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Monday, October 18, 2021

‘OUR AMBITION IS 100% PANDAMART COVERAGE ACROSS ALL MAJOR CITIES AND ZONES IN BANGLADESH’

Interview with Tamal Gope, Director, New Verticals, foodpanda Bangladesh

Foodpanda’s grocery delivery service pandamart plunged at the opportunity created by the ongoing Covid-19 pandemic that broke out last year. As demands for online groceery shopping skyrocketed, pandamart, like other e-grocery services, began to grow what appears to be a very fast rate.

Fintech interviewed the man at the helm of pandamart’s business. Tamal Gope, Director New Verticals, talked about pandamart, its future, and e-commerce business in general. Here’s an excerpt of the interview taken through email.

Fintech : Tell us a little bit about your professional background and your role at pandamart.

I joined foodpanda Bangladesh in June 2020. Here, I am heading the groceries & new verticals business. My role at pandamart is to scale the business, sustainably and to create best-in-class customer experience in grocery quick-commerce for our customers.

What I love the most about my job is the incredible speed with which we move. Being one of the first employees for groceries in foodpanda Bangladesh, I have seen our team grow from 1 to now 40 corporate employees and more than 400 on-field staff including transgenders, who have been able to build, stock up and start operations in 25 different locations, in about six months’ time in the midst of a pandemic. I feel proud of the team we have been able to build here.

Personally, it has been a thrilling and a very rewarding journey over the last 15 months or so. I say it’s thrilling because it involves a lot of ‘first timers’ for us as an organisation — building dark stores, inventory management or running 24/7 store operations, all this amidst a pandemic!

Professionally, I started my career with IBM back in 2009, after my graduation. Over the next 5 years, I worked in various capacities across consulting, finance and payments brands like Fidelity Investments and PayU.

Then in 2014, at the cusp of the e-commerce revolution in India, I joined Amazon as part of their India launch team and then led the vendor management function for Amazon Fashion. Four years and two roles later, I went on to join Uber in 2019, initially heading their Eats business in South India and Sri Lanka and then moved on to the Rides part of the business, leading the vehicle supply team across India SA.

Fintech : What was the objective and purpose behind the launch of pandamart?

Well, it’s kind of cliche to use the phrase ‘customer obsession’ these days, but any company of our scale wouldn’t sustain itself if we don’t put our customers first in every decision that we make. So that is what we did with pandamarts as well.

foodpanda has always been very strong operationally and with its technology. On the business side, we are already a prominent online food delivery company in Bangladesh. So once we figured out how to move restaurant food from point A to B, under 30 mins, it was just a natural extension to move into delivering everything else.

Plans to diversify into grocery were in discussions late in 2019 but when the pandemic hit, we sensed a genuine customer need — for getting groceries home delivered, and super-fast. We came together as a team and launched our grocery marketplace business, ‘foodpanda Shops’ in March last year. This business today contributes about 20% of our overall grocery orders.

As we started growing our Shops business, we were looking at demand patterns, customers feedback and soon realised a host of challenges. It was evident that if we wanted to create the best-in-class grocery shopping experience, it would mean that we will need to own and manage some aspects of the supply chain. And that is how pandamart came into existence in Bangladesh.

ONE OF THE KEY TRENDS THAT WE WERE ABLE TO IDENTIFY FROM OUR INITIAL OPERATIONS WAS ABOUT – ‘WHAT’S IMPORTANT TO A BANGLADESHI GROCERY SHOPPER?’ AND WE FOUND THREE THINGS – BRAND, PRICE AND QUALITY

pandamart is a 24/7, online grocery store. It is a network of ‘darkstores’ or mini-warehouses that stores somewhere between 4000-5000 skus (stock keeping units) across various categories from fruits and vegetables to baby care to home cleaning and is able to deliver products in under 30 mins, from click to your door.

Fintech : What are the trends in q-commerce like in Bangladesh and how do they compare to other South Asian countries?

