Just after a year of being acquired by the Chinese e-commerce giant Alibaba, HungryNaki, the country’s first online food delivery service provider, has downsized its operations.
HungryNaki recently sacked a lion’s share of its employees.
Established in 2013, the local delivery startup saw 100% of its stakes being acquired by Alibaba in 2021 through its local owner Daraz Group - the Pakistan-based e-commerce platform that was also acquired by the Chinese e-commerce giant earlier in 2018.
Out of the 30 zones Hungrynaki used to operate in, it has pulled out from 15 of them, with only two being in Chittagong and the other 13 being in Dhaka, according to sources.
Alibaba has been tapping into the markets in Bangladesh, Pakistan, Myanmar, Sri Lanka and Nepal mainly through Daraz, who had initially planned to extend HungryNaki's network to around 100 cities after it was acquired last year.
However, according to a statement shared with the media, the company claimed the “appropriate” move was made to ensure the sustenance of the organisation’s profitability against the reduction in order ratios and service development.
The company also had to rapidly change its business strategies several times because of the dynamic local market that has been rapidly growing and evolving.
As a result of those changes, the e-commerce platform had to resort to downsizing in response to some roles and functions merging, it claimed.
According to internal sources, HungryNaki tussled to meet expected revenue because of high competition from other competitors in the market such as Foodpanda, which holds the title of the market leader, alongside the likes of other homegrown favourites, such as Pathao.
Industry insiders said that the online food delivery market in Bangladesh being relatively small, inflicts high costs in regard to customer acquisition that might have forced Alibaba to shift its focus from food.
With nine delivery apps competing over around 100,000 orders a day, many of the services have been bleeding cash, with Uber Eats closing its local operations in 2020.
A HungryNaki investor told Nikkei in 2021 that he would be taking a large loss on the capital he had put into the company with the sale to Alibaba.
"This is not a success case for local entrepreneurs, rather a failure case for startups," he said.
Last year, Shohoz also closed its online food delivery arm amid shrinking orders.
