Our first ever Alumni Roundtable hosted two alumni: László Arany from foodpanda, and László Sabjányi from Woltto tell us about their companies, the current state of the food delivery market, what the future might hold for the industry, and how their experiences with BCG shaped their careers.
Balázs Kotnyek: Please tell us a bit about yourselves.
László Sabjányi: I am the Managing Director for Wolt Hungary, and I spent four years with BCG.
László Arany: I worked at BCG only for a bit more than a year and left in 2014 to join foodpanda as a Managing Director. At the time foodpanda was a much smaller company than now, employing only around 20 people, so my role was more focused on building up the company. After that, I became the Managing Director of Flixbus for 4 years, with a much similar focus on expanding the company, before rejoining foodpanda a year ago.
B.K.: Home delivery and food delivery have become an essential part of our lives in the past years. How do you see the recent years, and what lies ahead in the next 10 years for this industry?
L.S.: The delivery market in Hungary has been growing steadily, at about 25% a year. This drastically increased during the pandemic, to 80% a year. Ten years ago it was quite difficult to get groceries delivered to your home – I remember it well, as I just moved back from London, where it was common at that time. It took about a week or two to get them delivered and half of the items were missing.
The problem with that was that it is hard to predict what your household will need in two weeks’ time. With the introduction of the 30-minute delivery service came the advantage of not having to decide in advance as you can have things delivered to you nearly immediately.
Also, the consumer mindset has been changing a lot. People are used to getting their orders delivered in a matter of days now – like electronic appliances – and the demand for even faster delivery is rising, especially when we talk about groceries and everyday items. We offer a convenience service that helps you save time in exchange for a small amount – both regarding hot meals and groceries. Additionally, these platforms give you a much broader variety, with thousands of restaurants, shops, pharmacies and so on. In 10 years, customer demand for quicker delivery will grow even more, so the delivery timeframe will have to shorten to meet those demands, presenting new challenges in terms of logistics, warehousing, etc. This growing demand will probably lead to a lot of changes in our industry, just like how e-commerce, in general, has led to significant business model and operating model changes before.
L.A.: For foodpanda, the operating model has seen some changes. First, it only served as a platform to connect the consumer with the restaurant, and the partnering restaurants delivered orders, using their own courier services. Later the company transformed and became more focused on logistics, ensuring a more reliable delivery service, while also enabling a number of restaurants without their own courier services to join the home delivery market.
The introduction of online grocery shopping was a huge hit, but we still have room to grow: the e-commerce share of grocery shopping is only 3-4%. To be able to get the most out of this opportunity, we realized that there are two main factors for success: speed, and reliability. That is why we launched our own dark store network – panda Market – so that we can guarantee that you get exactly what you ordered within 30 minutes or so.
K.B.: Is the Hungarian delivery market any different from that in Western Europe?
L.S.: Time is becoming more and more precious these days as people work more and would like to spend their free time doing the things they love instead of shopping or cooking. This is a global trend. We are present in 23 countries and no matter where we look, we see the same happening: people are willing to spend a smaller sum if that means saving some time.
L.A.: The only difference is that for example in London there are many companies that only focus on grocery shopping. They have their extended dark store network and there is fierce competition mainly focused on delivery speed. In Hungary, people are fine if their groceries are delivered in 30 minutes, but in London, even a five-minute difference can matter a lot.
K.B.: You mentioned that your company operates on an international level. How does the cross-border operation add value and synergy?
L.S.: This is the kind of business that cannot operate without synergy. Our main product is the platform itself. The heart of the whole operation, the engine that drives it, is our system that connects the end-user, the restaurant, and the courier partner. The algorithm optimizes the whole ordering and delivering process: the customer sends the order, the restaurant accepts it, and the system will send a courier partner to the restaurant or the store at the exact time when the order is ready to be delivered. Most of the operation is managed by this platform, which is a global tool that we can use to optimize our local performance, like defining target groups for marketing. We have thousands of courier partners and hundreds working at the office, but the key to our efficiency lies within the platform.
L.A.: Exactly. To add another aspect, Artificial Intelligence is a crucial element in the success of these online delivery platforms. If you have more data, you can learn more about your customers and the logistics. Thanks to the global network of our companies, we are moving towards personalized offerings for the customer. However, if the development of the core product – the platform –becomes more prioritized than local development, a new challenge of balancing the global product versus local service development might rise.
B.K.: What are the main challenges for you in managing these companies?
L.A.: There are numerous challenges and we have to balance them well, but this makes the job super interesting. For me it began with scaling up the company: not so long ago we had 30-40 people working in our e-commerce team, while now we have over 100 team members. Since we have our own dark store network, we have much more work than with the delivery service only. Now we must make decisions about our selection, our pricing, we do inventory management, we do location scouting and manage our real estate portfolio, not to mention dealing with the regulatory changes, so it is a complex and dynamic industry.
L.S.: Similarly, we need to have a deep understanding of our operations, of our marketing strategy, and our recruitment to make sure we hire the best-suited person for a job. To excel in this position, you need to be able to work in all departments of the firm, from strategy all the way to people management.
B.K.: If you had to pick one thing that prepared you best for your current role at BCG what would you choose?
L.A.: It’s hard to pick only one as three things came to my mind. One is structured, data-driven problem solving, which comes in handy as we must deal with a lot of complex data. The second is being agile and being able to do projects and delivering results quickly. The third, quite important element, is culture: it’s a mixture of this “work hard, play hard” culture and being helpful and supportive of the colleagues and having this family-like atmosphere in the office. For me these are the main things BCG gave me, that helped me get better in my position.
L.S.: I think there is a certain BCG mindset: people coming from BCG can just roll up their sleeves and do what has to be done with a deep understanding of the problem they face, from strategy presentations to setting up companies, no matter what the task is. For me, it is the combination of intellectual power, the ability to motivate the people around you, and the can-do attitude.
B.K.: BCG is a global company, with a local presence in many countries, which comes with the feeling of being part of a broader network. Is it similar in your companies or are you more focused on Hungary only?
L.A.: foodpanda is somewhat similar in that term, you can benefit from the knowledge of the global company, but BCG’s global network provides a unique opportunity of broadness, one that cannot be found elsewhere.
L.S.: Wolt has its global network with a lot of dynamism and synergy between offices: sometimes experts from the Hungarian office go to other countries to help realizing a project, and sometimes foreign experts come to us to help. Also, there are opportunities abroad, as our office is relatively small, so the ability for promotion can be limited, but other offices might have openings – recently four colleagues from our office moved abroad for open positions. I think that this will only accelerate in the future, and I expect more foreign experts to come to work in the Hungarian office.
B.K.: One of our BCG mantras is “you don’t plan ahead for more than two years”. Are you still following this principle, or do you have long-term plans for your companies? Do you see yourselves as the leader of a much larger company in a couple of years?
L.S.: It is hard to predict the future. My company is growing continuously, and I think this trend won’t change anytime soon. When I joined, Wolt was a Finnish company, now our parent company is merging with DoorDash, the leading American food delivery company. We are rolling out new products and features, we have a lot of exciting ideas, and the whole market is constantly changing, so I don’t think you can plan much ahead in terms of what you will do as a leader and how the market will evolve. We have a generic direction but there are so many moving parts, that you cannot predict which path you will take.
L.A.: Exactly. Our industry is super exciting, also with bigger parts of offline shifting to online, and to e-commerce, so there are a lot of changes coming our way in the upcoming years. We still need to figure out quite a lot of things regarding product market fit.
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