Recently, there have been public Facebook posts from several F&B retailers highlighting that the GrabFood app sometimes automatically labeled their stores "Not available for delivery" or "Closed" for one reason or another .
Whenever this happens, these traders are often unaware of it until their customers contact them directly to ask about it.
This leads to lost sales, as traders like Burgertory and Mamalee typically do this around rush hour.
In the post's comments, customers claimed that they would normally see the same recycled, popular F&B retailers like McDonald’s or KFC during rush hour, and the smaller players would only reappear in the app after rush hour.
These retailers also state that they have contacted GrabFood customer service several times to inquire about this issue. As a rule, however, they either receive no answer or one that does not take any action anyway.
It is understandable that these dealers and their customers are upset about it. However, I would like to give some plausible reasons why this happens.
1. Profit is prioritized
I don't think most companies that work with a model like Grab are here to play fair, and it's not logical for them to do so.
They are here to help you help yourself, and ultimately they aim for profit. In food delivery services, retailers like McDonald’s or KFC are larger retailers who can achieve constant sales and profits.
I understand that these traders actually pay lower commission rates (for example maybe 20% compared to the usual 30-35%), not higher ones.
What GrabFood loses on commission rates is offset by the sheer volume of orders from these larger retailers (e.g. 500 orders / day versus 50 orders / day from a smaller retailer, provided the orders average around 20 RM).
In the end, GrabFood will still receive a commission of RM 2,000 from the larger retailers, compared to RM 350 from the smaller retailers.
(This is a very simplified calculation. Until GrabFood Malaysia provides a transparent breakdown, we don't know exactly how much will go to the drivers and GrabFood itself, without taking other costs into account.)
Larger retailers like the ones above have the manpower to place fast-moving, high-volume orders and could therefore make the most money during the short rush hour.
In the end, GrabFood will continue to benefit from the larger players, which is why the app's algorithm may have been developed to prioritize these larger players at rush hour and "hide" the smaller ones.
This is my logical conclusion, but according to GrabFood's statement, "they don't shut down any of their businesses on commission."
Editor's update: The above sections have been edited for clarification by the author.
2nd The technology is not perfect
Given the increased number of users that GrabFood is struggling with this MCO, I am not surprised if the system's filter is sometimes broken or fails.
Ideally, GrabFood always has a team that keeps an eye on this and fixes any problems that arise as quickly as possible. With the number of other features included in the app, this may be easier said than done.
As the dealers stressed, calling the customer service team will usually fix the problem and their company will be available in the app again after that.
- GrabFood has now clarified that its representative who replied to Burgertory has provided inaccurate information / Photo credit: Burgertory's FB post
- Photo credit: Burgertorys FB-Post
- GrabFoods clarification under Burgertorys FB-Post
Yes, it gets annoying if you have to do it multiple times, but there were no public complaints before the MCO, or at least none that I know of.
It seems that this could be an MCO-specific problem, and if so, GrabFood should investigate and clarify the situation with all of its dealers.
3rd The management of the driver fleet is not easy
One reason why dealers use GrabFood is because they have a large fleet of drivers across the country.
These drivers are likely organized according to a formula that is unknown to both dealers and customers. So we don't know how drivers are delegated.
According to the latest response from GrabFood, the system automatically reduces the service distance / radius when delivery drivers are missing to ensure that people still get their groceries on time.
If you live further away from a particular dealer, it may mean that you cannot order from this dealer.
On the other hand, however, it occasionally appears that you can order from a distant dealer and not from a nearby dealer.
The weather can also play a role in prioritizing certain traders, as highlighted in the comment below.
4th Grab's internal management probably has less to say than you think
In my work, I've heard several stories of startups that have had to reject investors and shareholders who just didn't suit them.
Investors may want to have some level of control over what the company does and how it is done, and it is up to the company to decide whether to exchange that control for funding.
I'm not saying that this is absolutely necessary at Grab, but I'm not surprised if the company works in a way that its shareholders are satisfied.
According to the CEO and co-founder Anthony Tan, some of Grab's activities are already profitable, but the company is waiting to be fully profitable before going public.
I believe that in the period between now and this event, Grab is cautious and protects the interests of its current shareholders for their own benefit.
You may not agree, but not all companies are managed equally.
– // –
Of course these reasons are just my opinion and I know that not everyone will agree.
Despite trying to give GrabFood the benefit of the doubt, I think they can do some things better too.
For one thing, it would be good if you could provide a map function in the GrabFood function before you place your order (not just afterwards), similar to GrabCar, where you can see all drivers in the area and further out.
This could offer customers more transparency as to whether they really cannot order from Dealer A or not due to the lack of drivers in this area. At the moment we only have the word from GrabFood.
GrabFood also admitted that despite informing their retailers about the potential for their stores to be labeled "closed" during Christmas, they have not verified that the retailers actually received the memo.
They should be more proactive in ensuring that their dealers are on the same page, and after publicly announcing this confirmation, dealers are sure to expect this responsibility from GrabFood in the future.
I think it's good that F&B dealers highlight these types of problems because they're at least worthwhile discussions and could create more transparency within the system.
Whether this will happen or not is uncertain, as GrabFood wants to avoid being overwhelmed by close competition like Foodpanda.
If you are a customer of smaller F&B dealers, you can increase your support at any time by placing direct orders in the restaurant instead and arranging for pick-up if possible. In this way, you can at least fully benefit from our purchases.
- More information about GrabFood can be found here.
Selected image source: GrabFood