Customers everywhere always want the same things. Large assortment range, lowest prices and a superfast and convenient delivery experience. It’s still early days for Bangladesh but the appetite for quick-commerce is clearly there from what we have seen in the last 10 months or so of our operations.

One of the key trends that we were able to identify from our initial operations was about – What’s important to a Bangladeshi grocery shopper? and we found three things – Brand, Price and Quality, in that order of priority. In a recent survey among our active customer base, more than 80% cited ‘brand’ as a top factor that influences their buying decisions. Along with this, we also identified that assortment range and delivery speed matters, more so in big cities like Dhaka.

We were able to effectively address most of these areas through our pandamart operations. We only source ‘genuine’ products, either directly from the brands or from listed suppliers and distributors. We are also proud of the fact that we have been able to build a sizable assortment of genuine, branded imported goods- across various categories including chocolates, snacks, beauty and baby care to name a few. We have a stringent quality control process to ensure that we deliver the best quality products and fresh produce to our customers.

Interview with Tamal Gope, Director New Verticals, foodpanda Bangladesh
Tamal Gope, Director New Verticals, foodpanda Bangladesh

Fintech : Even though seen as an emerging market, smartphone penetration is relatively low in Bangladesh. How does that compute into your business planning?

It’s still early days for any internet business in Bangladesh, even of our scale, to start worrying about low smartphone penetration as part of their business planning.

The number of mobile phone and mobile internet subscriptions stood at slightly over 176 million and 110 million respectively as of June this year as per the BTRC. The latest GSMA report says there were 90 million unique mobile phone users in the country as of December 2020, and of them 41% were smartphone users. Even with such low smartphone and internet penetration, there’s an addressable market of roughly 40 million people, which is larger than the population of Malaysia, Australia, Canada and most of the other countries in the world.

Another big positive is the mobile data prices here. Bangladesh ranks 8th in the world in terms of cheaper mobile data charges, costing about 50% lesser on average for every gigabyte. But what would really accelerate the adoption rate is by reducing the lower tier price bands for mobile data where most of the first time adoption happens. For instance, the cheapest mobile data plan available here would cost 11 cents per gigabyte as compared to just 5 cents in India.

So there are a few factors at play here, one has been the tremendous growth in the number of mobile internet subscribers of late and that there is huge headroom for two or maybe even three major players to grow sustainably in the online grocery market (which is currently less than 0.1% of the country’s overall grocery market) in a young country with a median age of 27 years and an almost one to one ratio between males and females.

Fintech : Where does pandamart stand in terms of growth since its launch? Has it been in line with your projection?

It has been a pleasant surprise so far. The entire foodpanda team has put in a lot of hard work to get to where we are now and we saw the results come in almost instantly. pandamarts have grown 250% since January this year and now contribute around 15% of our gross revenues. Some of our darkstores are already doing more than a thousand orders per day and have one of the best customer satisfaction scores across all our business verticals, which is a big testament of our efforts so far.

Meanwhile, we have been able to establish commercial relationships with over 110 large, medium and small scale manufacturers, suppliers and distributors across the country who supply products to our stores and distribution centers. They range from multinational brands like Unilever, Reckitt and Nestle to local conglomerates like ACI group, Bashundhara group and Pran group to list a few.

We are also pushing our grocery marketplace business, “foodpanda Shops”, which is also growing steadily with more than 3000 vendor partners on the platform including some big names like Meena Click, Lavender, Daily Shopping and Unimart. This business now contributes around 20% of our overall grocery orders.

We are also making significant investments in the product and technology side for our grocery businesses in 2021 that will enable us and our partners to create a compelling value proposition and better serve our customers.

Another area I am proud of is our work with the Bidyanondo Foundation. Our teams work together to ensure that products that are closer to their best before dates, aren’t just wasted. This is a small cause to help feed and support the less privileged among us.

