Despite only emerging in recent years, the food delivery market in Vietnam has witnessed rapid development. The annual gross merchandise volume (GMV) of Vietnam’s online transportation and food sector reached a significant milestone of US$3 billion in 2022.
The second quarter of 2023 also saw a surge in demand for online meal orders. As a result, revenue in the online food delivery market is expected to reach approximately US$1.93 billion in 2023.
Furthermore, revenue of the online food delivery market is anticipated to exhibit a compound annual growth rate (CAGR) of 15.29 percent between 2023 and 2027. This growth trajectory is expected to lead to a market valued at approximately US$3.41 billion by 2027.
Key players in Vietnam’s online food delivery market
As of 2022, GrabFood emerged as the dominant food delivery service in Vietnam, with a substantial market share of 45 percent. ShopeeFood followed as the second most popular food delivery platform in the country with a market share of 41 percent. The remaining market was divided between two unicorn startups, including South Korea’s Baemin with 12 percent and Indonesia’s Gojek with 2 percent.
A domestic delivery startup called Loship has also recently entered the fray, although it has not yet acquired a significant portion of the market. However, Loship has garnered substantial attention and funding from investors. In addition to the aforementioned names, BeFood has also recently entered the food delivery service alongside its existing transportation and delivery services, grocery shopping assistance, and digital banking services.
Since it entered into the food delivery market in 2018, GrabFood has emerged as the market leader in Vietnam. Currently, GrabFood operates in 19 cities across Vietnam. With the advantage of its existing ecosystem including a large fleet of drivers, and numerous commercial partners, Grab has a significant edge to further develop and expand its presence in the online food delivery market in Vietnam.
The journey of ShopeeFood in Vietnam began in 2017 when SEA Group, the parent company of Shopee, acquired a local company named Foody. Over the years, ShopeeFood (formerly known as Now) has consistently improved its services to make it easier for customers to order food. Despite a slight decline in market share in Q1 2023, ShopeeFood is still in close competition with GrabFood in the online food delivery battle in Vietnam, trailing by only 4 percent. Currently, ShopeeFood is available in 16 provinces and cities nationwide.
Baemin made its entry into Vietnam in May 2019 and acquired the food delivery app Vietnammm, which was subsequently discontinued. Unlike its competitors, Baemin primarily focuses on food delivery and does not offer ride-hailing services. It also provides grocery deliveries and operates its own kitchen.
Baemin has diversified its offerings with a merchandise line called Baemin Studio and a beauty brand. According to a report by Momentum Works in January 2023, Baemin held a 12 percent market share in Vietnam’s food delivery market, which is estimated to be valued at US$1.1 billion. In June, Baemin Vietnam established a partnership with Selex Motors to pilot the use of electric motorcycles for its deliveries.
GoFood is backed by technology unicorn, Gojek. GoFood has a smaller market share in Vietnam compared to major players like GrabFood or ShopeeFood. However, GoFood is one of the platforms with the most vast network of drivers. This reduces delivery times and ensures that customers receive their orders during peak periods.
Emerging market trends
Vietnamese are adopting healthier eating habits
This trend is reflected in the ordering habits of Grab users in Vietnam, with the demand for healthy meals on GrabFood doubling during the period from 2019 to 2022, according to the SEA GRAB Food and Grocery Trends 2022 report. The report also highlights the growing popularity of plant-based and health-conscious food options: approximately 83 percent of surveyed consumers in Southeast Asia have tried plant-based food in the past six months. Furthermore, 93 percent of consumers have at least one healthy meal every two to three days.
Order value is increasing
According to Gojek statistics, in the first quarter of 2022, the number of users ordering food on the platform more than doubled, with a growth rate of 220 percent, in Hanoi compared to the same period in 2021. Gojek also reported a significant increase in new users, reaching over 160 percent in Hanoi and 80 percent in Ho Chi Minh City. On GrabFood, the spending on food and grocery delivery experienced a 30 percent increase between 2021 and 2022.
Finding new restaurants
Consumers are discovering new restaurants through delivery apps. A total of 88 percent of consumers become aware of new stores through delivery apps, and 74 percent of users browse through these apps when they haven’t yet decided on a specific restaurant or store, according to the aforementioned GRAB report. On average, GrabFood users spend 17 minutes making their ordering decisions.
Trending food orders in Vietnam
In Q1/2022, GoFood recorded the highest increase in breakfast orders, with 2.5-fold growth compared to the same period last year. This demonstrates that consumers are becoming more interested in ordering breakfast. The most popular dishes on the GoFood platform are traditional Vietnamese dishes such as chicken rice, spring rolls, rice noodles, and noodles.
