Specialist
Former executive at Talabat (Delivery Hero SE)
Agenda
- 2022 MENA food delivery and q-commerce (quick commerce) review – H1 2023 outlook across market structure and competitive dynamics
- Delivery Hero’s (ETR: DHER) expansion and profitability strategy across food delivery and Dmart roll-out in MENA
- Advertising revenue expansion potential and longer-term MENA profitability and growth outlook
Questions
1.
How has Delivery Hero’s strategy for the overall business evolved across geographies and verticals? How has the company taken M&A as a core method to do this?
2.
Are other players with a wider geographical approach – such as Just Eat Takeaway, Deliveroo and DoorDash – also centralising logistics and other services, similarly to Delivery Hero? Is this a common strategy of centralisation?
3.
What are the advantages and disadvantages? It seems that Delivery Hero needs the ability to localise to a degree, because it has multiple brands across numerous regions. What are the associated disadvantages with such a decentralised structure relative to other players?
4.
Which major regions in MENA are key for us to focus on?
5.
Given you have more experience on Talabat and HungerStation, how is Yemeksepeti performing in Turkey, especially with competition from Getir in the q-commerce [quick commerce] space? Getir is trying for a super-app development similar to Gojek.
6.
How critical is Turkey for Delivery Hero in MENA? Is it a core market for the company to retain its presence in, or could it be rationalised and then capital could be reallocated more appropriately?
7.
How does Delivery Hero prioritise its business across MENA vs the Americas vs APAC vs Europe? The company reports about 18-20% GMV, so how does it think about allocating and prioritising MENA for further growth?
8.
Delivery Hero’s major labels include Talabat, HungerStation, Yemeksepeti and InstaShop, although InstaShop was a separate brand in the company presentation. How do the various brands work and operate under the umbrella? Why is InstaShop still on the presentation when the company has Dmart? What’s the possible brand creation strategy here?
9.
How are Talabat and HungerStation differentiated in their operating regions? HungerStation seems more focused on Saudi Arabia whereas Talabat has the rest of the GCC [Gulf Cooperation Council]. How do they operate in North Africa?
10.
Why isn’t HungerStation expanding beyond Saudi? Is it to allow the different brands to gain leadership and not compete against each other, or is it a function of when it was acquired?
11.
How do Talabat, HungerStation, Yemeksepeti and InstaShop interact with each other under Delivery Hero’s MENA umbrella?
12.
Dmart is Delivery Hero’s in-house or traditional q-commerce dark store model, but there is also a marketplace model, to some degree. How does a q-commerce business interact across the Talabat, HungerStation and Yemeksepeti brands?
13.
Is Delivery Hero trying to execute a standardised q-commerce strategy on a global scale given q-commerce has become such a critical play for the sector overall? Or is it allowing for localisation in each market? How does the q-commerce strategy you helped to build feed into the company’s global q-commerce vision?
14.
Do you anticipate Delivery Hero making any more large acquisitions or market entries in the short term? The company was potentially looking at Wolt, but then DoorDash completed that acquisition in June 2022. In which regions could it potentially execute large-scale M&A? Do you think the business will now focus on that path to profitability?
15.
Talabat as a whole has a really large remit over most of the GCC, barring Saudi. What are the brand’s core markets and how is it positioned across each in terms of market share?
16.
What is Talabat’s contribution to Delivery Hero’s overall MENA reporting in terms of GMV or revenues? How weighted is it towards Talabat?
17.
How much of a threat to Delivery Hero is Deliveroo given its expansion into respective core markets seems to be a recurring theme?
18.
If we take Kuwait, how substantial is Delivery Hero or Talabat’s market dominance or market share? How sustainable is that with Jahez now entering the market?
19.
Can you elaborate on the UAE region? Deliveroo’s dominance is primarily in Dubai. How sustainable is Talabat’s positioning in the aggregator market?
20.
You said there are several players in the Qatar market, but none have really been successful. What dynamics make it difficult for scaling in Qatar and how is Talabat addressing this?
21.
