“Sure, rising costs are one factor, and so are supply-demand concerns,” said Mr Goh.
Referring to the temporary driver fee, the spokesperson added: “Ultimately, our goal is to provide sustainable earnings for our partners, while continuing to offer a good experience and meeting our consumers’ everyday needs.” The spokesperson added: “We recognise that the external situation remains fluid, and we will continue to review our support measures and fares in line with prevailing market conditions, to ensure that our driver-partners are properly compensated for their time and hard work."While cutting costs and raising revenue earned from customers and merchants may seem like the most obvious ways to widen the profit margin, it is, in fact, a delicate balancing act, said industry experts.
“As a result, their profitability would depend more on people’s continued reliance on delivery service,” he said. A case in point is Netflix, he said. The streaming platform raised its prices a number of times prior to its loss of subscribers. Assoc Prof Theseira said: “For example, minimum order sizes, reducing delivery or order priority, being more selective about onboarding merchants — these are all ways that platforms can potentially improve profitability."
“In the past, these unicorns could afford more budget and time to explore new markets, but now it seems trials are smaller and get cut faster. An example is Shopee expanding into India, Spain and France in 2021, but only to quickly shut down in less than 12 months,” he said.
While Grab places its bets on its super-app approach, its rival in the food delivery space here, foodpanda, prefers a more “focused” approach by building new segments closely linked to their core business. “In terms of disrupting the disruptors, yes, it’s always a concern that market gains could be eroded by a new entrant with more money,” said Assoc Prof Theseira.