India’s online food ordering sector saw a strong growth rate in the number of daily orders, growing consistently at 15 per cent on a quarterly basis from January to September last year, according to a report from RedSeer Consulting.
The growth has resulted in the number of orders on a daily basis clocking an average of 400,000 during the September quarter. It has also meant players, including Swiggy, Zomato and Foodpanda, are investing in in-sourcing deliveries.
In the September quarter, self-deliveries grew to 56 per cent of the total number of orders done by the food-tech sector in India. In-house deliveries stood at 46 per cent in the fourth quarter of 2016.
“It is becoming increasingly clear that food tech is more and more of a logistics play, restaurant discovery is not a deep competitive advantage. There are clear trends on customer and seller satisfaction supported by the better delivery speed and compliance that vouch for superiority of the captive delivery model in Indian market,” said Anil Kumar, founder and chief executive officer, RedSeer.
Having a better control of their deliver fleets, food ordering platforms were able to bring down the average time taken to deliver a meal from 47 minutes in the December quarter of 2016 to 42 minutes in the September quarter in 2017.
This number is expected to grow as food tech players look to boost customer satisfaction and have them order more meals.
Swiggy, one of the leading players, has in-sourced deliveries since its inception and continues to process 100 per cent of deliveries.
Zomato, which started off as a restaurant discovery platform and turned to online food ordering, acquired Runner, a hyperlocal logistics firm in order to boost its own in-house delivery arm.
The growth in 2018 is expected to continue at the same pace. However, Ola, India’s largest taxi-hailing firm, buying Foodpanda could upset the market. Ola has said it would invest $200 million into Foodpanda over the next few years, creating a scare that there could be a price war in the food-tech space again.
Currently, players such as Swiggy and Zomato have managed to maintain the growth despite charging delivery fees for small-ticket deliveries. Experts and industry watchers say the model of delivering food from restaurants, which is ordered online has been proven, even if there’s some way to go for firms in the space to begin making profits.
This also puts the sector at risk from being invaded by players with deep pockets, who splurge huge amounts of money to grab market share and fend off rivals in the hope that they’ll be able to turn profitable someday.business-standard