Participants in food delivery bemoan hiked commissions

Some restaurants and eateries are complaining about the increased commission rate for food delivery app, which is typically 25-30 per cent per order.

Nguyen Minh Tu, an owner of a soup shop at in Hanoi’s Cau Giay district, received an extended contract with a food delivery service provider with a higher commission rate than previously.

“Orders on the app account for one-third of the total orders of my shop. In the early years, we acquired big profits thanks to a breakthrough in orders and a reasonable commission rate. However, we currently get little profit from online orders due to the high commission rate in collaboration with promotional programmes on apps,” Tu said.

“However, we are forced to maintain collaboration with app providers to meet the increasing demand of online orders from customers,” she added.

To ensure stable orders, shop owners have to invest more in advertising costs, and the average discount on applications ranges from 30 per cent per order, Tu explained. “However, customers’ preference for promotions has created great pressure on food delivery businesses to be profitable after a period of pouring money on the race for promotions,” she said.

Participants in food delivery bemoan hiked commissions, illustration photo

Meanwhile, delivery drivers also complain that they are losing out because of combined orders set up by apps, as well as longer distances and longer waiting times.

The combined order feature allows drivers to receive 2-3 orders at the same time, in which each restaurant will be an individual order. These orders may have a similar travel route. Most apps implementing the feature explain the purpose is to help increase income as well as optimise travel distance.

However, many shippers on driver forums say that combined orders are simply “a form of oppressing drivers”, putting customers at a disadvantage and increasing revenue for the app.

Do Thanh Liem, a food delivery driver in Hanoi, said, “The food delivery apps do not ask customers whether they agree to combine orders because the delivery time is likely longer, but they have still paid similar money compared to a normal order.”

Many drivers install a couple of apps to increase bookings and earn more money, Liem said. “However, some drivers are deciding to work for other apps with the hope of improving their situation.”

In Vietnam, online food delivery has become an indispensable part of life but may have peaked in the pandemic period, with many people returning to in-person shopping habits.

Statistical data for Q3 on the Payoo payment platform shows that over-the-counter transactions at supermarkets, convenience stores, and food and beverage establishments have grown by 14 per cent in quantity and 20 per cent in value compared to the previous quarter. This is an increase of nearly 40 per cent in both quantity and value since the beginning of this year.

Online transactions dipped 12 per cent in volume and 11 per cent in value compared to the previous quarter.

Meanwhile, major tech apps that incorporate food delivery have been reducing personnel numbers in recent times. Grab, the owner of GrabFood, has cut staff across Southeast Asia several times since 2020. The most recent cuts took place in June this year, when Grab cut up to 1,000 employees, including some in Vietnam.

Late last year, Shopee, the application that owns ShopeeFood, also made massive cuts across ASEAN such as in Indonesia, Thailand, and Vietnam. At the same time, GoTo, which owns Gojek, also announced a layoff of 1,300 people, equivalent to 12 per cent of its staff, to reduce costs.

Food delivery market looks to restructure The impairment of Baemin in the food delivery sector may open a new opportunity for the current players to conquer to gain the remaining market share.