On GrabFood, the top five most popular dishes in Vietnam include milk tea (with more than 20 cups of milk tea sold per minute in the first half of 2022), grilled pork rice, fried chicken, banh mi, and Vietnamese coffee.
Challenges in the online food delivery market
The food delivery market in Vietnam is currently witnessing intense competition between GrabFood and ShopeeFood. However, Baemin has shown significant growth by implementing strong marketing strategies, building an impressive brand identity, and offering attractive promotional programs.
Meanwhile, despite having a smaller market share, GoFood has also demonstrated impressive growth recently. In the first half of 2022, the number of users ordering food through the GoFood platform increased by 66 percent compared to the same period in 2021. The number of new users increased by 35 percent as well, with the growth rate in Hanoi almost five times higher than in Ho Chi Minh City.
To quickly capture the market, online food delivery apps invest heavily in promotional programs and discounts to attract a large number of users and expand their market share.
But this can be problematic.
“The app that offers more advantages will retain users. However, if users only stick to an app because of good promotions, they will turn away when the promotions end,” Jinwoo Song – CEO of Baemin Vietnam told Vietnamnet.
That said, in the face of unstable macroeconomic conditions and the pressure to generate profits, companies operating in the food delivery industry have reduced their reliance on promotional activities that were previously used to drive growth. Instead, they are expanding their revenue sources through new business models such as advertising or subscription services.
Opportunities for foreign firms
Gross merchandise value is well below the regional average
Currently, there is ample opportunity for the expansion of food delivery services in the Vietnamese market. A report by Momentum Works reveals that the gross merchandise value (GMV) in Vietnam was relatively modest at US$1.1 billion in 2022 compared to other countries in the region like Indonesia ($4.5 billion), Thailand ($3.6 billion), Singapore ($2.5 billion), the Philippines ($2.4 billion), and Malaysia ($2.2 billion).
A positive outlook for the F&B industry in Vietnam
According to a recent report by iPOS.vn, the F&B industry in Vietnam is expected to achieve “sustainable growth” following a remarkable recovery in 2022. The report forecasts that the food and beverage market will grow by more than 18 percent this year, reaching approximately US$30.7 billion. Furthermore, it predicts that the market will exceed US$40 billion by 2026.
Vietnam currently boasts around 338,600 restaurants and coffee shops, with Ho Chi Minh City accounting for nearly 49 percent, followed by Hanoi. The survey also indicates that Vietnamese consumers are willing to spend between VND 40,000 (US$1.64) and VND 70,000 (US$2.86) on beverages generally and up to VND 500,000 (US$20.46) during special occasions.
Vietnam’s rapidly developing digital economy
A developed digital economy is crucial for the growth of the online food delivery service sector. The internet penetration rate in Vietnam currently stands at 78.6 percent, significantly higher than the global average. Statista also predicts a steady increase in the number of internet users in Vietnam, with a projected growth of 17.3 million users from 2024 to 2028.
The food delivery services sector is developing rapidly and a number of innovations are currently taking place.
Dining-in through delivery apps
Some super apps in Southeast Asia are shifting their focus towards the dine-in business as consumers tend to eat out more after the COVID-19 pandemic. Grab is currently testing in-restaurant dining features in 15 cities in Singapore, Thailand, and Indonesia. This feature allows users to purchase dining vouchers for restaurants with discounts of up to 50 percent. Consumers have the convenience of using the GrabFood Dine-in BETA feature to make informed decisions about where to eat. They can pre-purchase dine-in vouchers, browse restaurant menus, read consumer reviews, and even book rides to the chosen restaurants all within the Grab app.
Eco-friendly deliveries through electric vehicles
The leading player in this trend is Be Group. On March 21, 2023, Be Group signed an investment and cooperation agreement with Green and Smart Mobility (GSM) to introduce electric cars and motorcycles into their transportation service operations.
In a similar vein, on April 25, 2023, BAEMIN partnered with SELEX MOTORS to pilot electric motorcycles for their riders. Through this collaboration, BAEMIN aims to support its riders in transitioning from traditional gasoline vehicles to electric motorcycles, leading to cost savings in the delivery process. Additionally, Gojek recently announced a collaboration with Dat Bike in a project to introduce electric motorcycles for users’ transportation, delivery, and food delivery needs.
The food delivery services sector moving forward
The revenue in Vietnam’s online food delivery market is projected to increase steadily from 2023 to 2027, reaching a total of US$1.5 billion. This presents an opportunity for businesses to jump in and seize a piece of the market on its way up. To do so, however, they should endeavor to do their best to understand Vietnam’s food delivery services market.
Source: Vietnam Brieafing