Fintech : When you think about scaling pandamart, do you think about across the country, or is it more practical to target the cities? And given Bangladesh’s large population would it be wrong to say that acquiring enough business in the cities alone makes business sense for you?

With the world’s eighth-largest population, Bangladesh is one of the fastest-growing markets worldwide. It is estimated that by 2025, around 17% of the population will be classified as middle-income consumers. That’s almost 30 million people, a big enough market to be on the radar of any global organisation.

These consumers are also living in close proximity. Territorially, we are roughly one-quarter the size of Thailand. As of now, we see around 80% of our target customers concentrated in two cities — Dhaka and Chattogram. We are significantly scaling our operations there, both in terms of infrastructure and man-power. 12 out of our 25 existing pandamarts are in these two cities. We are also seeing significant traction in cities like Khulna, Sylhet, Rajshahi, Jessore and Gazipur.

We started our pandamart operations in September last year with four stores in Dhaka. We expanded to 15 stores by the end of the year. This year, so far we have added 10 more stores, taking our tally to 25 stores. We plan to add another 10 to 15 more stores this year which will help us to add more coverage in the country and enable us to deliver to our customers even faster. However, given the capital intensive and operationally heavy nature of building and running a dark store, I believe new models of expansion like franchisees and omni-channel points of sale will also evolve as we move forward.

IT IS ESTIMATED THAT BY 2025, AROUND 17% OF THE POPULATION WILL BE CLASSIFIED AS MIDDLE INCOME CONSUMERS. THAT’S ALMOST 30 MILLION PEOPLE, A BIG ENOUGH MARKET TO BE ON THE RADAR OF ANY GLOBAL ORGANISATION

Fintech : What are the challenges you are facing?

When you’re doing something new, you are bound to have challenges. We are determined to go the extra mile to work with all our stakeholders in explaining how our business works. When foodpanda began operating in Bangladesh in 2013, there were challenges and the team overcame those challenges through continuous improvement and innovation. We are confident that we can do the same with pandamart.

Quick-commerce is hard enough in itself and when you are running an inventory controlled, grocery dark store business with wafer thin margins, that is operational 24/7 and are delivering orders in 30 mins, it gets very challenging across all aspects of supply chain, store operations and delivery logistics.

Another big challenge is finding the right properties that are fit to be used as our ‘darkstores’ so that we can live up to the promise of 30 minutes delivery, especially in Dhaka where the traffic situation makes things further challenging.

As we continue to expand and grow, we are always looking for skilled human resources. Scouting and retaining skilled manpower is also a challenge, but we are fortunate that Bangladesh has a large young workforce who are adopting technology very fast.

Fintech : Where do you plan to see pandamart in the next few years?

I believe the future of grocery is omni channel. Our mudir dokans, our supermarkets are here to stay and foodpanda is empowering them to grow online through our Shops business. Online grocery shopping is just about shaping up as a genuine customer need in our part of the world and will supplement the role played by our more traditional channels, at least in the near foreseeable future.

I see all three formats collaborating more in the future because that’s the only way we will be able to truly understand and better serve our customers. All three have their own unique strengths. A mudir dokan has the most nuanced data on what products work locally, their price sensitivity etc. Supermarkets are a one-stop shop with unparalleled range, stock availability and loyalty programs. Online grocery (pandamarts) have superior delivery logistics, provide speedy delivery and offer competitive pricing. Imagine a world where these data sets come together – what you will then have is a superior customer experience.

In the future, we want to be even more customer centric. Our ambition is 100% coverage across all major cities and zones in Bangladesh. We want to expand our assortment range across groceries and other categories to be a one-stop shop for our customers for all their grocery and beyond needs. And we aspire to deliver faster, not in 30 mins but in 10 mins.

With the new normal, I believe Bangladesh is looking at the beginning of a change in it’s grocery buying behavior and the entire grocery retailing ecosystem here has a major role to play in this transformation.

Saqib Sarker

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