The digitalisation of Indonesia’s F&B is unprecedented. Many startups have emerged to revolutionise the industry and trigger attractive growth opportunities for F&B businesses. The overall F&B market is growing moderately at a CAGR of 3.2 per cent. Yet, sales via F&B E-commerce have reached almost IDR3 trillion (US$212 million) in 2019, which is an astonishing growth with 38.2 per cent CAGR in the past six years.
This shows the robust shift and strong acceptance of digital platforms among Indonesian consumers. YCP Solidiance’s latest forecast estimate that F&B e-commerce sales would reach IDR15 trillion (US$1 billion) by 2024.
Given the prolonged COVID-19 social restrictions, those figures are highly achievable as the market has become heavily reliant on online delivery services to mitigate health and safety concerns. However, online delivery is only one piece of the puzzle in Indonesia’s digital F&B landscape.
Seven major trends in digital F&B
The current state of digital F&B in Indonesia can be reflected by the following trends:
Dominance of the super-apps in delivery service, online order, and fintech
The super-apps have branched out from their ride-hailing origins to capture the three major roles. GoFood and GrabFood’s rise to prominence in Indonesia has been compelling.
Also Read: Food Market Hub lands US$4M Series A to grow its cloud-based F&B management biz beyond Malaysia
Nielsen reported that the super-apps have dominated the online delivery scene, with a usage share of up to 85 per cent, decimating other platforms such as restaurant hotlines, mobile applications, and websites.
The rise of fintech
Many payment options now need to be catered by F&B establishments, which drives the demand for payment gateway services. Ipsos reported that GoPay is currently the leading digital wallet with 54 per cent loyalty rating, which is surprising as GoPay has been toning down their promotions.
This trend showcases that the battle in fintech that has reached organic retention. Meanwhile, the likes of Ovo, Dana, and LinkAja have loyalty ratings of 29 per cent, 11 per cent, and 6 per cent, respectively.
Future integration between online delivery and PoS terminal
Currently, there is limited integration between online delivery and PoS terminal. Most F&B enterprises still record their online transaction manually to their PoS system.
With the recent acquisition of MOKA by Gojek, connectivity between online delivery service and PoS terminal appears to be on the horizon. Prior to that, Pawoon has made the first move for integration by connecting transactions from GrabFood into its system.
Food is now more social than ever
Customer engagement players allow F&B enterprises to extend their digital marketing by providing an avenue for public reviews, voucher distributions, promotions, table reservations, etcetera.
Also Read: ‘Underdeveloped payment infrastructure holding e-commerce in Indonesia’
Most players present themselves as foodie apps (i.e. Zomato, Qraved, Pergikuliner), travel apps (i.e. Tripadvisor, TravelokaEats) or retention platforms (i.e. Tada). The social media and tech giants (i.e. Instagram, Facebook, Google Reviews) are also in the game.
PoS terminal making moves toward customer engagement via CRM feature
PoS terminal players have been upping up their game in customer engagement with the incorporation of centralised customer relationship management (CRM).
This built-in feature enables display of customer reviews, automated or personalised response from enterprises, provision of discounts and promotions for customer retention.
Super-apps looking to complete the ecosystem with entry to produce marketplace
In 2018, Grab and HappyFresh sealed a partnership to launch GrabFresh, an in-app grocery platform. gojek’s GoShop service also provides connectivity to local produce sellers. This move by super-apps is a step towards a holistic journey from grocer-to-kitchen-to-table.
Cloud kitchen’s growing popularity among restaurants
Growth for F&B enterprises tend to be curbed by limited capital, hindering them to quickly expand to other regions. Cloud kitchen solves this issue by giving restaurants access to prime locations at a fractional cost as they provide shared kitchen space and workforce, with no dining area. Several players are currently in this role, including GoFood and GrabFood.
How innovation help digitalise F&B
With fierce competition in the digital F&B battlefield, we recommend for new entrants to innovate on roles where the first-mover advantage is more likely. Generally, it is better to avoid roles where market adoption is sluggish compared to the pace of product evolution.
Areas where both aspects are moving rapidly should also be avoided as fast technological advancement will make your innovation more vulnerable to duplication by other players. These conditions provide little chance of long-term success, especially for companies with limited resources. For instance, new entrants can try innovating on the following gaps:
Digital procurement solution not yet available
Digital procurement solution can potentially be achieved through collaboration with online produce marketplace. Currently, these players are focused on B2C segments. Most of them act as an interface for farmers (e.g. TaniHub, Sayurbox, Tanijoy).
In contrast, HappyFresh is positioned as an interface for modern markets. For the prior model, there are complex issues at the agriculture level, particularly the reliance of farmers on traditional middlemen and wet markets.
Insight and advisory solution not yet available
Given that most F&B enterprises are SMEs, many business leaders make decisions in traditional, non-data driven manners. Despite sales performance data from PoS terminals, not everyone can extract insights and synthesise actionable strategies.
An ‘insight and advisory’ role can be created to help F&B businesses navigate growth.
Minimal integration encompassing all roles and features
There is little connectivity across digital roles. The major pain point for enterprises is in extracting data from delivery services, which is a non-existent feature in most PoS terminals. Current players only provide exclusive integration. With COVID-19 social restrictions, the data gap widens as the key to customer understanding lies in the data collected by delivery service players.
Reluctance of top-tier F&B establishments to join the online delivery ecosystem
There is an identified prestige and visibility element that is being maintained by top-tier F&B restaurants, which is not addressed by the super-apps as they play within the mass market.
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