{"id":201357,"date":"2023-11-10T13:36:31","date_gmt":"2023-11-10T05:36:31","guid":{"rendered":"https:\/\/www.grab.com\/sg\/?post_type=editorial&p=201357"},"modified":"2025-11-25T13:45:42","modified_gmt":"2025-11-25T05:45:42","slug":"grabfood-online-food-delivery-southeast-asia-order-density","status":"publish","type":"editorial","link":"https:\/\/www.grab.com\/sg\/inside-grab\/stories\/grabfood-online-food-delivery-southeast-asia-order-density\/","title":{"rendered":"What China can tell us about the potential for online food delivery in Southeast Asia"},"content":{"rendered":"\t\t
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In the food delivery business, order density (the more orders there are within a window of time, in the same area) is an important factor in allowing platforms like Grab\u2019s (NASDAQ:GRAB) to offer the services at lower cost, and still make a profit.\u00a0<\/p>

That\u2019s why population density is key. That raises the potential for order density to go up, giving delivery platforms a better chance to benefit from the economies of scale\u2014and flourish.\u00a0<\/p>

Take for example a city like Jakarta, where more than 16,000 people live per square kilometre. Lots of people living close to each other and ordering food delivery<\/a> means that with smart allocation systems, riders don\u2019t have to travel very far to either a merchant or customer to make a delivery. Even better, the system has a chance to combine multiple orders within a trip, saving the rider time per order.<\/p>

This increases utilisation of the overall fleet, lowering the average cost per delivery. It\u2019s good for the delivery platform, but also good for the riders because they can earn more by completing more jobs in a day.\u00a0<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Densely populated neighbourhood in Indonesia. (Source: shutterstock)<\/figcaption>\n\t\t\t\t\t\t\t\t\t\t<\/figure>\n\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Meituan\u2019s success in China<\/h5>

Meituan is a good case study of this. The company achieved operating profitability in 2019 by harnessing China\u2019s urban population density, their leading market share and a focus on squeezing efficiency out of operations.\u00a0<\/p>

Their 2019 annual report cited an improvement in unit economics for their food delivery business due to \u201cincreasing economies of scale\u201d. Their report the previous year included the following excerpt:<\/p>

\u201cOur delivery rider cost per order further declined attributable to the continuous expansion of our delivery network, improvement of order density and enhancement of our AI-powered intelligent dispatch system.\u201d<\/p>

In other words, order density and an allocation system that tapped the benefits of the urban population.<\/p>

Southeast Asia\u2019s under-penetration and potential<\/h5>

Southeast Asia has the groundwork set for similar success.\u00a0<\/p>

According to Euromonitor, online food delivery penetration in Southeast Asia stands at 17 per cent, trailing behind China\u2019s 28 per cent penetration rate. For Grab, this signals potential for growth. Southeast Asia\u2019s development tends to be a few semesters behind China, but it will catch up. The International Monetary Authority forecasts <\/a>ASEAN\u2019s growth in 2024 and 2025 to be ahead of China\u2019s.\u00a0<\/p>

Importantly, Southeast Asia has in place all the ingredients for increasing adoption of digital services. The population here is young and smartphone penetration is high. The region has a growing middle class, and internet accessibility and speeds have been improving significantly.\u00a0<\/p>

Its cities also have the density needed for growth to translate into profit.<\/p>

Drawing parallels with China:<\/h5>