What would you do if food deliveries, e-hailing prices go up in Malaysia? 82pc surveyed say will reduce or stop using

KUALA LUMPUR, July 28 — What would you do if it becomes more expensive to get food delivered or to hop on an e-hailing ride? Will you try to cook at home or use the public transport or carpool, or will you continue using these services?

In consumer research company Rakuten Insight’s latest survey, 82 per cent of the 1,003 Malaysian respondents said they would change their behaviours (including reducing or not using these services) if ride-hailing or food delivery prices continue to rise due to fuel costs.

For example, 28 per cent said they would switch to cheaper alternatives such as public transport, driving themselves, or cooking at home; 27 per cent said they would use such services less often; 17 per cent would only use when there is a promotion, while 10 per cent would stop using such services altogether.

In the July edition of the survey known as the Malaysia Cost Pressure Pulse (MCPP), only eight per cent said they would continue using these services as usual, as they say it is worth it for the convenience.

The same survey had also recorded some of the respondents noticing that prices had gone up for such services in the past month.

When contacted, Rakuten Insight Malaysia commercial research lead Ming Yao Kong said there are two reasons that could explain this survey result, including the availability of “obvious cheap substitutes” for both services such as using public transport or cooking at home.

The other reason is that consumers may find it easier to resist using ride-hailing or food delivery services when price hikes are due to fuel costs, as they may feel that it is a cost being passed on to them instead of a value upgrade.

In other words, consumers would find it easier to justify paying more for these services if they feel that they are getting more value, as compared to a price increase solely due to fuel costs.

“If a price goes up because the service got better, faster delivery, more features, nicer app, people feel like they’re paying for something extra, so it feels earned and they’re more willing to accept it,” he told Malay Mail.

But if the price is going up purely because of higher fuel costs and it does not come with improvements to the service, Kong said it would just feel like the platform is passing on a cost to consumers without giving something in return: “That’s why it’s easier to resist or switch away, there’s no upside being offered, just a bill you’re being asked to help cover.”

Survey finds more consumers reporting higher prices, compared to those who noticed longer waits  

In the same survey, more of the respondents said they noticed higher prices and less discounts for ride-hailing or food delivery services, as compared to those who reported waiting longer and noticing less drivers or riders available.

Kong said this survey result makes sense as ride-hailing and food delivery platforms can immediately protect margins by cutting promotions and raising fares, without having to renegotiate payouts to drivers.

“Service issues (wait times, fewer drivers) usually show up later — only if fuel costs eventually push drivers off the platform,” he told Malay Mail.

With less consumers in the survey reporting longer wait times or lesser drivers compared to price increases, Kong suggested that this could mean that the supply of drivers has not been hit hard yet or it has not become common enough for consumers to notice as a pattern.

But Kong also noted that this survey is only based on consumers’ experience, and not on platforms’ data or what drivers are actually doing: “We don’t have data on whether drivers have quit or whether fuel costs pushed them away, that would need data from the platforms themselves.”

Food deliveries vs dining out 

In the same survey, 56 per cent of the consumers surveyed would cut dining out first if prices rise further, compared to 31 per cent who said they would reduce spending on food deliveries first.

In all three editions of the MCPP survey (March, April, July), dining out was the number one thing that they would cut first, while delivery ranked fourth.

At the same time, Kong noted that the survey showed that overall spending intent by Malaysian consumers is actually recovering in July, as compared to April.

But amid this improved consumer sentiment, Malaysians are quicker to plan to spend on dining out again instead of food deliveries.

“Delivery / ride-hailing is just a structurally fragile category on its own — quick to cut, slow to recover,” he said, pointing out that the survey respondents’ net spending intent for food deliveries only improved by 1.5 percentage point as compared to the 5.3 percentage point gain for dining out.

Kong gave three reasons for why food deliveries and ride-hailing is a more fragile category, when compared against dining out where consumers’ spending intent is faster to recover.

“First, these services layer a visible extra cost on top of the base price, delivery fee, service fee, surge pricing, so any increase is very obvious to the consumer, unlike dining out where the price is just the price of the meal.

“Second, there’s always a ready, low-effort substitute sitting right there, cook at home instead of ordering in, drive yourself or take the bus instead of Grab. Skipping dining out doesn’t have that same easy substitute if what you actually want is the experience of going out,” he told Malay Mail.

He also said this matches the survey’s findings in its first edition in March, where convenience “ranked dead last” at 13 per cent as something that drives consumers’ purchases when money is tight, behind other factors such as price, promotions and even brand trust.

“Delivery and ride-hailing are basically convenience products by definition. So when budgets tighten, they’re going after exactly the attribute people value least,” he said.