Food delivery is one of the hottest sectors right now for both VCs and startups, and rightly so. Currently, online food orders only represent 15 percent of a massive US$70b market, and consumers are quickly moving online to do everything, which includes ordering food. Investors and startups are in a frenzy to get in on the action early. While competition is growing rapidly in Asia, there are still incredible opportunities present in many Asian countries and cities that are reaching a turning point through technology and changes in consumer behaviour.
We interviewed Jessica Li, co-founder of the Malaysian food delivery service, Dah Makan, which means “Have you eaten yet?” in Bahasa. Dah Makan controls their entire value chain, starting from creating their own fresh meals in-house which are then ordered through their online website or app and finally delivered to customers.
Hong Kong born, Australia and UK educated Jessica founded Dah Makan in Malaysia just over one year ago in 2014. With her previous experience leading Foodpanda’s marketing in Hong Kong, a strong consulting background and a love for healthy meals, Jessica heeded the call of the generational shift and changing food preferences in Kuala Lumpur and set out to create a new food delivery service for the health conscious. Together with her two co-founders, Jonathan Weins and Christian Edelmann, the trio funded Dah Makan out of their own pockets along with two angel investors, who chipped in US$320K.
Where did their faith in the food delivery industry come from?
“Malaysians are becoming more tech savvy and love the convenience of ordering items online,” Jessica said, “If you can order books and clothes online, ordering your dinner instead of cooking it yourself becomes the natural next step. Existing food delivery models are expensive, so we saw an opportunity to create an affordable, everyday experience.”
“What’s more is that the Malaysian government is starting to promote living a healthier lifestyle to its citizens and Kuala Lumpur is still relatively limited when it comes to healthy and affordable options. Because the city is also quite spread out, many people would save time and money from using a food delivery service like Dah Makan.”
The response for Dah Makan seems to show that there’s a demand. Jessica says sales are strong, with thousands of deliveries monthly. Growth has been largely organic, with over 80 percent of customers coming through unpaid channels such as word of mouth and social media. “In our first year, we would be sold out two or three days in advance, so this really motivated us to move into a larger kitchen space in late 2014 in order to meet the demand,” Jessica said.
A thriving tech startup scene in Malaysia
As for launching a tech startup in Malaysia, Jessica has found the startup community very welcoming and open to collaborate.
While a smaller player in the startup scene compared to its neighbor Singapore, Malaysia has fostered a few homegrown success stories of its own, most notably Grab, a ride hailing service that operates in six countries amidst serious competition, and has raised a whopping US$680m in funding. There are other startups targeting the health conscious as well, such as KFit, a fitness pass sharing startup that landed $3.25m in seed funding just last year, led by Sequoia Capital.
“KL’s startup scene is growing quickly and it’s a close knit community, so we all tend to know each other. There are also many opportunities to partner together, which is amazing,” Jessica says.
There are a unique set of challenges that food delivery services face in Asia — as Jessica has seen that first hand from her experiences working in the industry in both Hong Kong and Kuala Lumpur.
As Jessica explains, “In a place like Hong Kong, there is comparably less traffic, and streets don’t change much, so riders know their way around. Most Southeast Asian cities change rapidly and often face heavy traffic during peak hours. In this environment, logistics becomes trickier, which is why we are investing a lot of time and effort into developing our in-house routing technology. Once we have nailed delivery using technology in a city like Kuala Lumpur, it makes it so much easier to expand into other cities.”
With that said, Jessica makes it clear that Dah Makan is focused growing the Malaysian market first. She says, “While we are working hard on the logistics technology, the food side also plays a major role. Not all food is good for delivery. Soggy fries is the obvious example, but foods like duck breast are not great for delivery either. Therefore, we do a lot of R&D with our 5 star hotel-trained chef and food scientist to understand how to create food that can still be tasty after delivery.”
What does the future of food delivery mean for Dah Makan and other food delivery services in Asia?
Jessica says, “The opportunity that we are working on is to completely redefine food delivery. Instead of ordering pizza once a month with your friends, we want to make it a hassle-free, every day food experience that has the potential to completely change eating habits for the majority of households in Asia.“