three Swiggy orders with a minimum order value of ₹99 and a maximum discount per transaction of ₹100 in new cities like Vadodara, Surat, Vizag and Indore, as it continues to expand its reach. It has also partnered with Kotak Bank and Amazon Pay to offer 25-40 per cent discounts.

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Uber Eats, which entered the food delivery market last May, is offering snacks starting at ₹39, rice bowls for ₹99 and free desserts with some orders.

Delivery time: 

Foodpanda’s delivery system is almost similar to that of other online food delivery service providers. The delivery procedure includes: finding a restaurant, order, checkout and payment, and delivery.

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But long wait times and response time affected the efficiency of the system. Below given are the customer apprehensions about the delivery time of foodpanda compared to other service providers.

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Customer service: 

Foodpanda manages all their customer service inquiries through Zendesk support and Zendesk chat.

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From the opinions of users, we got to know that the customer services of foodpanda were bad compared to other service providers.

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The customer service was not efficient because of the poor attention to details, inexperienced representatives, and unprofessional and impersonal interactions.

User experience: 

The users got more frustrated with the experience of ordering food on foodpanda

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It starts with the sign- up process itself. The app doesn’t respond with the otp used for signup. It shows an error which continues for days. And this is an initial problem of experience with foodpanda app.

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There is no cancellation option available once the order is placed as in the other online food delivery apps.

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And at times, when a user places an order, it happens that the restaurant doesn’t confirm the order. So, the app shows the message “waiting for the restaurant to confirm your order” for hours long. This really irritates a hungry person.

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And the chatbot service provided takes at least 20 minutes to connect with an assistant

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Foodpanda doesn’t provide the option to call the driver assigned for our order. This is a problem because when a customer want to leave some message to the driver regarding address or other, it won’t be possible.

Loyalty Programs: 

20% discount vouchers on order above Rs. 100 and the voucher codes will be sent through mails to the customer. The other online food delivery giants were attracting customers with major 30-50% discounts on the current order itself, but foodpanda gives a voucher that can be used in the next order.

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Number of restaurants registered: 

At its peak Foodpanda had 1 million restaurants registered on its app as compared to Zomato’s 1.4 million.

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The process of registering is a bit difficult on foodpanda as compared to other platforms. Some of them are: o

Heavy commission fee

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Restricted online space which limits advertising ability of the restaurants

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Not a promising investment, as foodpanda is not backed up by huge funds

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How to Improve Service Quality As is evident by recent announcements and news by Ola regarding foodpanda, it is evident that Foodpanda is not coming back into food delivery business with third party restaurants again. But there is one major issue that is faced by all the Delivery businesses i.e packaging and tampering with food.

For food delivery operations like Zomato and Swiggy, it becomes increasingly important to come up with methods that can be employed at a large scale within their network in order to ensure that the food packages are not tampered with. The system being used also has to be hassle free both for the restaurant packaging the food and for the consumer who ordered it.

One such easily implementable solution is the use of Tamper Evident tapes. Once sealed, these tapes upon removal leave a mark on the surface they were initially stuck on, making it clear that the packages might have been tampered with. Merits of this method are that it isn’t capital intensive and is rather easy to use.

Method 1

Method 2

Method 3

The second method that can be used is heat sealing the food packages. The equipment to be used is shown in the image above. Using a high-temperature metal contact this machine effectively seals the top of the food tray and makes the packaging spill proof. However, implementation of this method will be capital intensive. Another issue with this kind of method is that each machine is meant or sealing a particular container dimension, which would require standardization of the packaging material, making it difficult to implement.

The third method which can be employed is the use of shrink wrap. Simple to use, cost-effective and difficult to tamper with this kind of packaging is not specific to any container size or shape, making it much more convenient to use. 8|Page

Way Forward 1. Cloud Kitchen Business –The plan is to focus on the cloud kitchen business that was launched after Holachef, a food-tech start-up based in Mumbai, was acquired by Foodpanda. As part of its cloud kitchen business, Foodpanda currently owns three private label brands including Great Khichdi Experiment and FLRT. 2. Foodpanda to focus only on cloud kitchen instead of food delivery business- Foodpanda would focus only on running the cloud kitchen brands instead of a food delivery business. 3. Focus on in-house brands-Foodpanda has three in-house brands and is likely to add more. Foodpanda is focusing on in-house brands in order to achieve higher profit margin. 4. Expanding portfolio-Foodpanda will now focus on expanding its own portfolio of private labels.

Lessons Learnt The lessons that can be learned from Foodpanda’s failure are: 1.Technical issues can lead to closing down of a Company- An order placed on Foodpanda that had passed through the transaction process was not aware that the restaurant has shut down its operation. However, this process of ordering from closed restaurant went for a few months until Foodpanda became suspicious, but it was too late for them. So, Foodpanda should ensure that there is no technical failure in future. 2. Communication is very important- Foodpanda would take orders from the customers but failed to share it with the restaurant in time, which would result in customers calling directly to restaurant and delaying delivery. 3. Emphasis should be put on usage of tamper proof seals- The emphasis should be put on the use of tamper proof seals that guarantee the authenticity of their food package and thus the reputation of Foodpanda and its employees. 4. Motivation of the workers is beneficial-Motivated employees are beneficial for any companies. Foodpanda needs to ensure that the employees are satisfied and motivated to work hard. 5. Controlling the flow of Promotion and Discounts- As Foodpanda provided a lot of discount and promotion offers it got the initial boost in orders but was not able to maintain the order deliveries and quickly lost the push it had gained into the delivery market

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Conclusion In order to ensure the success of the delivery business, it is important to convey to the customers that the company is taking their issues seriously. This can be done by running an ad campaign where Zomato/Swiggy can showcase various ideas and their implementation. The emphasis should be on the usage of tamper proof seals that guarantee the authenticity of their food package and hence the ethical image of brand and its employees. Company also needs to make sure that their employees are satisfied and they do not indulge into such practices in the future. Each and every employee needs to be informed about the measures taken up by the company. The reward system keeps the employees motivated to work hard and fairly. It can also be concluded from Foodpanda debacle that company should be careful with its offers and discount and not let them get out of hand as it hampers relations with both customer and restaurants

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