Case Study: How Foodpanda Earns Money

What is foodpanda?

Well, Foodpanda is a very popular online food ordering app that acts as the middleman between the consumer and the restaurant.

Are you hungry and tired at the same time?

You don’t want to cook food?

Then grab your phone and order your food online on foodpanda!!

It connects the customer to thousands of local eating points

Foodpanda allows it’s users to order their food for home delivery or take away whatever suits them the best.

There is no food delivery that is too difficult for Foodpanda and so it has the highest reach among all the other platforms.

So, now you might be thinking about how Foodpanda earns enough money?

After all, it gives us so much discount then how do they make money for themselves?

Well, Foodpanda has an amazing approach and strategies that help it to gain profit.

Further, in this article, we’ll be discussing :

1. Achievements Till Now

2. Approach and Strategies

3. Marketing Skills

4. Revenue Model 

5. Funding

6. Risk Analysis of Foodpanda

1. Achievements Till Now

Foodpanda started it’s journey in 2012 under the name of Rocket Internet.

Presently it is working across 5 continents and a total of 24 countries in the whole world.

Active in more than  500 cities and tied up with almost 40,000 restaurants all around the globe,

Foodpanda has a big team of approximately 4,000 people over the world.

 2. Approach And Strategies

Foodpanda aims at delivering food to the users in all corners of the earth before anyone else and to complete this goal it has a lot of marketing and growth strategies.

Some of those strategies are:

• Expanding their reach, services, and discounts to reduce competition.
• They aim at increasing their market share so that they can become the leader of the online food ordering business.
• Increasing the promotions of new food brands by 20% every 6 months.
• Building a highly capable and talented team.
• Using scalable technologies from the start.
• Focusing on providing an efficient market to the users.
• Focusing on different ways of marketing skills.

With all of these and many more useful strategies, Foodpanda is excelling itself in the market very rapidly.

3. Marketing Skills

There are many marketing skills adopted by Foodpanda in order to increase their sales.

The three main platforms on which they are presently working are:

• Email Marketing

Foodpanda is using Email Marketing as a powerful weapon to attract people, once you place one order using foodpanda it starts sending you emails regarding different discount offers and coupons.

The company makes sure that the first experience of every user should be awesome and then tries to target them by sending different discount and promotional emails.

• Social Media Marketing

Social Media the most powerful platform for promotions is being fully utilized by Foodpanda.

It has around 2.2  million likes on Facebook and about 27k followers on the Twitter account.

In 2013 it also ran a campaign on social media, in which the users had to use the code “IPAD” while ordering food which made them eligible for a contest and gave them a chance to win IPAD by ordering more food via foodpanda.

This campaign had a positive response and increased it’s popularity among more and more users.

One more advantage social media gave them is the chance to interact with the users and solve their queries one on one which created trust and faith among the users regarding the company.

• Mobile Marketing

The time when Foodpanda launched itself in the market, it was a bit difficult for people to understand the reason of it’s existence some thought it’s a restaurant while the others thought that it’s a food supplying company.

Later, the company introduced it’s mobile app which made the users very clear about the work this company does.

It has a user-friendly app that allows the user to access it from anywhere and at any time.

Thus, mobile has played a very vital role in making Foodpanda a successful company and now it focuses more on the mobile app than anything else.

4. Revenue Model

Foodpanda asks restaurants to upload their menus online and increase their number of customers and it uses analysis and user-recommendations to help them increase their sales. The main revenue modes of Foodpanda are as follows:

• Their largest amount of revenue comes from the commission of the restaurants they tie-up with.
• According to the words of the CEO of Foodpanda Indian Branch Mr. Saurabh Kocchar, “Foodpanda earns 40% of its revenue from delivery business“.
• The display ads connected with the CPM, allows Foodpanda to earn a 10% profit. Normally, it charges advertisement fee for pages served, ads unit served per page, redirecting to pages.
• When a user orders food from the website of Foodpanda, then 5-10% of the total price of the ordered food is given to the company.
• The company also generates revenue by selling it’s customers habits to the market researchers.
• Another revenue model that the company focuses on is making a new entrepreneur sit in each country, who use global standards that can help improve that market.
• They mainly focus on changing user behavior.

Know more about it’s revenue model.

5. Funding

As mentioned earlier Foodpanda works under the name of rocket internet which is the biggest internet companies in the world.

The company raised funding of  $20 million to make it stable in the market and the funding round was led by AB Kinnevik, Phenomen Ventures, and Rocket Internet in April 2013.

Furthermore, in September 2013 Foodpanda again raised funding of $8 million from iMENA Holdings.

Then, again in February 2014 Phenomenon Ventures and other investors gave more $20 million to the company.

And the list doesn’t end here,

Another funding round took place in August 2014 in which the company raised $60 million.

Then, in March 2015 rocket internet funded the company with a huge amount of $110 million and in May 2015 Goldman Sachs and some other investors gave the company funding of $100 million.

The list is unending and the company continues to raise huge funding from the investors that are helping the brand name to get wider and wider across the globe.

Foodpanda is becoming the Amazon for the foodies and with it’s current presence in 24 countries is looking forward to expand itself worldwide.

6. Risk Analysis

Irrespective of the revenue and profit that foodpanda makes it has to face a number of challenges to survive in the market. It needs to make some developmental changes to be able to compete in the upcoming future.

Therefore, there are certain setbacks of the company that every entrepreneur should consider:

• Foodpanda has a false notification system which means very often they show restaurants to be active while they are closed. Though they apologize for the inconvenience later, still, it gets annoying for the customers.
• Sometimes the company also loses the record of the transaction, it makes no response after taking the order and does not notifies if the order gets canceled.
• Many countries indulge local companies and ban or limit the activities of foreign countries like Foodpanda.
• There are many countries where companies like Pizza Hut, McDonald, and other local shops have already made a strong market and thus it becomes difficult for Foodpanda to establish itself there.
• 90% of customers still prefer ordering food offline as they find it too complicated to order food online.

Things To Learn

So, there are some points that entrepreneurs can learn from the success and risks of Foodpanda:

• If you own an e-commerce business then, the best strategy you should use is to target the audience when they are online and convince them to try your business.
• Always focus on different digital marketing strategies because digital marketing is the most powerful source of marketing these days.
• For mobile marketing, you must know that creating and maintaining an app might sound expensive but if you have a sensible reason for starting your business then it might be helpful in the long run.
• Talking about email marketing you should always remember not to irritate and annoy the users by spamming them if they have unsubscribed you. Always respect their decisions.
• Work hard to show your quality and stay loyal to your customers.