The Online Food Delivery Market in Indonesia was valued at USD 1.75 billion in the year 2019 and is estimated to reach USD 1.95 billion by the end of the year 2020.
It is expected to grow at the CAGR of 11.5% within the time horizon of 2020-2025 because of busy consumer lifestyles, increasing smartphones penetration rate, rising adoption of online food delivery services, and growing food & beverages industry.
However, cyberattacks & data breaches issues in digital platforms, and concerns regarding safety and quality of restaurants food might restrain the growth and development of this market.
Its market value will reach USD 3.36 billion by the end of the year 2025.
- Definition / Scope
- Market Overview
- Market Risks
- Top Market Opportunities
- Market Trends
- Industry Challenges
- Technology Trends
- Pricing Trends
- Regulatory Trends
- Market Size and Forecast
- Market Outlook
- Technology Roadmap
- Distribution Chain Analysis
- Competitive Factors
- Key Market Players
- Strategic Conclusion
- References
- Appendix
Definition / Scope
Online food delivery is the process concerned with the ordering of food products from the digital platform and management of the customer’s orders.
The food orders are placed through either a website, application, phone, or other digital platforms. The ordered food products can be either ready-to-eat food or food specially prepared for consumption.
The payment for online food delivery can be placed through cash on delivery and online platforms. The online food delivery market is concerned with the order placement and delivery of food products.
Based on the type of online food delivery services, the online food delivery market is categorized into restaurant-to-consumer and platform-to-consumer segments.
Market Overview
Online food delivery is the largest category of e-commerce, which accounts for almost 27.85% of all e-commerce sales in Indonesia.
The total market size of the online food delivery market in Indonesia is valued at USD 1.75 billion in the year 2019 and is expected to reach USD 1.95 billion in the year 2020.
Its market value is expected to grow at a CAGR of 11.5 % within the forecasted time horizon of 2020-2025. Its market value is expected to reach USD 3.36 billion by the end of the year 2025.
The number of platform-to-consumer delivery users is expected to reach 31 million by the end of the year 2024.
Based on the channel type, the smartphone application segment is leading the market with a market share of almost 60.2% of the total online food delivery market in Indonesia.
The market size of this segment is valued at USD 1.08 billion in the year 2019. Based on the type of online food delivery services, the platform to consumer delivery segment is leading a market with a market share of almost 51.28% of the total online food delivery market of Indonesia.
The market size of this segment is valued at USD 0.90 billion in the year 2019. Based on the use of the application, the Go Food segment is leading the market with a market share of almost 49.36% of the total online food delivery market in Indonesia.
The market size of this segment is valued at USD 0.86 billion in the year 2019. Busy consumer lifestyles, increasing smartphones penetration rate, rising adoption of online food delivery services, and growing food & beverages industry are the factors responsible for the growth and development of the online food delivery market in Indonesia.
However, cyberattacks & data breaches issues in digital platforms and concerns regarding the safety and quality of restaurant food might restrain the growth and development of this market.
The key market players engaged in the operation of its market are Gojek, Grab Food, Klik-Eat, Gorry Gourmet, Kulina, PUMASERA, Raja Makan, etc.
Market Risks
Cyberattacks and data breaches issues in digital platforms
The use of online food delivery services sometimes can cause issues related to data breach and hacking. Some of the food delivery application requires sensitive data such as credit card numbers, and sometimes cellphones numbers might be shared if the food items are ordered through the use of cellphones.
The computer and internet security of some of the smaller restaurants and other big restaurants is quite weak and can be hacked. Globally, the cases of cyberattacks and data breaches are in increasing trend.
The cases of cyberattacks have been increased from 41% to 61% in organizations within the time horizon of one year from 2018 to 2019. On average, the constant rate of hacker attacks on computers is about 39 seconds.
In every minute, almost 16 hacker attacks occurred. In the year 2019, more than 15 billion records were exposed in the data breaches and about 8.4 million distributed denial of service attacks have occurred. The trend of cybercrimes has even increased to a more extent after the pandemic outbreak of COVID-19 disease.
According to the US FBI, it has been estimated that cybercrimes have been increased by almost 300% after its pandemic outbreak. According to Indonesia’s State Cyber and Crypto Agency, more than 98 million cyber-attacks occurred in the context of Indonesia within a year.
