Food delivery Services in Thailand
The pay rates of gig workers have been reduced without explanation by platforms such as Grab and Foodpanda.
At the height of the COVID-19 pandemic, Piti earned a decent living as a Grab delivery driver in Bangkok.
Piti’s earnings have plummeted after two years of delivering food to homes and offices. Piti says the starting rate for food orders has gone down from 40 baht ($1.12) to 38 baht ($1.07) in recent months. Even worse, Piti says he is picking up far fewer gigs due to a sharp increase in the number of drivers on the road. “I used to earn about 2,000 baht [$57] per day, but now I earn just 900 baht [$25],” Piti said, using a pseudonym to avoid retaliation.
With Grab’s ride-hailing service, Piti plans to transport passengers at a cheaper rate of 35 baht ($0.98) per kilometer. The tough business climate in Thailand, one of Southeast Asia’s most competitive markets for “super apps” like Grab, is forcing platforms to cut costs.
After a $39.6 billion merger with a blank cheque company, Grab Holdings, which controlled 44 percent of the Thai market in 2021, went public in New York.
Although the Singapore-based start-up ranks as Southeast Asia’s most valuable tech unicorn, it has been unable to turn a profit.
More than 1,000 Grab employees were laid off in June, the largest round of layoffs since 2020.
According to analytics firm Creden Data, Line Man, a delivery app backed by Japan’s Line Corp., reported a loss of 2.7 billion baht ($75.9m) in 2018, down 14 percent from 2021, despite growing revenue 88 percent to 7.8 billion baht ($219m).
As the volume of food orders declines post-pandemic, the Kasikorn Research Center, a Bangkok think tank, estimates that the food delivery business in Thailand will shrink by 11.3 percent this year.
Al Jazeera spoke to food delivery drivers for a variety of platforms who claimed they did not know why their rates had been lowered.
Pon, a driver for Robinhood, said his basic pay had dropped from 43 baht ($1.21) to 39 baht ($1.10).
“We have faced the same situation in many platforms,” Pon, who asked not to be identified by name, told Al Jazeera.
Pon switches between apps and platforms on a daily basis, as do many drivers.
A similar payment structure is shared by Grab, Foodpanda, Robinhood, and Line Man Wongnai.
To encourage drivers to reach revenue targets, incentives are sometimes offered.
The more hours a driver works, the more money he or she makes.
“Orders are at their highest between 11am and 2pm and 5pm to 7pm, especially if it’s raining,” Natee, a 39-year-old Foodpanda driver who requested anonymity, told Al Jazeera.
Since Natee quit his factory job after his boss failed to pay him overtime, his rates on Foodpanda have declined.
A ride-hailing app launched in Thailand in 2020 allows him to supplement his income by transporting passengers. “Some drivers work for multiple ride-hailing platforms simultaneously to diversify their income streams,” Hilman Palaon, a digital economy expert at Lowy Institute’s Indo-Pacific Development Centre, told Al Jazeera.
Depending on demand and pricing conditions, they can switch between platforms.”
The fact that platforms were giving drivers a smaller split of revenue than in the early days was not surprising to James Guild, an adjunct fellow at the S Rajaratnam School of International Studies (RSIS) in Singapore.
In future, Guild told Al Jazeera, we can expect less generous incentive schemes, lower revenue splits, and higher fees from the company. Because Grab’s business model has been so unprofitable, it needs to change something. Costs for these adjustments will have to be borne by who and where.” According to Line Man Wongnai, a delivery arm of Thailand’s popular messaging app Line, drivers’ rates fluctuate depending on local economic conditions, weather conditions, and user demands. Line Man Wongnai’s vice president of public affairs, Isriya Paireepairit, told Al Jazeera that the latest adjustment in March rose and dropped in different areas. The compensation was raised in the central Bangkok area because of the high demand.”
The pay cut was not commented on by Grab Thailand.
Grab Thailand’s managing director, Worachat Luxkanalode, said the platform experienced growth after the country reopened following the pandemic.
Food delivery orders were strong, in part because of remote work, but the platform was working on increasing value per order by partnering with more restaurants and offering more promotions. It was admitted by Luxkanalode that the food delivery service wasn’t profitable. With an order of 100 baht [$2.81], Grab receives 20 baht [$0.56] commission from the restaurant and pays the driver 40 baht, which means we instantly lose 20 baht,” he said.
As platforms face profitability issues, they have been trying to diversify their revenue streams.
With Line Chat, Line Pay, and Line Shopping, Line Man Wongnai intends to capitalize on Line’s 50 million users.
In July last year, Grab’s Luxkanalode announced the platform would offer low-interest rate loans to its food vendors and drivers.
For example, Grab Thailand offers hotel booking, digital wallet services, and customised delivery services for laundry and groceries.
However, RSIS’ Guild noted that the company is entering a period of transition as it pivots from growth toward profits. According to the study, ride-hailing and delivery apps have a hard time making money, so they are turning to financial services customers, which are more profitable. After a promising start, Guild said the gig economy’s future is unpredictable.
By reducing transaction costs and matching buyers and sellers more efficiently, it has certainly had positive effects. As a result, small businesses have been able to enter markets that were previously closed to them. A few years ago, Indonesian drivers who put in the hours were earning well above minimum wage. The goal was to onboard more drivers at that time, so they received very attractive incentives. “Those days seem to be over.”
The reference news from ALJAZEERA