Line Corp’s Thailand food delivery business is gearing up for a prolonged food fight with players ranging from Grab (backed by SoftBank) to banks following a merger with a listings heavyweight and an outside capital injection.
As the sector grows internationally due to the COVID-19 pandemic and social distancing, food delivery by chat app operator Line grows within the sector in what has become its second-largest market.
However, there are still many doubts and questions linger on how companies could make a profit.
Line Man is a fast-growing delivery business that merged last month with Thailand’s leading restaurant listing site, Wongnai. In this way, it expects that this fact, together with the 47 million Thai users that Line has gained, becomes an advantage.
Yod Chinsupakul, Line Man Wongnai Chief Executive, said in an interview with international media: “We can reduce costs a lot and that is the path to profitability.”
Also, in what was his first interview since taking office, Yod Chinsupakul said the company is targeting 20 cities by the end of the year. These expectations come after they have placed their trust in Hong Kong logistics company Lalamove for rapid escalation. Now, they start from 15 cities and promote in-house delivery.
To date, Line Man Wongnai has raised $110 million to fund its expansion from investor BRV Capital Management, making it the first international company to raise this capital.
Alfonso de Los Reyes, an analyst at Singapore-based venture Momentum Works, said the strategy to win is to focus on conquering volumes as the average price per item tends to be very low.
This merger has left Line with a 46% stake in the delivery business. The company also delivers food in Taiwan and Japan. Z Holdings, Softbank’s national Internet company, is reaching a private agreement with Line, raising expectations about the possibility that the operations with the chat application serve as a gateway to growth abroad.
Similarly, SoftBank-backed Grab is also delivering food throughout Thailand alongside other left-field rivals of the delivery business, such as Siam Commercial.