India’s leading food delivery firm Zomato recently acquired UberEats India, Uber’s food delivery offering, in an all-stock deal. This deal gives Uber around 10% stake in Zomato.
This acquisition is the first big consolidation in the food delivery space and the battle is now between Bengaluru-based Swiggy and Gurugram-based Zomato for the top honors. UberEats, according to reports, was a distant third in the race.
What does Zomato really get from this deal?
Zomato will acquire all of Uber’s delivery partners, business deals and more importantly, UberEats’ customers and their order data. The UberEats app will redirect its users to Zomato for the next six months.
“We have acquired Uber Eats India and with this development, we are the undisputed market leaders in the food delivery category in India,” claimed Deepinder Goyal, CEO of Zomato, on the company’s blog.
According to various news reports, these platforms deliver around a million orders daily. And a sizable chunk of these million orders comes from non-metro cities. This is a significant development for these players as the ‘non-metro’ market has so far been nascent and largely untapped and they have put in a lot of marketing and promotional efforts to gain a foothold.
A recent report titled ‘Demystifying the Online Food Consumer’ by the Boston Consulting Group (BCG) and Google highlights the massive growth that this industry has witnessed.
The report says, “Macro trends such as rising internet penetration, increasing ordering frequency, favorable consumer disposition, expanding reach in smaller tiers and expanding network of restaurants on Food Tech platforms pan India, continue to drive momentum in the industry. Consequently, the reach of food tech aggregators has grown six times from 2017 to 2019.”
The report also adds, “Riding on the wave of higher consumption in a growing market and maturing dynamics on the supply side, we expect the industry to grow from $4 Bn to $8 Bn in next three years, a massive 25% growth rate.”
The report lays down a potential path ahead for the food tech space. It believes that these players will diversify into several new offerings by leveraging their customer base, delivery and service expertise.
And that is what is exactly happening in this sector. The food delivery companies have already come up with cloud kitchens and are experimenting with new offerings like Swiggy Go, an instant package pick-up and drop service.
Swiggy Go directly competes with Google-backed hyperlocal concierge app Dunzo. The idea behind Swiggy’s venture into concierge service is to use the same food delivery fleet to also fulfill pickup and drop service requests and thereby increase the delivery fleet’s ROI and efficiency.
All this melange of activities in the food delivery sector means significant opportunities for allied sectors like logistics. It is amply clear that restaurant discovery will no longer be the only major competitive advantage. What will really matter is the logistics play of these companies.
Better delivery speeds lead to higher customer satisfaction and higher customer satisfaction translates to the stickiness of the app. Research firm RedSeer’s Food-Tech Market Updates states, “Deliveries fulfilled by restaurants have lower delivery compliance as compared to those fulfilled by own fleet/3PL partner.” At the end of the day, customer experience will become a key differentiator.
Adopting smart tech in logistics and implementing artificial intelligence could help in pushing customer satisfaction levels in this highly competitive food delivery market.
Locus helps companies manage their delivery fleet with smart logistics solutions.