- Online Food delivery space sees a new name in terms of Amazon which is a season entity in e-commerce and this entry has made the competition more interesting.
The food distribution industry has emerged as one of the biggest online networks with the start-up of many new companies over the past decade. The market shape is shifting with a breakneck speed with players such as Swiggy, Zomato, and Now Amazon. With these giant players on the food industry market, the industry is booming not only in the metros but also in the cities of Tier II and III.
With rapid growth, the business of delivering and ordering food online is changing and these attract considerable investment. But the intensified competition and chaotic strategies for development have also caused some causalities along the way. Companies like Eat Fresh and TinyOwl were forced to close due to major losses. Even FoodPanda, a giant food supply marketplace operating in 13 countries that first underwent several acquisitions by Delivery Hero and then by OLA, finds it hard to survive in the online food supply industry.
As the decade ended in a sector that has experienced many changes in terms of approaches and operating procedures, we have started to see some signs of consolidation. Of which the decade belonged to the two top space companies, Swiggy and Zomato. While Uber Eats, a fairly new player on the Indian market has succeeded in making a major daily order dent on the market but later it was acquired by Zomato in 2020. we need to look at how the two space giants did in 2019 to get a better picture of where the industry is headed.
Exploring New Territories
Speaking of positive changes, the rise of these brands in Tier II and III cities were among the biggest trends of 2019. As the Indian economy expands outside the metro, these cities display nearly seven-fold growth compared to major cities, where development is nearly flatlining. Swiggy and Zomato took a rather smart approach to this expansion, expanding to cities such as Kanpur, Ludhiana, Shillong, Pushkar, and many more. Swiggy has taken a further step in reaching the Tier II and III markets by going hyper-local and linking up with local stores for household goods distribution.
Offering services that enable deliveries from small Kiranas will not only help increase reorder rates from existing customers but might also increase resource utilization of the delivery team given that groceries can be batch delivered as the delivery expectation is not real-time like food orders. Additionally, it will also help them flatten the crests and troughs in the food delivery orders (through lunch and dinner times) that are typical of a restaurant food delivery company thus improving cost and resource utilization.
2020: What’s In-Store
Both businesses look with confidence to the future ahead as the figures point to an increase in their user base but the losses do so. While Zomato expands the ecosystem with its business models consisting of multiple sources such as ads, distribution, dine-out, and now streaming, the management is also reportedly looking to introduce innovation with the use of drones into the food delivery space. Following the acquisition of TechEagle Innovations, a start-up based in Lucknow, in 2018 the company has been exploring the possibilities of drone-based delivery to gain an advantage over its rivals in terms of user experience.
In 2020, the key emphasis will be on reducing mounting losses while sustaining both Swiggy and Zomato’s growth rate. When the two companies start moving away from fundamental discounting and towards the organic expansion of their offerings, the goal would be customer retention. There are some murmurs of Uber Eats exploring the possibility of putting up their business for sale in the months ahead, with Zomato being reported to be in negotiations for the same.
2020 saw a huge loss to the business of these two giants as COVID19 Pandemic struck the world in March. Following the need for essentials, both the players forayed in the market of grocery and essentials delivery. Swiggy & Zomato both laid-off employees. With now Amazon entering the space, the competition is becoming tight and Swiggy and Zomato need to increase their sales.
