Zomato is an Indian food delivery startup restaurant aggregator. Zomato primarily provides concrete information, menus, and user reviews of the restaurants. Along with this, Zomato also has food delivery options from partnered restaurants of the selected cities. The founders of Zomato are Deepinder Goyal and Pankaj Chaddah. The Zomato recruiting team is of the ideology that hiring the correct people is primary for their company’s startling growth. Also, recruiting this pool of employees was one of the major milestones achieved while building the foundation of Zomato. Now, the company has a squad who are vital in bricking their dream project.
To date, Zomato has had 17 funding rounds and raised close to $914.6 million in these rounds. Its most recent funding came in April 2020, Series J round by Baillie Gifford for $5 million. According to Zomato, it has registered $205 Million in revenue as compared to $63 Million in the first half of 2019.
Based on the Regulatory Filings, Zomato has allotted 15,188 Preference Shares at issue price of Rs. 300,235/Share to Temasek (Singapore-based Investment Firm). This gives Temasek a holding of 2.37% stake in Zomato. This financing round bought Zomato’s valuation at $3.18 Billion.
The Top Individual Stakeholders of Zomato are:
Top Individual Stakeholders – Zomato
Deepinder Goyal, Co-Founder & CEO of Zomato, with 7.7% stake i.e worth nearly $245.2 million
Pankaj Chaddah, Co-Founder of Zomato, with 1.75% stake i.e nearly worth $55.7 million
Gunjan Patidar, Chief Technology Officer (CTO) of Zomato, with 0.54% stake i.e nearly worth $17.25 million
Apart from issuing preference shares, Zomato also alloted ESOPs of around $52 million. This scheme is all set to bring $25 million for Zomato thereby also creating wealth for its employees.
This fresh capital from Temasek, would give Zomato a much-needed push to the foodtech major, As the funding of $100 million from Ant Financials was stuck due to the ban on FDI (Foreign Direct Investment) under the automatic route from countries that share a border with India.
The world is suffering from a pandemic caused by an extremely contagious virus- COVID-19. Its been almost six months, and yet things do not look to go back to “normal”. But the lives keep moving. The fast-growing changes in lifestyles have brought a drastic change in the marketing scenario and the FMCG sector has been affected the most.
Fast moving consumer goods (FMCG), are basically packaged goods that we buy at retail shops at a very low cost. These are also called as consumer packaged goods. They get sold out easily and are not durable.
Some Thriving Brands of FMCG Across the World
Categories of FMCG
Processed food
Beverage
Dry foods like tea,sugar,coffee
Prepared meals
Cosmetics
Toiletries
Over the counter medicines
Candy
Fresh foods like veggies
Frozen foods
Baked foods
Consumer electronics
Office supplies like pen,papers
Cleaning products
Clothes like socks,under garments.
These are also called as consumer packaged goods. Some of the goods are highly perishable like processed meat, dairy products, etc. FMCG goods are the largest sector of consumer goods. Although half of the consumer’s spending accounts for these “fast-selling packaged goods, they tend to be low investment purchases.
Future of FMCG from a Global Point of View
E-commerce has come across a latest trend of piling of FMCGs. Following reasons can be attribute to the sudden change in the behavior of consumers all over the world.
Lack of fresh products have compelled the users to depend on packaging items.
More over package foods are easier to stock.
Development of panic buying attitude as regards to essential commodities including common medicines.
Avoiding/closer of restaurants have driven consumers to their own kitchens.
Sanitary, hygienic and over the counter medicines have been added to the buying list.
Global projections that the share of online FMCG sales would comprise 10% of the total market by 2025. It is likely to be vastly understated given the pandemic’s role as a catalyst for e-commerce growth in the FMCG and grocery space. Most FMCG companies have fogged a tie-up with delivering companies such as Zomato, Swiggy, Dominos, Big Basket and Dunzo to ensure that their products reach their customer amidst this pandemic.
But companies are claiming that even after this pandemic, this could stay as the normal trend. As people are being acquainted to online ordering. Not to mention the convenience of home delivery. It is expected the sales through e-commerce to increase from 2-3% to 4-5% post pandemic.
The FMCG sector is expected to grow since people have shifted to e-commerce post this virus outbreak. Due to WHO guidelines regarding social distancing, unnecessary bars, shopping malls, retail shops, and markets are closed. People maintaining distance socially in order to stay safe are choosing to buy their necessities online, instead of going to their near Kirana store.
People in India would normally do their grocery shopping from the retail shop near, where they would buy goods sold on loose, but now due to pandemic people are forced to shift to e-commerce. Now instead of buying wheat flour from the nearest cottage mill, one has to buy the packaged product.
