Alibaba aims big since it enters local meals delivery market

Business
Alibaba aims big since it enters local meals delivery market
Alibaba has entered Bangladesh's burgeoning meals delivery market by purchasing HungryNaki, the country's initial on-demand delivery program, demonstrating the Chinese multinational's ongoing work to seize a bigger show of the local e-commerce market.

Officials of Daraz, a problem of Alibaba Group, and HungryNaki yesterday announced that the ex - had taken over all of the latter's tangible and intangible resources for an undisclosed volume.

HungryNaki will continue steadily to function due to usual using its existing employees due to another brand with an unbiased food delivery program owned by Daraz.

The development comes at the same time when the neighborhood food delivery is expanding rapidly but nonetheless remains largely untapped.

Daraz, which has operations in Bangladesh, Pakistan, Nepal, Sri Lanka and Myanmar, was acquired by Alibaba found in 2018 in a surprise move.

Alibaba's financial service subsidiary Ant Group also bought a 20 % stake found in bKash, the major mobile financial service provider in Bangladesh, found in the same year.

Daraz is definitely considering a good takeover of HungryNaki, even prior to the Covid-19 pandemic had emerged.

"We aspire to be considered a one-stop remedy for all our clients' needs," said Syed Mostahidal Hoq, managing director of Daraz.

"So, getting into the meals delivery business is an all natural move," he added.

HungryNaki may be the pioneer in foodstuff delivery services found in Bangladesh and includes a loyal customer base.

"Therefore, we believe that instead of construction our own delivery business from the bottom up, acquiring HungryNaki is ideal considering both of these factors," Hoq said.

By buying infrastructure, technology and recruiting, Daraz has the capacity to take HungryNaki to innovative heights.

Released in 2013, HungryNaki, will serve a lot more than 500,000 customers around Dhaka, Chattogram, Sylhet, Cox's Bazar, and Narayanganj through it is network of over 4,000 restaurants.

It was a success story till 2018. After that, it came under serious competition when two latest players -- Shohoz Food and Pathao Food -- entered the marketplace.

The following year, Uber Eats arrived and shortly gained popularity with its solid service.

However, Uber Eats abruptly kept in June this past year just as the ongoing pandemic built a significant dent in its organization.

The brutal heat of the pandemic was also felt by HungryNaki.

In the early levels of the coronavirus outbreak, the business had declined over 70 % because of restaurant closures, explained AD Ahmad, CEO and Co-founder of HungryNaki, earlier.

In a bid to survive, HungryNaki furnished full Qurbani services during the last Eid-ul-Azha.

Replying to a question regarding the sales of the system to Daraz, Ahmad said it was a really moment of joy for a home-grown company in order to attract a worldwide company as a buyer.

Industry insiders were, however, critical, saying the development place a bad precedent since it shows that hometown startups can't survive by themselves.

Some said the maneuver would create uneven competition available in the market, where more than half a dozen of e-commerce platforms are actually operating.

"It would have already been better if Daraz had only bought a stake found in HungryNaki instead," stated a business insider, preferring anonymity.

Usually, acquisitions such as this are expensive of money, but HungryNaki was marketed at a very good deal, he said.

"That is frustrating as just Alibaba is the winner in this instance," he added.

Additional market players think this move will generate uneven competition available in the market.

"Daraz's recent acquisition provides market validation for the emerging customer technology sector in Bangladesh," Hussain Elius, co-founder and CEO of Pathao, told The Daily Superstar yesterday.

"However, in addition, it illustrates how the insufficient an enabling plan environment cedes the market towards colonisation."

"To build a really digital Bangladesh, we must allow native champions to emerge, grow, thrive and build the critical digital infrastructure of the united states."

DARAZ TO HANDLE STIFF COMPETITION

Daraz features big dreams for HungryNaki.

"You want to be the next leading market person in six months and the leading 1 within a time," explained Daraz Managing Director Hoq.

But to turn the aspiration into simple fact, the e-commerce giant will need to face a good gruelling struggle with other competitors.

"Consumer discount battles begins, leading all players to bleed a lot more than before," stated Maliha M Quadir, founder of Shohoz.

Daraz is likely to face fierce competition from Foodpanda and Efood.

Foodpanda, a good subsidiary of Berlin-based Delivery Hero, commenced its journey found in Bangladesh in December 2013 with limited businesses in Dhaka.

Through its seven-year journey, Foodpanda has extended its operation to all or any 64 districts of the country, a first among its peer companies.

The local food and grocery delivery industry has potential for growth as most of the market continues to be offline and would greatly reap the benefits of digitalisation, said Ambareen Reza, managing director and co-founder of Foodpanda Bangladesh.

The market may also benefit from the large internet penetration and fast smartphone adoption rate in the country.

Efood, the meals delivery arm of hometown e-commerce program Evaly, is probably the fastest-growing foodstuff delivery platforms found in the country.

In less than a year since its inception, Efood now makes around 10,000 deliveries per day from 4,700 eating places to customers in eight cities, including Dhaka, Chattogram, Cox's Bazar and Sylhet.

Other potential opponents include Pathao Food, which has 9,000 registered eating places and operates on Dhaka, Chattogram and Sylhet, and Shohoz Food, which has 5,000 registered restaurants.

DARAZ'S GROWING DOMINANCE

After Daraz's integration with Alibaba, it predominantly brought changes to the technological side.

As a part of that eyesight, in early June, Daraz announced its strategies to get Tk 500 crore by 2021 to set up logistics infrastructure and hubs that would help grow its foothold across the country.

A good big chunk of this investment was already utilised for different requirements, including the buy of over 100 vehicles to greatly help Daraz mail goods to all districts.

"We include the logistic infrastructure that Alibaba uses," Hoq advised The Daily Star within an interview last year.

And today, Daraz has its logistics facilities all around the county. 

The e-commerce platform is currently building a sorting centre and warehouse with an investment around Tk 150 crore. It'll employ 2,000 persons.

Daraz currently makes above 65,000 deliveries each day.

According to experts, the gross annual food delivery marketplace stands at Tk 1,200 core.

Some 20,000 persons work as freelance delivery people, and another 5,000 have employment with the platforms. Around 1.1 lakh food deliveries are created each day.
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