Kickin’ it old school: KL-based SmartBite is using SMS technology to become the next player in foodtech
SmartBite is using a unique approach for everything from logistics to marketing to build a foodtech company that workers will use every day
For tech savvy people across Southeast Asia, when the belly starts to rumble, all it takes is some fiddling with the phone to have lunch delivered within the hour.
Yet, if we are going to be blunt about it, services like foodpanda, Deliveroo and UberEATS are essentially the same business with slightly different branding, restaurants and delivery methods.
They are great for an evening dinner with the team or a weekend lunch with flatmates. But, they get expensive and do not solve a pain point of finding a daily lunch service that does not break the bank.
Enter SmartBite, a Kuala Lumpur-based foodtech startup leveraging an old-school technology (text messaging) in the hopes of becoming a daily lunch option for the city’s professionals.
“The reason we started the project is because we saw that, even with a lot of competition around, many people never use [food delivery] because it’s too expensive or because they want to change their food every day,” said Gabriele Fadda, a Co-founder of SmartBite, in a conversation with e27.
“Sometimes they are a bit limited because [the services] push the same kind of food.”
Smartbite, launched at the end of January 2016, was started by two Italians, Fadda and Carlo Cappelletti, plus one Danish man named Rasmus Rønholt. Both Fadda and Cappelletti worked at the health and wellness startup Kuazoo and Rønholt has worked as a freelance designer and developer for the last four years.
The company is young, and very much an early-stage startup — it is currently on the hunt for funding.
But, it has started to generate some revenue, last month it is averaged about 70 deliveries per day and currently works with eight office towers in the central district of Kuala Lumpur.
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The basics behind the business works like this:
A user receives a text message at 9:30am with four lunch options.
Users are given a choice based on previous responses, price points and personal preferences.
To place an order, the person replies to the SMS with option ‘A’, ‘B’, ‘C’, ‘D’.
Between 12:00 – 12:45 lunch is delivered to the office.
Pretty neat. However, there is one major catch. The building must have a minimum of 20 signups for lunch to be delivered in a given day.
Fadda says main reason for this requirement is to reduce the cost of logistics via bulk delivery in order to on-board customers who would have originally been turned off by a more expensive foodtech services.
With one delivery window (lunch), the logistics is a one-time push per day rather than the constant buzz of delivery drivers like the traditional method.
Under the current model, the company can offer pricing ‘tiers’ for its food. A lunch can cost anywhere from MR9.9 (US$2.45) to MR29 (US$7.10) for a dish. This is by design as the original pain point is to attract Malaysians that may have viewed food delivery to be an unnecessary luxury.
So far, SmartBite is making a dent into ‘expensive’ reputation as about half of its customers have never used food delivery services before.
Competing in 2016 by going ‘old school’
Foodtech companies, whether its grocery delivery startups or hot-food delivery, tend to corner themselves almost immediately into a market of wealthy professionals, expats and middle-class families.
The reason is, the app, the accompanying data plans and the above mentioned logistics costs make it inaccessible to low-income people living on a smaller budget. It only takes 10 minutes of walking around KL to see there is a huge market to be served by targeting dumb phones, or minimum-standard smartphones.
The method to do this is through SMS.
“Food delivery is still not something used by everyone. We are not in London or the United States. [So our] communication is one-to-one. You don’t have to ask your friend, you don’t have to waste a bunch of time and if you don’t like the food you just ignore and wait for the next day,” says Fadda.
Once they have their lunch, they give feedback and the system works to improve the food being pushed to customers (the team only sends food with an average rating of fours stars).
“The customer doesn’t have to go and choose, because at the end of the day, when you go and choose, you always choose the same food. You go to the restaurant you already know, you never try new ones. With this method, we see that people keep trying news meals,” says Fadda.
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He pointed out that the system really benefits local restaurants, especially the small ones without much experience.
“They don’t have a lot of expertise, and when they join an on-demand platform, they don’t get much feedback… because [the user] goes for the [famous] brand,” he says.
To make sure the restaurants can handle what might be an unusually busy day, owners are given a schedule so they can prepare. At 11am, the employees get notified of the volume of the dishes they need to cook and have about 45 minutes before the delivery drivers arrive to pick up the meals.
As of now, the company has a bit more than 20 contracts with restaurants and is working to sign an agreement with a large restaurant group to expand to other areas of the city.
Technology and Marketing
The key part of ensuring the strategy works is building the backend.
The system needs to adapt to different menu choices based on the location of each tower — Tower A. may get a different menu than Tower B. because of the restaurants available in the vicinity.
Developers also need to handle the feedback capabilities and new users who may not follow the A, B, C, D model by attempting to have a chat with the bot. (“I would like order ‘A’ please”)
Developing a method to eliminate poorly reviewed restaurants and tailor the meal to the customer’s preference is also complicated.
Moving forward, SmartBite is planning to integrate the API into other channels.
“In the future, you will be able to choose from which service you receive the message. So if I want the message on Skype and SMS, or on Facebook only,” says Fadda.
He used the example that SmartBite cannot be used on WhatsApp at the moment because they have not released the API.
The goal, and challenge, at the moment is to demonstrate that Smart Bite can build and scale this technology to expand into other cities.
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Even marketing strategies are different for SmartBite as it has completely forgone Internet marketing.
“Being focused on the towers and areas we serve, for us, it does not make sense to get sign ups from locations we cannot serve. So once we target the tower, we hand out flyers for a couple of days and we use first-time vouchers so people tell their colleagues,” says Fadda.
Fadda says that if the rest of the year goes well, it would mean automating what is now a semi-automatic technology and have a presence in about 20 towers that actively use the service.
So, next time in KL, that 9am text message may no longer be a significant other asking a favour, or moms and pops offering some advice.
Nope, it is probably lunch.
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Photo courtesy of SmartBite.
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