Local conglomerates eye Robinhood food delivery app

Big customer and vendor database is the main prize for companies looking to expand reach

Local conglomerates are expected to be potential buyers of the Robinhood food delivery app as SCB X negotiates its sale and postpones its closure.

SCB X, a financial technology group and holding company of Siam Commercial Bank, is also gearing up to apply for a virtual banking licence from the Bank of Thailand in September.

SCB X on Tuesday announced it would postpone the cessation of Robinhood food delivery services, which was initially scheduled to take place on July 31 at 8pm.

The decision comes as the company evaluates acquisition proposals that have “exceeded expectations”, it said in a statement to the Stock Exchange of Thailand.

However, other services on the app — including travel, rides, marketplace and express services — will cease operations on Wednesday as originally planned.

SCB X said it believed customers would continue to support Robinhood’s food delivery services. This in turn would benefit the merchants and drivers who have been helped by Robinhood over the past four years, it said.

Robinhood set itself apart with a no-commission business model, in line with its original aim to help vendors survive the lean times during the Covid-19 pandemic. While it did not charge commission fees in core areas such as food delivery, it charged modest transaction fees, as well as platform fees for other services such as ride hailing, though they were lower than those of rivals such as Grab.

While revenues improved steadily, operator Purple Ventures Co Ltd ran up accumulated losses of 5.56 billion baht as of the end of 2023, according to data Creden Data, a corporate performance service.

A source in financial circles who requested anonymity said acquisition proposals are expected to come from local conglomerates, business partners of SCB and those with strong relationships with the bank and SCB X, such as Siam Cement Group, the energy group PTT or the Charoen Pokphand Group, rather than other food delivery platforms.

These conglomerates could take advantage of Robinhood’s solid ecosystem for retail business expansion or enhance their existing retail operations, said the source.

Existing food delivery or ride-hailing platforms would not benefit as much from acquiring Robinhood due to business overlap.

The tentative buyer would need to adjust Robinhood’s business model for the new chapter, and that would have to include a gross profit charge.

“Let’s say that SCB X incurred losses from Robinhood amounting to 5 billion baht and is proceeding to write them off,” the source said. “Selling the food delivery service is a better option despite the sale price not covering the loss, as the key value of Robinhood lies in its ecosystem.”

In March 2023, Robinhood introduced a charge for small-ticket purchase orders of 20 baht per order. This fee applies to food delivery services for orders less than 70 baht and marketplace services for orders less than 100 baht.

Database the real prize

Pawoot Pongvitayapanu, an e-commerce pioneer and founder of Tarad.com, said Robinhood’s focus only on food delivery is the right strategy and the potential buyer is expected to be either businesses that need the data of Robinhood customers, or rivals, such as Shopee Food, which need to grow their business.

Anantaporn Lapsakkarn, a senior researcher at Kasikorn Research Center, said potential buyers might be the biggest and second biggest players in the market. Whoever can successfully acquire Robinhood will be able to expand their market share to 40%.

If the market leader, Grab, acquired Robinhood, it would be far bigger than the second player. If second-ranked Lineman Wongnai made a move, it would become the market leader.

As of January 2024, Robinhood had over 400,000 restaurants, 4.3 million customers and 40,000 combined food and ride-hailing providers in its database.

K-Research forecasts the value of Thailand’s food delivery market in 2024 will decline by 1% to 86 billion baht as the slow economic recovery has made consumers much more cautious about spending.

Online food delivery is more mature in the post-pandemic period and the end of the previous government’s co-payment scheme. The overall market is expected to decline, except some sub-segments such as high spenders, said Mr Anantaporn.

According to Creden, Grab Taxi (Thailand) posted a profit for a second consecutive year in 2023, with revenue expanding 2.8% to 15.6 billion baht, the lowest growth rate in recent years.

Lineman (Thailand) alone (excluding part of Wongnai) posted revenue of 11.6 billion baht in 2023, up 49% year-on-year. The company recorded a loss of 253 million baht last year.

Line Man Wongnai denied the company was a prospective buyer of Robinhood.