This story was delivered to BI Intelligence "E-Commerce Briefing" subscribers. To learn more and subscribe, please click here.Prominent online meal delivery startup Foodpanda is looking to sell its Indonesia business for less than $1 million, reportsTechCrunch.The Berlin-based company sold its business in Vietnam last year, and reportedly tried to sell its India operations earlier this year. Foodpanda operates in 23 countries around the world, but the bulk of its customers are in Asia and Eastern Europe. In the face of increased competition and logistical challenges, Foodpanda is rethinking its presence in the entire southeast Asia region. As online meal delivery approaches market saturation, companies like Foodpanda are struggling to keep growth up and scale further without increased capital.The changing landscape of investments in the meal delivery industry is likely driving Foodpanda's decision to scale back.Foodpanda raised $210 million last year, but the company will likely face headwinds trying to raise money in the future. Funding for meal delivery companies is expected to drop severely by the end of this year. Meal delivery startups raised nearly $4 billion in funding in 2015, according to CB Insights.Meanwhile, this total is expected to reach only $918 million by the end of this year. As more startups enter the market, venture capital firms are likely becoming more selective in their investments. And companies that saw early success like Foodpanda are particularly threatened by this environment, as they're reliant on VC investment to fund their existing operations.A potential decrease in funding rounds can amplify existing problems, like logistics, when companies do not have the funds to address them.Foodpanda also faced issues in Indonesia that stemmed from logistics and infrastructure. Specifically, heavy traffic congestion in Jakarta made it harder to deliver food in a timely manner.In addition, developing neighborhoods often lack infrastructure, like paved roads and clearly marked street signs, which makes deliveries more difficult. Both of these factors mean that Foodpanda drivers in Indonesia were likely met with frustrated customers if orders took too long. These complications are likely present in other Asian markets where Foodpanda operates, which we expect has held the company back from being profitable in the region.Meanwhile, Foodpanda CEO Ralf Wenzel reports that the company is now operating at a profit in its other two regions: Central and Eastern Europe and the Middle East,according to Reuters. After the sale of its Indonesia business, we expect to see Foodpanda focus on these other regions to more heavily compete with new entrants to the scene like UberEATS and Amazon Restaurants.To receive stories like this one directly to your inbox every morning, sign up for the E-Commerce Briefing newsletter.Click here to learn more about how you can gain risk-free access today.Join the conversation about this story
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