Takeaway from dabao group: food delivery apps must step up for hawkers

Singapore

A FACEBOOK group set up by a local hawker has drawn over 146,000 members as of Wednesday evening, enabling hawkers to promote their takeaway and delivery services amid a dire business climate with the Covid-19 outbreak.

The need for such a ground-up initiative underscores how far behind hawkers have fallen on digitalisation, and how food delivery players need to better serve this segment.

Called "Hawkers United - Dabao 2020", the Facebook group aims to "showcase all hawkers doing delivery and takeaway, so that customers can search them up easily", the group's founder Melvin Chew told The Business Times.

With Singapore's dining-in ban in light of Covid-19, hawkers who have not joined food delivery apps are fully exposed to the plunge in walk-in sales. Meanwhile, those already on the apps are struggling to afford the steep commissions of about 30 to 40 per cent.

The Hawkers United group serves as a stop-gap measure driven by the community. Thousands of merchants have posted on the group - some offering meal deliveries, others providing contact details for pre-orders.

According to Mr Chew, a 42-year-old second-generation hawker, the situation is grim. His stall, Jin Ji Teochew Braised Duck and Kway Chap, has seen sales fall by over 50 per cent since the Covid-19 outbreak.

Before the outbreak, many hawkers only saw food delivery apps as an ad-hoc source of income.

"It can be like a jackpot; if there's a big delivery, then that's just an extra bonus for us," said Mr Chew, who uses apps including GrabFood, foodpanda and Deliveroo.

As such, not all hawkers saw a need to join the apps. Those that did were willing to accept the steep commissions, since dining-in was still the cash cow. This left a lack of major food delivery apps that actually make economic sense for hawkers.

Paul Liew, who runs Keng Eng Kee (KEK) Seafood restaurant, reckons that the delivery apps must be tailored to the economics of each food segment.

For instance, KEK has not tapped on food delivery apps, because "for seafood, the margins are really low, so we can't give away that high a commission," Mr Liew noted. It instead fulfils deliveries using Oddle, an online food ordering system enabler.

But KEK's other concept store, Wok In Burgers, uses food delivery apps because the economics of burgers are more suited for low basket value orders, Mr Liew said.

Without the right model, apps like GrabFood, foodpanda and Deliveroo may not necessarily help hawkers survive - even with the government absorbing 5 per cent of the commission for those three players.

Case in point: Hawker Mary Quek has decided to temporarily shut her stall, Ah Hui Big Prawn Noodle, after a dearth of sales. The stall only made about S$210 in sales via food delivery apps on Tuesday, excluding the commissions of about 30 per cent.

"There were no customers at all, and even on GrabFood and foodpanda, sales didn't increase much. I can't cover the cost of running the stall," the 44-year-old said.

This presents a compelling case for startups to design a food delivery solution that works for hawkers - one that can be more efficient than a Facebook group flooded with posts.

There has been some innovation by smaller startups. WhyQ, which launched in 2017, offers a food delivery service that does not charge hawkers any commissions. It instead earns from delivery fees and mark-ups on the food prices, among other revenue streams.

"We wanted to help hawkers digitalise, but we know that their margins are too thin. We understand that if a hawker is selling chicken rice at S$3, he can't give away 30 per cent of that," said chief executive Varun Saraf. WhyQ has seen a spike in enquiries from hawkers since the outbreak.

The entry of players with alternative models like WhyQ is positive, and the current situation is a good opportunity for more experimentation, said Mr Chew. Ideally, hawkers should be able to find a solution that can outlast the pandemic.

"Surely one day, all of us will need to be digital. This is a good time for hawkers to try out more technology," Mr Chew added.