The hacking of the online food delivery services applications, websites, and software will expose the sensitive information and personal data of customers.
The issue of the hacking and data breaches might lose the trust of the consumers regarding the brand, which will create a significant risk for the growth and development of online food delivery services in Indonesia.
Top Market Opportunities
Busy consumer lifestyles
In the context of Indonesia, the lifestyle of the consumer is quite busy as the number of working women is in increasing trend and a higher number of people are getting engaged in overtime work.
A survey conducted by Licorice among 500 Indonesian people has found that almost 14.4% of the study participants use the food delivery services when they are busy. Because of this, they don’t have time to cook food themselves.
Almost 64% of the consumer eats the food purchased using food delivery services at home, and almost 21% of them at friend’s house. Almost 70% of the Indonesian people have an income of about USD 269.56 to USD 336.95 per person.
The busy lifestyle of consumers and their rising income is creating a significant opportunity for the growth and development of the online food delivery market in Indonesia.
Increasing adoption and penetration of smartphones users
In the context of Indonesia, the smartphone penetration of the population is in increasing trend. The smartphone penetration of the Indonesian population has been increased from 28.55% in the year 2015 to 63.29% in the year 2019. The smartphone penetration is expected to reach 70.05% by the end of the year 2020 and will reach 89.21% by the year 2025.
Along with this, the number of smartphone users has been increased from 73.77 million in the year 2015 to 171.28 million in the year 2019. The number of smartphone users is expected to reach 191.6 million by the end of the year 2020 and will reach 256.11 million by the year 2025.
The increasing adoption of smartphones and rising smartphone penetration among the Indonesian population is creating a significant opportunity for the growth and development of the online food delivery market in Indonesia.
Market Trends
The factors driving the growth and development of the online food delivery market in Indonesia are the growing food and beverages industry, promotion of 100% home delivery restaurants, rising adoption of online food delivery services, branding through promotional activities, increasing number of young families, development of cashless mobile payments, and increasing use of the smartphone and other digital devices.
The major factors driving the growth and development of the online food delivery market in Indonesia are as follows:
Rising adoption of online food delivery services
According to Google-Temasek e-Conomy report, the value of the food delivery sector in South East Asia is expected to be doubled annually. In the context of Indonesia, almost 100,000 users have ordered food from small stalls to premium class restaurants in the year 2018.
A survey conducted by Nielsen, the well-known data firm in May 2019 among 1,000 Indonesian consumers has revealed that the study participants age between 18 and 45 years have used at least one app-based food delivery service in the last three months.
It has also found that almost 58% of the people order food using the application almost 2.6 times a week. A survey conducted by Licorice among 500 Indonesian people has found that almost 20% of the study participants have often used the food delivery services and almost 33.4% have used the food delivery services sometimes.
Here, almost 37.2% of the users order the fried chicken, and 37% of them order fast food. The rising adoption of online food delivery services is driving the growth and development of the online food delivery market in Indonesia.
Growing food and beverages industry
In the context of Indonesia, the food and beverage industry are a growing trend. According to the Industry Ministry of Indonesia, the food and beverage industry is expected to grow at a CAGR of almost 6.7% within the forecasted time horizon of 2020-2025.
The revenue of food and beverages has reached USD 253 million and there are almost 265 million consumers in the food and beverage processing industry. The sale of convenience package foods has been increased by almost 9.4% within a year as most people are preferring convenience package foods.
Along with this, the investment in the food and beverage industry in the context of Indonesia has reached almost USD 1.4 billion for foreign investment and USD 2 billion for domestic investments. The growing food and beverage industry are driving the growth and development of the online food delivery market in Indonesia.
Concerns regarding safety and quality of restaurants food
According to the Global Food Security Index 2019, Indonesia has been ranked in 84th position in terms of food quality and safety, and the food safety of the country is considered to be poor.
A research study conducted by Ernawanti et al about the e-commerce platform in Indonesia has found that almost 35% of the processed packaged food was sold without the required food labels. Along with this, NA-DFC reported that almost 14,553 pieces of unregistered ultra-processed food are sold without permission from the online commerce platforms.
