Delivery Hero CEO Niklas Östberg stated that growing its subscriber base has helped the company navigate "brutal" competition in key markets. The German food delivery firm is increasingly relying on subscription plans to retain customers and defend market share, with significant subscriber penetration in South Korea and Saudi Arabia.
Delivery Hero's strategy of leveraging subscriptions is crucial for its profitability and market position amidst intense competition and a pending takeover offer from Uber, impacting customer retention and operational costs in the global food delivery sector.
Competition has been "brutal" in some key markets for German food delivery firm Delivery Hero, but the company is increasingly relying on its growing subscriber base to retain customers and defend market share, according to CEO Niklas Östberg.
Östberg told Reuters that while competition remains intense, it is not worse than the previous year, suggesting that the situation may improve. He highlighted that customer loyalty, driven by subscription programs, has been crucial in withstanding competition in markets such as Saudi Arabia and South Korea, where subscriber penetration is approximately 60% and 50%, respectively.
The company views subscriber programs as a key advantage, encouraging repeat orders and reducing customer churn, which helps in spreading marketing costs across more transactions. Östberg also noted that Delivery Hero is evolving beyond just food delivery, offering a wider range of services to give customers more reasons to subscribe and increase loyalty.
Delivery Hero faces increasing competition in Asia, and in March, it agreed to sell its Foodpanda business in Taiwan to Singapore's Grab. The company is also currently subject to a takeover offer from U.S.-based rival Uber.