Ride-hailing company Bolt says anticompetitive behaviour in the food delivery space, where competitors refused to allow some restaurants to deliver to customers on multiple platforms, is behind its decision to close its food delivery service, Bolt Food.
“It definitely is premised, in part, on the Competition Commission, which conducted its market inquiry into online intermediary platforms,” said Bolt head of public policy Andrew Ihsaan Gasnolar.
“Our submission to the commission sought to highlight challenges in the food delivery space. The commission ... found dominant players had arrangements that meant certain service providers, which account for the bulk of food delivery in the country, had exclusive arrangements with them.”
In a report on online services released in August, the commission said it had reason to believe there were market features of online intermediation platforms that may impede, distort or restrict competition. It instructed some companies, such as Uber Eats, Mr D Food, Takealot, Property24, AutoTrader, Bolt and Google, to change their business practices.
Speaking to Business Times after the release of the report, Tafadzwa Samushonga, country manager for Bolt Food South Africa, said they were pleased with the recommendations that address concerns about practices that restrict smaller delivery services from attracting big restaurants, thus limiting their growth.
“We are encouraged by the commission’s recommendations that expressly confirm that franchises must not be restricted from using food delivery platforms, and we believe this will provide improved options for both consumers and restaurant providers across the country.
“We are optimistic that these recommendations will have a positive impact on businesses such as ours as they will allow us to expand our offering to a wider audience, offering them a wider selection of restaurants on our app,” Samushonga said at the time.
However, Gasnolar said this week Bolt would now leverage its short-trip and last-mile parcel delivery services and introduce electric bike and scooter offerings in response to the closure of its food delivery service.
“We had to make the very difficult decision over the past year of … closing the food delivery business in South Africa. So for the next month or so we are going to be managing that arrangement with restaurants on our platform [so] that the off-boarding process is seamless,” Gasnolar said.
Speaking on the sidelines of the Africa Tech Festival in Cape Town, he said Bolt remained committed to its €500m (about R9.9bn) continental investment pledge and planned to provide 300,000 job opportunities across Africa in the next three years.
Bolt had gauged price sensitivity and waiting times as it prepared to introduce a short-distance service called Bolt Lite, Gasnolar said, adding that the company had developed pricing models that allowed drivers to tap into growing demand for such trips.
“For us, the shorter trips are under 4km. [Bolt Lite] is meeting the needs of thousands of passengers, so in a very small area of Johannesburg we’ve been able to assist passengers, on average, with trips of 3.2km in the past 100 days.”
Gasnolar said Bolt was keen to introduce electric scooters and e-bikes to South Africa as these “fed into the notion of shared mobility”, including ride-hailing, last-mile package delivery and other public transport nodes, such as taxi ranks and train stations.
“We still think in the African market there is space for things like electric scooters and electric bikes. That’s obviously a culture change. If you think of our cities, some are suitable for bicycles and electric scooters, some are not. But from a last-mile delivery perspective, there are opportunities.”
Bolt is in discussion with the National Regulator for Compulsory Specifications, which conducted studies and was prepared to structure compulsory specifications for electric scooters and e-bikes in the coming months, Gasnolar added.
The Competition Amendment Act now allows regulators to impose remedies where market structure inhibited the entry of food delivery services run by SMEs, trade, industry & competition minister Ebrahim Patel told parliament recently.
“The big franchises that run the big fast-food stores impose on their businesses in townships that they may only use UberEats. SMEs are excluded because there is a condition in the franchise arrangement. The inquiry has said this is anticompetitive,” said Patel.
It was vital to ensure fair competition in the e-commerce space as it had implications for tech and retail, he added.
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