Foodpanda: How did the billion-dollar startup fail due to technology?

Insight into Foodpanda,

Foodpanda is a Germany-based on-demand food delivery app. In 2012, it was founded by Ralf Wenzel with his three business partners. After two years of its initial launch, Foodpanda started dominating the markets of other countries. In February 2014, Foodpanda has acquired a Pakistan-based on-demand food delivery service provider company named Eat Oye, which was a major rival of Foodpanda.

Till 2016, Foodpanda made its services accessible in all major countries of Asia and the Middle East. But with the advent of other on-demand food delivery apps which had a more profitable business model and industry-defined business strategies, Foodpanda couldn’t sustain its growth. In December 2016, Foodpanda was acquired by a German competitor Delivery Hero. After one year, Foodpanda’s business of India was acquired by Ola which is an India-based ride-hailing giant.

When OLA Acquired Foodpanda!

When Ola acquired Foodpanda, they decided to run the business of Foodpanda with their own chain of restaurants. Currently, Ola has 50 restaurants and four private labels. These are Flirt, The Khichdi Experiment, Love made, and Grandma’s kitchen. During the initial days, Foodpanda was aggressively giving a heavy discount to the users and processing 3 million orders in a month. But later in 2018, they revised its strategy as other on-demand food delivery service provider companies like Zomato and Swiggy took the Indian market by storm. Compared to Zomato and Swiggy's services and business models, Foodpanda has become unwieldy. At last, on the morning of the 22nd of May 2019, they dropped their delivery services and laid off several employees.

Why did Foodpanda Fail?

There was a time when Foodpanda was doing delivery of 2 Lakh Order A Day! And Above 3 Million Orders A Month! But did you ever wonder how they failed? Why do I mention failed due to technology? Let's figure it out!

• Poor Business Model

Unlike crowd-puller food delivery service provider companies Zomato and Swiggy which are working with thousands of restaurants to offer the food of all cuisines, Foodpanda decided to create their own network of restaurants. With this decision, they remained limited to only 50 restaurants. They failed to provide a diverse food experience to the users and so, users dodged Foodpanda as soon as they get other food delivery services that are allowing them to try different cuisines.

• Technical Issue

An order was placed on Foodpanda which had gone through the transaction process not being aware that the restaurant has shut its operations. To retain and please its customer it offered a free voucher of the same amount to order from any other restaurant. The customer was happy, everyone was happy. But this operation ordering from closed restaurants went for a few months until Foodpanda got suspicious, but it was too late for them.

• Miscommunication

Foodpanda would take orders from the customers but fail to share them with the restaurant resulting in customers calling directly to the restaurant, delaying delivery. Clearly a miscommunication.

• Poor Technology In Tracking System

A large number of orders were delivered, Foodpanda was not tracking the delivery of orders, resulting in paying a huge amount to the restaurant, Foodpanda was not able to prove it was not a genuine order. It was not the only case, some new fraud would come to light daily.

• Tablet Episode

Zomato entered the food ordering space. As part of the initiative, it decided that all its restaurants would be connected with an Apple iPad. That way, the moment an order is placed on Zomato, it will reflect on the iPad with the restaurant. Foodpanda decided to follow in the footsteps of Zomato.

iPad being expensive it decided to settle on Samsung tablets. But the actual restaurant Foodpanda claims it has been nowhere near to the said number. Tablets were ordered and when they arrived, they were neither of the ordered specification nor in the ordered quantity. Also, they had been bought at a huge mark-up.

• Conclusion -

If you have poor technology in today's startup race, my friend you are a loser! Foodpanda failed due to the big loophole in technology. There are many other reasons like founders also exited their place from the company due to which the Foodpanda vision breakdown. But the conclusion of this article is that technology is the most important key factor in your business in today's world.

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