This article first appeared in Digital Edge, The Edge Malaysia Weekly on April 26, 2021 - May 2, 2021

Delivery services have become an essential part of urban living, and a lifeline for many during the Covid-19 crisis. But it is a convenience — sometimes a necessity — that is still denied to many residing outside city limits.

foodpanda Malaysia managing director Sayantan Das says nearly 17% of the country’s 32 million population is located in highly underdeveloped areas, where access to basic needs is not a given. This has prompted the company to tinker with the idea of drones, to expand its reach to cover the barely tapped segment. 

“We feel that 5% to 7% of this population are decent targets in terms of digital adoption because they are digital natives — they think, learn and understand the world around them using technology,” says Sayantan.

“Right now, they can’t come on board because we cannot service those areas. But they come from a generation that is comfortable with and reliant on applications such as Facebook, Instagram and TikTok, which are literally second nature to them. This is where we want to reinforce our position even more.”

foodpanda, which is part of Berlin-based Delivery Hero SE, currently operates in 14 countries in Asia and Eastern Europe. 

“Basically, we want to be involved, as much as possible, in the daily lives of our customers. Delivering food is always going to be our core; that is where our undisputed strength lies. But we also see a lot of opportunities across complementary and adjacent verticals. This has naturally led us to explore other products that can be delivered on demand. Medication is one of those products, such as paracetamol or other over-the-counter medication that is always needed,” says Sayantan. 

“We wanted, first and foremost, to deliver convenience, especially during Covid. I feel that the pandemic has proved to be an accelerant for many of these trends that you are seeing today. This is what really pushed us to ensure that customers will not need to leave their homes or physically interact with other people unnecessarily, but still get everything delivered to their doorstep, whether it is food, vegetables, medication or other products.” 

foodpanda in Singapore piloted the use of drones for food delivery last year. The company signed an agreement with Singapore Technologies Engineering to use its drone network system — DroNet — to test the delivery of light food items over distances of up to 3km in the city state. 

While the project, aptly dubbed PandaFly, is still in the prototype phase, the company believes that its drones will be commercially viable in a couple of years. Since 2015, foodpanda has been experimenting with the use of drones for deliveries in Singapore, where ordering food online is the new eating out.

On the home front, AirAsia Digital, in partnership with the Malaysian Global Innovation and Creativity Centre (MaGIC), launched a pilot programme to consider the long-term viability of urban drone delivery services. The six-month programme will kick off in Cyberjaya at the third National Technology and Innovation Sandbox test site to assess the capability, experience, approval process, deployment readiness and service expansion of the drone operators.

foodpanda Malaysia is looking to solve more urgent needs using drones. Sayantan says bad road, weather and traffic conditions are often the reason for delayed deliveries.

Seeing that foodpanda — through its on-demand delivery service Shops — offers daily essentials and grocery delivery services from more than 7,000 vendors nationwide with a delivery time of under 30 minutes, it has become imperative to look at alternatives to complement its existing fleet. 

“To achieve that, we would need a very well distributed rider fleet. What we saw is that in urban centres, we have a very strong and healthy rider fleet, one that is very well managed. But outside urban areas, it was proving to be difficult to recruit [committed] riders for the fleet, which often leads to subpar performance,” says Sayantan.

Also, the project provides an opportunity for the on-demand delivery company to diversify its capabilities beyond food and groceries to transporting necessities such as medication to communities that are not within its serviceable range, he says. “This is really where we see that a lot of value could be unlocked. It is in the rural areas that we might have a crunch in terms of supply, because there is just not enough of a pool to dip into to recruit riders for our fleet. 

“We want to ensure that we can touch as many customers as possible across the country, but it is definitely not by putting the riders’ livelihoods or incomes at risk. Instead, we are looking to just supplement the services that we already provide.”

Malaysia, Singapore and Brunei are the only countries in Southeast Asia with an internet penetration of more than 80%. But even people with access to the internet experience some infrastructural divide, including the discrepancy in internet speeds in different areas. 

Despite the inconsistencies, Sayantan says tier-3 to tier-5 cities possess great potential, based on the delivery business trends in countries like China and India. “We definitely see some similarities. The good thing about Malaysia is that there is actually quite a healthy reach in terms of broadband speeds. That is really what we have to piggyback on.”

There isn’t much data on the consumption patterns of communities in rural Malaysia, but Sayantan believes it is only a matter of time before the distribution of wealth improves. “We are seeing more people become digital natives regardless of the geography. If you look at countries like China and India, there are more internet adopters in tier-2 to tier-5 cities.

“It is the same in Malaysia. Right now, they probably don’t have access to as many lifestyle options as they would in an urban centre, and their smartphones are their only form of entertainment, which means they are already consuming [that amount of data].

“So, we plan to be that kind of internet lifestyle app that specialises in last-mile, on-demand deliveries. There is definitely huge potential to be unlocked across these underdeveloped areas.

“Second, [the services we offer] will give them the ability to choose. We could improve their quality of life in some of these areas and offer experiences that they would not have experienced before. And this could boil down to having a choice of some of the more popular fast-moving consumer brands and [what is available] in their nearby shops.”

If all goes as planned, foodpanda Malaysia will be able to roll out its drone services in the next few years. 

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