Food delivery has become one of the hottest topics in the news right now, especially as the recent Google and Temasek report highlighted it as one of the main drivers of eCommerce growth in the region.
With this is in mind, it seemed like a good time to see how the local food delivery scene is faring compared to the major players like GrabFood, Foodpanda and Deliveroo, so we spoke to Gabriele Fadda from Malaysian food delivery service, SmartBite.
This Malaysian startup is doing things very differently from the rest of the pack by focusing on providing the corporate sector with quick delivery options at no extra cost by limiting food options and providing timeslots for delivery. This goes against the common food delivery model of wide selection and on-demand delivery.
We spoke to them to find out how they are doing and what we can expect from the Malaysian food delivery industry.
What was the story behind starting SmartBite?
When we started SmartBite, we were motivated to create a model that was extremely efficient and convenient for people working at the office. We first started with a basic technology and went on to spend time deep diving into the major pain-points of working people. We saw an opportunity to create a different business model built to become a dominant an innovative player in the industry. When we started, we were using SmartBite ourselves. Our goal was to create a simple and clear product that was easy and quick to use and with no extra fees.
Why did you choose a model, which reduces choice in food delivery? Was it consumer want or do you believe this helps create an efficient process?
We immediately understood that for people at the office, it is not really important to have thousands of restaurants available. The majority of office employees within Kuala Lumpur’s Central Business District have similar preferences and time is a major deciding factor in how they choose their meals. This is the main reason why food delivery is not a frequent alternative for them; delivery is not always on time and the prices are not affordable once the extra fees and minimum order are included. By understanding this crucial point, we immediately worked on developing our technology. In limiting the choices for our customers, restaurants have higher control over their production of these selected meals which are forecasted in advance and thereby eliminate the inefficiencies and unpredictability which arise from an extensive menu. Of course, by limiting the choices of meals, it is important to provide a reliable and curated selection to the customers. In this regard, machine learning and AI are crucial. The rotation and curation of food suppliers and meals are chosen by analysing data such as previous orders and customer preferences. At this moment, our supply chain is a mixture of local restaurants and popular chains such as Nando’s, Tealive and Krispy Kreme.
Food delivery startups tend to grow or fail very fast, just like the traditional F&B industry. What has been the main reasons SmartBite has survived and continued to grow?
We kept a lean process while building the fundamentals of the business. Traction and customer retention are extremely important to attract investors. We decided to invest our efforts in deeply understanding our customer base first before developing a proper technology and expansion plan based on these insights. I would add that it is also important to build a product that has a clear direction and where possible, to have the ability to become a dominant player. Our fixed costs are relatively low and this let us keep going with minimal losses while validating our business model.
Why KL instead of other markets like Singapore or Indonesia? What were the factors that made Malaysia the best choice for you?
Our funding team was in Malaysia and we are working here as well. The main reason why we wanted to start here was because of our strong existing networks in the corporate realm. Additional reasons can be attributed to the bureaucracy and the costs of starting a business in Malaysia. The governmental institutions in Malaysia are really supportive towards tech companies and this helped us in obtaining the MSC status. Malaysia is a great place to test out SmartBite as a service due to the complexity of the customer base and their food preferences in a multicultural country. We are confident that what we learn from Malaysia would undoubtedly help us in our expansion to other countries in the region.
Logistics and technology usually play a large part in the food delivery business. What is the technology like that drives the system behind SmartBite and how is it different from others like Deliveroo or GrabFood?
Other food delivery models provide an unlimited choice to their customers so they focus on closing as many food merchants as possible. Unlike the commonly used model of on-demand and point-to-point food deliver, we set ourselves apart by curating meals and delivering on a fixed time slot. This allows us to bulk food orders for a single delivery personnel and saves significantly on logistical costs. We train our delivery riders, in cars and motorbikes, in their service as the final customer touch point. Although our trips per day are lesser, the tasks itself are more complicated and heavier to complete. As the meals are delivered on a fixed timeslot, this also means that restaurants would be able to prepare these forecasted meals in advance, eliminate unpredictability in inventory management and increase productivity during off-peak hours. This is unlike on-demand service which means restaurants would have to rush out orders during peak hours which may compromise on food quality and delay delivery of these meals if they are at overcapacity. Similarly, we extensively collect key data points from such as tastes, food preferences, orders and other patterns from customers and analyse them so that we are able to provide sufficient choices of quality meals on rotation. By passing on these benefits, SmartBite customers are able to enjoy better service, food quality and cost savings from no delivery charges.
Do you plan to expand across the region? What challenges do you see in those potential markets?
Yes, we are planning to expand in the next year (2019). We studied the market by abstracting the customers’ pain points and finding commonalities to working professionals around the world. Of course, culture remains the main challenge. Every city in Southeast Asia has a unique culture and background that differs from one another, especially when it comes to food. Nevertheless, we believe that Kuala Lumpur is a testing ground for us that will prepare SmartBite to face such challenges in the future with a positive attitude.
What advice would you give a new entrepreneur looking to set up their startup in the region?
I would say as a foreigner in the region, it is important to understand and adapt to a different culture. The region is growing at an impressive speed and offers a lot of opportunities to those who are able to understand the culture of the country one’s business is in and adapt accordingly. Another important point is to keep meeting fellow entrepreneurs and customers so that one can always learn to improve and be better. On a whole, I would say empathy is important, not only in terms of empathy towards new cultures but customer behaviours as well.
We speak to one of the most successful entrepreneurs in the region
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