How is profitability faring in Kuwait and UAE? What are the dynamics there? Are these profitable markets for Talabat?
22.
Can you elaborate on the advertising revenue stream? To a certain degree, MENA tends to be an innovation ground for Delivery Hero, which it then extends across its portfolio. How are the click revenue stream and Joker, which is a pop-up banner, advertising units structured? How do they operationally fit into the application and business?
23.
Are other major players with global operations – such as Deliveroo, Just Eat Takeaway and DoorDash – also trying to build out an advertising revenue stream? How would you compare the players based on this initiative?
24.
How might the advertising structure impact competitive dynamics? Presumably we can link this into the merchant onboarding and retention criteria. For example, the merchants of the restaurants would primarily be paying and contributing to the advertising banner revenue, whereas in food delivery, the operating brand typically goes to market and locks the merchants in and then the commission rate is based on that. Is Delivery Hero trying to integrate the advertising component with the commission rate or restaurant negotiations? How is it trying to link the two together?
25.
Can you elaborate on the layering of the q-commerce initiative and synergy realisation between the two different verticals? I understand the cross-fertilisation and cross-pollination of the consumer base, and lower CAC [customer acquisition cost] – the key thing being the ability to push down logistics costs to drive up efficiency. What were your operational challenges in executing this integration?
26.
I believe that in the case of MENA, drivers typically don’t fall into the more commonplace gig-economy model, but they are acquired through agents instead. What is the usual driver acquisition criteria and how much of a difference in driver profitability and efficiency has the integration made? How has the driver component benefited from the integrations?
27.
On the q-commerce side, Getir has been successful experimenting with the franchising model in Turkey and London. Do you see franchising as a viable strategy for the sector overall? Might Talabat look at implementing a franchising model?
28.
Once the brand campaign and integration is complete, how does marketing spend associated with customer acquisition and retention shift? What’s the impact from amalgamating two brand identities?
29.
When there is a combined offering, do consumers tend to remain within the ecosystem of the Talabat application or move to alternatives, whether Getir or another player? How successful is the user lock-in?
30.
How does Talabat position or market itself to consumers? Delivery Hero chose a premium positioning in the market, whereas Just Eat Takeaway is known for lower-quality merchants but having a greater base. Where does a Talabat fit across the two extremes?
31.
How has Talabat’s positioning shifted in terms of discounting? It doesn’t seem too aggressive any more.
32.
When it comes to brand building and marketing, is Talabat allocating spend towards brand marketing or is it still focused on performance marketing? How is it thinking about that position given its scale?
33.
What’s Talabat’s strategy to acquire more merchants in the market? Is it still trying to onboard more merchants or is it mostly about merchant retention?
34.
How is Talabat positioned in terms of commission rates to merchants? Is it higher, lower or in line with the market and other players?
35.
Has Talabat been successful in developing exclusivity contracts with merchants or is it still a free-for-all for all players?
36.
What might be relevant or a core complexity for Talabat operating in the GCC region, excluding Saudi Arabia?
37.
What’s going on with HungerStation in the Saudi Arabia market?
38.
Why are Jahez and HungerStation going for non-subsidised fees to gain customer penetration? Is it to first get profitability or test the pool before going more aggressively? How might this be phased out?
39.
For the Talabat business in the non-Saudi Arabia market, what’s the split between the marketplace and logistics model?
40.
How critical is logistics for driving the overall profitability for Talabat’s integrated offerings, for example? Can profitability also be reached in an integrated manner through the marketplace model?
41.
What do you think we should be looking out for as Delivery Hero begins to execute on its Saudi Arabia strategy? When investors think about the growth engine and story for HungerStation in Saudi, what should be tracked? Is it a story of revenue and penetration to gain scale? Is it a story of profitability or market dominance? What is the narrative to monitor in this space?
42.
What’s your 1-3-year outlook for opportunities in the more emerging markets such as Jordan, Egypt and Iraq? Is it a critical part of Delivery Hero’s equity story or are these markets more of a long-term play?
