28 Nov 2019
Rise of Food Delivery Platforms in Taiwan Triggers Consumer Concerns
With online food ordering now a way of life for many Taiwanese residents, calls have grown for stricter monitoring and regulation of both the overall hygiene levels in this still emerging sector and the day-to-day safety of delivery staff.
The rise and rise of online purchasing has brought enormous changes to the retail catering sector in recent years, not least with regard to food delivery services. While these were previously arranged by food outlets themselves, as the internet and mobile technology have become more and more part of everyday life, specialised food delivery companies have emerged. Unfortunately, within Taiwan, this has also coincided with growing concern over certain food hygiene issues and the safety of delivery workers.
Today, food delivery services are actually extensions of the overall e-commerce business model, with a number of industry players having developed an electronic transaction platform and an app for use by delivery couriers and consumers. Through the app, consumers can order their choice of food, with a courier then delivering their selection while earning a commission in the process.
Taiwan is well-known worldwide for the quality of its food and its highly competitive catering sectors. According to figures released by Taiwan's Ministry of Finance, turnover in the local catering sector had been growing for 17 consecutive years as of the end of 2018. The growth rate in 2018 was 4.6%, with turnover reaching NT$777.5 billion (US$25.6 billion). Meanwhile, the overall number of food outlets has risen for five years in a row – jumping to 142,000 in 2018 from 117,000 in 2014.
Against this backdrop of steep market competition, a number of well-established overseas-based online food delivery service platforms have set up operations in Taiwan. To date, many catering operators have been more than happy to co-operate with these platforms in order to expand their coverage and increase their sales. Moreover, they are also increasingly popular with consumers, as food deliveries save them time and travel costs in terms of going out to eat. Today, food delivery couriers can be seen crisscrossing Taiwan's major cities on their motorbikes by both day and night.
According to a survey conducted by market-research company Kantar in July 2019, 40% of Taiwanese residents aged between 16 and 60 (about 5.87 million people) have used a food delivery app. Overall, usage is highest in the 20-30 age group, with more men than women availing themselves of such a service.
The survey found two of the overseas operators – Foodpanda and Uber Eats – are the most popular, with their level of user overlap rate also notably high. Among respondents who said they had used food delivery platforms, the "user rate" and "frequent user rate" for Foodpanda came in at 74% and 43%, respectively, while the corresponding results for Uber Eats were 64% and 32%. Meanwhile, the user rates for Deliveroo, another overseas operator, and several local players (including Yo-woo, Foodomo and Lalamove) were all under 10%.
Foodpanda – back in 2012, the first overseas operator to enter the Taiwanese market – offers delivery in 15 of the territory's 22 cities and counties. In total, it has about 10,000 partner food outlets, ranging from high-class restaurants to street stalls.
According to John Fang, the Managing Director of Foodpanda Taiwan, the combined value of the weekly orders the company has received to date in 2019 has matched the total of all its orders for the previous six years. In line with this, the volume of daily orders has recorded a 25-fold year-on-year increase, its number of partner food outlets has doubled and its number of active users has increased 20-fold. In spite of this, Fang said there was still huge potential for growth in Taiwan's food delivery market. In order to capitalise on this, the company now has two priorities – improving its operational efficiency and expanding its distribution network. It is also looking to incorporate artificial intelligence into its logistics systems as a way of refining its services.
For its part, Uber Eats entered the Taiwan market in October 2016. Speaking in the wake of its third anniversary, the company has now revealed plans to expand its services to five additional cities in Taiwan, taking the total number it serves to 15, putting it on a par with Foodpanda. While the company has not officially disclosed its number of partner food outlets, industry estimates put it at about 6,000.
In addition to food deliveries, Uber Eats has also diversified its offering by establishing a tie-up with two of the territory's convenience-store chains – FamilyMart and City'super. This has seen it providing a delivery service for their goods, as well as for fresh and live produce.
While the market continues to expand, two separate incidents in early October – both involving food delivery worker fatalities – have sparked renewed debate, not least as to whether such individuals should be classed as freelancers or employees. Subsequently, Taiwan's Ministry of Labour has ruled that the contracts signed between Foodpanda, Uber Eats and their food delivery workers represent labour contracts and make the platforms responsible for the safety of their employees and for insuring them against all accidents.
For its part, however, Foodpanda has maintained that delivery workers being employed on a freelance basis is better for the company and for the couriers themselves, arguing that the existing arrangement allows such workers to have flexible working hours and to arrange the insurance that best suits their own needs. Addressing the same issue, Uber Eats said that while ensuring the safety of delivery personnel is of paramount importance, consideration should also be given to ensuring flexible working hours can still be enjoyed.
Alongside employee safety, another aspect of the industry that has excited public concern is food hygiene. Given the nature of the items they deliver, the need to handle hot and cold items separately and maintain a high standard of cleanliness during every stage of the process are clearly of the utmost importance. In line with this, the Ministry of Health and Welfare confirmed recently that local government health bureaus have been mandated to regularly inspect the operational environment of all food delivery platforms, as well as those of their partner food-preparations outlets.
In a move aimed at alleviating these ongoing public concerns, at the end of October, several of the delivery platforms operating in Taiwan – including UberEats, Deliveroo and Lalamove – signed a voluntary code of conduct. This specified the priorities and obligations for operators across a range of areas, including the safety of delivery workers, consumer rights and food safety protocols. With regard to the latter issue, the operators specifically undertook to dispatch food in thermal bags, separate hot and cold food, maintain strict temperature control standards and prioritise cleanliness at all times.
Robert Kang, Special Correspondent, Taipei