Online food delivery businesses have been thriving lately and especially after covid-19, people are ordering food through on-demand apps. Foodpanda was one of the early entries into the market. The company was right in spotting a gap in the Indian market which was a lack of enough home delivery options for food.
Once valued at $3 billion dollars and operating in over 45 countries, Foodpanda shut down its operations and was facing huge losses.
Let's find out why did Foodpanda fail and what went wrong
Internal miscommunication was an issue within Foodpanda. The employees were not informed about the exit of the owners and the employees were left to fend for themselves amidst all the operational difficulties.
Regularly delivering poor services led to the company issuing discount coupons and other freebies as compensation. This was a major hit to the profitability.
Customers complained about having difficult and rude conversations with the delivery partners. Restaurants on the other hand, complained about the lack of proper service and support Foodpanda provided to them.
Being an on-demand food delivery application business, one would expect the operations to be driven by technology and data. But not at Foodpanda. The orders that users were placing on the app did not reach the restaurants.
The restaurants listed on the app sometimes did not even exist! The issues with the app, technically, were serious and detrimental to Foodpanda’s fall from grace. The user experience on the app was not seamless either. For everyone using it including users, restaurants and delivery partners.
The channel of communication was dysfunctional and for a business that runs on being able to deliver services all through a “communication device and software’ this was a travesty.
An important part of the internal environment, employees were not happy in the office. Naturally due to misinformation, distorted channels of communication and lack of transparency from top management, employees began to quit across all offices of the company.
Now, why bring up Foodpanda and its failure after all this time? Because this is the time when young people are aspiring to become entrepreneurs and established businesses are looking to grow technologically.
Foodpanda was trailblazing in many ways in the Indian market with an amazing vision but it started to blur out and that was the unbecoming of the food tech giant. This is the age of innovation and technology, we can learn a lot from these case studies and examples.
What you can learn from Foodpanda’s mistakes
If you are looking to develop an on-demand food delivery app like Ubereats or Swiggy or Zomato, these are the lessons you should derive
- Focus on customer touch-points
- Do not ignore the need of updated and efficient technology
- Set up healthy channels of internal and external communication
- Incentive the delivery partners enough to motivate them to perform and feel like they are part of the team and are taken care of.
- Build a team and encourage team spirit within the company
- Do not over-promise and spend all the money on advertising even before getting things on track fundamentally.
- A ton of orders mean nothing if you cannot handle it effectively.
- User interface and User experience is crucial to on-demand apps.
- Make sure you don’t lose track of the larger vision of the company and continue to work in a certain direction.
- Do not scale if you are not ready. It is better to operate in 5 cities and have happy customers instead of operating in 50 cities and not being able to handle the demand.
Finally, take feedback seriously!
Whenever customers complain about something, over and over again and people are facing similar issues, just look into it.
Act on the feedback and the data you receive. It will make a huge difference in your business.
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