They also found that almost half of the unregistered food sample and about 14% of all food samples were unsafe for human consumption. Some of these sample food items contain prohibited additives and microbial contamination. Because of this, food poisoning is one of the public health problems in Indonesia.
According to the National Poisoning Information Centre of the Indonesian Agency for Drug and Food Control, the most common factors contributing to food poisoning in Indonesia are lack of self-hygiene of food handlers, poor water, and environmental supplies.
A research study conducted in DKI Jakarta has found that catering services stand for almost 68% of the total food poisoning cases. The concerns related to the food safety and quality of the online food delivery services might restrain the growth and development of the online food delivery market in Indonesia
Industry Challenges
Traffic congestion in Indonesia
In the context of Indonesia, the number of vehicles is on a rising trend. Within a time horizon of 12 years, the number of vehicles has been increased from almost 30 million to 125 million representing an increase of about 300%. It has been expected that about 6 million units of vehicles are increasing annually in Indonesia.
However, the condition of the development of the well-paced roads remains the same. Because of this, traffic congestion is one of the burning issues in Indonesia.
The issue of traffic congestion is creating a challenge for the market players engaged in online food delivery services to deliver the ordered food products in time.
Technology Trends
The adoption of new and advanced technologies is creating a favorable environment for the growth and development of the online food delivery market in Indonesia.
At present, food products can be ordered through the use of smart digital technology and communication devices in the modern food delivery system. For instance, the food order can be placed through a tweet, virtual assistant, smartwatch, smart TV, car, etc.
The market players engaged in the food delivery services have released eye-tracking technology and digital menu to read the mind of customers through the collection of data on eye movements, and eye focus.
Along with this, AI technologies and robotic automation are used to deliver the ordered food products.
Pricing Trends
The cost of the online food delivery services in Indonesia depends upon the type of food products, food delivery company type, quantity of food, type of food, and location of delivery.
According to a survey conducted by Rakuten Insight, majority of participants i.e. 32% of the study participants are paying almost USD 1.36 to USD 2.72 per single order.
Here, almost 26% of them are paying almost USD 2.72 to USD 4.09 per single order. Almost 1% of them are paying almost USD 13.64 per single order.
Regulatory Trends
The National Agency of Drug and Food Control under the Ministry of Health is responsible for food safety standards, pre-market certification, and post-market supervision.
The registration of the company engaged in the online food delivery market is necessary. The major regulation for food safety is the Food law in 2012. According to this law, the subnational governments share responsibility for ensuring food safety.
Along with this, the pre-market certification is required for the food manufacturing companies engaged in the manufacture of processed and ultra-processed food.
Along with this, the governmental authorities conduct post-market supervision to regulate this market.
Market Size and Forecast
The total market size of the online food delivery market in Indonesia is valued at USD 1.75 billion in the year 2019 and is expected to reach USD 1.95 billion in the year 2020.
Its market value is expected to grow at a CAGR of 11.5 % within the forecasted time horizon of 2020-2025. Its market value is expected to reach USD 3.36 billion by the end of the year 2025.
Online food delivery is the largest category of e-commerce accounting for almost 27.85% of all e-commerce sales of Indonesia.
Based on the channel type
- The smartphone application segment is leading the market with a market share of almost 60.2% of the total online food delivery market in Indonesia. The market size of this segment is valued at USD 1.08 billion in the year 2019.
- The phone segment accounts for a market share of almost 29.8% of the total online food delivery market in Indonesia. The market size of this segment is valued at USD 0.52 billion in the year 2019.
- The website segment accounts for a market share of almost 10% of the total online food delivery market in Indonesia. The market size of this segment is valued at USD 0.17 billion in the year 2019.
Based on the type of online food delivery services
- The platform to consumer delivery segment is leading a market with a market share of almost 51.28% of the total online food delivery market of Indonesia. The market size of this segment is valued at USD 0.90 billion in the year 2019. The number of platform-to-consumer delivery users is expected to reach 31 million by the end of the year 2024.
- The restaurant to consumer delivery segment accounts for a market share of almost 48.71% of the total online food delivery market in Indonesia. The market size of this segment is valued at USD 0.85 billion in the year 2019.
Based on the use of the application
- Go Food is leading the market with a market share of almost 49.36% of the total online food delivery market in Indonesia. The market size of this segment is valued at USD 0.86 billion in the year 2019.
