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Innovation

Foodora parent exiting three other markets besides Australia

Last week, Foodora announced it was winding down operations in Australia to focus on more lucrative markets.

An estimated 1000 riders and 2500 restaurants lose an income or revenue stream, when the food delivery platform shuts down on August 20.

But it turns out Australia isn’t the only market Foodora’s Berlin-based parent Delivery Hero is exiting.

The MDAX-listed company released a statement on Thursday last week announcing its departure from Australia, France, Italy and Netherlands.

That still leaves Delivery Hero with a presence in more than 40 countries in Europe, the Middle East and North Africa, Latin America and the Asia-Pacific region.

While Delivery Hero said it is closing Foodora in Australia to focus on markets where it sees higher potential for growth, at least one local competitor believes there is plenty of room to grow Down Under.

“We look at Australia as a massive market opportunity,” Deliveroo country manager Levi Aron told Internet Retailing, citing Aussies’ affinity for technology and good food.

“In 2017, our revenue [in Australia] increased by 350 per cent,” he said.

Aron noted that Suppertime was the dominant and essentially only food delivery platform in Australia when Deliveroo launched Down Under in 2015.

Delivery Hero acquired Suppertime in 2015 and rebranded it to Foodora in early 2016, but the platform lost its early mover advantage due to lack of innovation, according to Aron.

“Foodora had a good proposition, but in this market you need to be continuously innovating,” he said.

“Australia is a very competitive market and you need to be willing to invest in effort, energy and engagement with government councils and restaurant bodies and everyone else who touches the hospitality industry.”

Deliveroo now has over 6500 restaurants and 5000 riders on its platform in Australia.

The competitiveness of the Australian market aside, some have suggested that growing talk of industry regulation Down Under was a factor in Foodora’s departure.

The Fair Work Ombudsman started legal proceedings against Foodora in June, alleging the platform misrepresented riders as independent contractors when they were actually employees.

Deliveroo’s Aron said platforms in the gig economy are coming under a lot of scrutiny and need to be working with governments to succeed in a shifting business landscape.

“We made a submission to the Future of Work [senate inquiry] and asked the government to end the trade-off between flexibility and security, so riders can receive benefits on the basis of work performed rather than hours worked,” he said.

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