A post-pandemic boom

In May, the firm began operating in the cities of Cartagena, Cúcuta and Bucaramanga, which were crucial to its expansion in Colombia.

Mexico was Didi Food's first port of call in this part of the world in 2019, when it began expanding outside China. The firm told América Economía that in just over two years of activity there, Didi Food has become the platform with the "most options, with more than 50,000 registered restaurants and 80,000 delivery partners using the app to receive orders." The firm has become the most downloaded food and drinks application in iOS and Android phones, says María Pía Lindley, head of Didi Food for Mexico, Colombia, Central America and the Caribbean.

She says the application came to Costa Rica in August 2021, growing swiftly in the capital and its environs within three months, in a post-pandemic recovery phase. The vast majority of registered businesses there, she said, were small eateries, which Lindley said Didi had helped bring online. She said that 56% of businesses on its app were using an online delivery service for the first time.

Lessons from the street

The difference between Didi Food and other food delivery applications may be its entry into the sector through transportation. In that sense, it is similar to Uber Eats, which emerged from Uber. For Didi, transportation was a way of getting to know the local market and its consumer dynamics.

Lindley says Didi launched its food delivery app in Colombia in August 2021, two years after successfully working a shared rides application there. In Chile, it also launched in 2019. The ride-hailing app "allowed us to quickly acquire a regional view of the needs and potential improvements for residents in that area, which we could implement in our expansion across the national territory," they added.

Didi Ride thus allowed Didi Food to make a "soft landing" in Santiago in April 2022. Lindley says that in any location, the right density is needed to ensure the best experience for all sides involved with its service — customers, delivery partners and restaurants. She said Didi wants to provide the same service and choices in new locations as it does in established markets like Mexico or Brazil.

The firm cites the absence of a service fee for users as one of its advantages, alongside a lower-than-average fee charged to restaurants. It says it helps its drivers by easing and optimizing their access to and use of its application.

From Asia to Latin America

The original taxi firm (Didi Chuxing) began in February 2015 with the backing of Alibaba, an online retail giant. By May that year, it was operating in 360 Chinese cities and coordinating a million trips a day. The firm launched Didi Food in April 2017, though its expansion in Asia has not always been smooth. In Japan, it shut down in April 2022, two years after its arrival there. Part of the problem in Asia, including in China, is existing stiff competition from other firms like Meituan, Ele.me, and even foreign brands like Deliveroo or Grab.

Barros said Didi Food now had a vast turnover, which aided efficiency in its services.

So expanding into markets further afield made sense. In Chile, it has a "big potential," says Salvador Barros, a co-founder of Kipp, a Chilean tech and logistics consultancy.

Barros said Didi Food now had a vast turnover, which aided efficiency in its services. In time, he said, it could really compete with firms like Uber Eats.

Rocío Franco, a logistics analyst with consultants Euromonitor International, says several factors aid this sector in Latin America. Firstly, he said, food deliveries remained quite cheap here, compared to regions like Europe or North America.
Early in the pandemic, Euromonitor saw Latin America as the fastest growing region for deliveries, after the Asia-Pacific region. A report it published in May 2022 found the entire home delivery sector in Latin America to have raked in over U.S. $16.2 billion in 2021, almost 13% more than in 2020. The biggest growth was in Chile and Brazil.

A challenge in any new market is to win customer confidence. In Barranquilla and Soledad, the firm is financing 30-50% discounts on different types of orders for a limited period after its launch. Daniel Serra says intermittent offers and constant, competitive prices are likely to become Didi Food's hallmarks.

Of course, other firms, like Rappi, the Brazilian iFood, Glovo, Uber Eats and others, follow similar principles.

Is the market saturated?

So is the home delivery market in Latin America saturated, or is there room for more firms?

Our consultants said there was room, especially if firms concentrate less on the region's vast capital cities and move into smaller cities where home deliveries had yet to be fully developed.

In Didi's case, linking its cab and food delivery services may serve it well and optimize use of resources. Another factor in its favor is timing, thanks to a pandemic-induced increase in remote work.

Once the Latin American home delivery market matures, says Barros, profitability may fall but it will stabilize. In that case, he says, Didi Food's cost-cutting efficiency may become its big advantage over competitors.