- Grab Food accounts for a market share of almost 46.20% of the total online food delivery market in Indonesia. The market size of this segment is valued at USD 0.81 billion in the year 2019.
- Fast-food delivery accounts for a market share of almost 2.53% of the total online food delivery market in Indonesia. The market size of this segment is valued at USD 0.044 billion in the year 2019.
- The Klik-Eat accounts for a market share of almost 0.63% of the total online food delivery market in Indonesia. The market size of this segment is valued at USD 0.011 billion in the year 2019.
Market Outlook
The online food delivery market in Indonesia is expected to grow at the CAGR of 5% within the forecasted time horizon of 2020-2025 because of busy consumer lifestyles, increasing smartphones penetration rate, rising adoption of online food delivery services, and the growing food & beverages industry. Its market value will reach USD 3.36 billion by the year 2025.
Technology Roadmap
The major advanced technologies adopted in the online food delivery system are the placement of order through a tweet, virtual assistant, smartwatch, smart TV, car, & other digital devices, digital menu, eye-tracking technology, etc.
Artificial intelligence, robotic technologies, and drones are used for the delivery of food products. For instance, Just Eat has developed moving pavement droids for the delivery of food products through the use of GPS signals and cameras.
The technological changes occurring in this market are driving the growth and development of the online food delivery market in Indonesia.
Distribution Chain Analysis
The key stakeholders involved in the operation of this online food delivery market are restaurants, food delivery platforms, software vendors, distributors, sales, and end-users.
At first, the software vendors develop online food delivery platforms such as applications, websites, etc. The food order can be placed through these platforms and delivered either from restaurants to the consumer or from the platform to consumers.
Competitive Factors
The key market players engaged in this online food delivery market are competing for the product portfolio expansion, high investment in research and development activities, mergers & acquisitions, geographical expansion, and collaborations.
For instance, Klik-Eat.com has a partnership with more than 500 restaurants all over Jakarta. They are focused on the launch of new menus, and new combo packages. These companies are dishing out discounts and promos to ramp up food orders.
Key Market Players
The key market players engaged in the operation of this online food delivery market in Indonesia are Gojek, Grab Food, Klik-Eat, Gorry Gourmet, Kulina, PUMASERA, Raja Makan, etc. Short profile of the key market players engaged in this market are discussed as follows:
Gojek: It is the Indonesia-based multi-service platform engaged in GoRide, GoSend, GoShop, and GoFood services. It is providing these services in Indonesia, Vietnam, Thailand, Singapore, Philippines, India, and Malaysia.
Grab Food: It is one of the largest mobile technology company connecting millions of consumers, merchants, and businesses.
Klik-Eat: It is engaged in the provision of food messaging services from a myriad of restaurants from Indonesian, Chinese, Japanese, Indian, and Western. It is providing these food messaging services in the Jakarta, Tangerang, and Bandung regions.
Gorry Gourmet: These food delivery services are specialized in the provision of healthy food products for the consumer seeking to maintain their body health. Its major products are meals for weight management, health eats, salad in the city, and muscle building.
Kulina: It provides multiple options for consumers in terms of healthy food, cheap food, diet food, and others. It is providing these food delivery services mainly in Central Jakarta, West Jakarta, and South Jakarta.
PUMASERA: It is specialized in the provision of online food ordering service with almost 75 restaurants. Its major products are vegans, halal cuisine, and local cuisine. Its operating areas are Ayam Goreng Ny. Suharti, Ayam Betutu, and Bakmi Boy Santa.
Raja Makan: It is delivering the food services in collaboration with 152 restaurants in the context of Jakarta within a delivery radius of 6 kilometers from the restaurant point.
Strategic Conclusion
The online food delivery market in Indonesia is growing at a rate of 5% within the forecasted time horizon of 2020-2025 because of busy consumer lifestyles, increasing smartphones penetration rate, rising adoption of online food delivery services, and the growing food & beverages industry.
However, cyberattacks & data breaches issues in digital platforms and concerns regarding the safety and quality of restaurant food might restrain the growth and development of this market.
References
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Appendix
- AI= Artificial intelligence
- GPS= Global Positioning System
- USD= United States Dollar
- CAGR= Compound Annual Growth Rate