In India, there has been seen a significant purchase of these packaged products in rural and semi-urban areas. Whereas the urban cities have shown a decline in the purchase of these goods. Because of severe lock-downs and restrictions on manufacturing and maintaining social distancing and store closures among others have had a severe impact on the FMCG industry.
India saw a heavy decline (about 6%) in the month of January 2020. Even with a steady increase in the consumption of dairy products and other essentials, this sector is still facing a crisis due to this pandemic.
The FMCG sector is the 4th largest sector in the Indian economy. It has basically 3 main segments under it with a consumption patter under:
Food and beverages (19%)
Healthcare (31%)
Household and personal care (50%)
chart showing consumption of different FMCG products
In India however, slashing the optimistic 5-6% FMCG growth estimate made around April of this year, it is now said to remain the same. In the worst-case scenario, to shrink 1 percent.
Of late, the FMCG sector in rural India has grown at a faster pace than its urban counterpart with FMCG products accounting for about half of total rural spending. Semi-urban and rural segments contribute over 40% of the overall revenues of the FMCG sector in India and with about 12% of the world’s population living in the villages of India, the Indian rural FMCG market is set to be a driving force for the industry at large.
The FMCG sector is trying to supply to introduce smaller packages of goods that will match the low incomes of rural areas, in order to increase in accessibility even more.
Some early shoots in the graph were seen in early June when the lock down was eased. 4.5% of the year on year value growth was seen in FMCG sales amidst this.
However a potential future is seen in the third quarter and significant growth is expected in light of the arrival of the festive season ahead.
But in long run, one can see FMCG has a potential future. This pandemic opened up the gates even to those who were skeptical before to use e-commerce before but now heavily dependent on them. This may be the next normal.
Indian e-commerce giant Paytm has come up with this new idea of having a ‘contactless in-store ordering’. They said that the idea of Paytm contactless ordering will help in promoting the process of minimum physical contact.
Paytm in a statement said that they have developed an online menu system where a QR code will be given to the restaurants and the users can scan the QR code which will help them getting the menu on their mobile phones and can place the order without having a contact.
Paytm will include contactless ordering
This process of contactless ordering and dining will help to avoid the unnecessary need of touching of the menu that could possibly be unsanitised and there will also be a certain distance maintained between the customers and the waiters.
Paytm has already introduced the process of contactless payment or billings few years ago. Making a greater hold in the market soon after the demonetization phase.
As the lockdown has been lifted , Paytm is mainly aiming for the top 30 cities to start with with over one lakh restaurants which will work this way. This concept can be a great success as it is helping the restaurants to restore their business which had been closed for a while.
This concept of contactless ordering and dining has been brought to stop the spread of coronavirus infection after the reopening of the country. Restaurants have also been told to properly sanitize and create a particular distance between the customers and the owners.
Zomato which is an online delivery platform has also said in a statement that they are working towards adding some new features on their app in which it will allow the diners who are having food in restaurants and placing order can have an online menu which will promote contactless delivery option.
Statement By Paytm On Contactless Ordering
Paytm has said that its solution will support all of their payment methods which includes Paytm wallet, Paytm UPI, net-banking and cards and the orders will be updated time to time as the restaurant changes them.
“In the first phase, the company is in the process of onboarding over a lakh restaurant which will help them to ensure social distancing amidst covid-19 fears. This, in turn, will also enhance the restaurant’s efficiency and trust for the customers to recover their business while reducing cost overheads,” Paytm spokesperson said in a statement.
contactless ordering by Paytm
Paytm also added that it will extend this unique solution to many big franchisees and dine-in restaurants so that it could reach out to maximum people.
Paytm Vice-President Nikhil Saigal in a statement said, “We understand that after the lockdown, our country will require a safe dining and food ordering experience. Therefore, we have built this technology to help restaurants and their customers to follow social-distancing norms. With our ‘contactless in-store ordering’, they will avoid touching menu cards and cash for a safer experience”.
Paytm has been an revolutionary industry for the Indian market. When they brought in the method of online payment services it created a great impact in the market for a while now. When they brought in the concept of online payment it was not a big hit but the promotion of this concept at the right time which was just after demonetization helped them to have a good hold in the Indian market.
By bringing in this new concept of contactless in-store ordering this can help them creating a good impact in the market once again. At this time of crisis people are looking at the ways which can help promoting the concept of social distancing with no human contact as it has become a necessity now. By launching of this concept it can become a major hit among the people and will also help in promoting this concept.
Needless to mention, Coronavirus has affected every aspect of human life. To contain the spread of the virus, many precautions are being taken at different levels. Many countries like India have declared lockdown to cope with the situation. While the delivery of essential services has been allowed, the supply chain is still struggling to cope with the security measures. India’s 21-day lockdown may have thrown up an opportunity for online grocers to shine, but the rest of the industry sectors is drowning in the Covid-19 tsunami.
But beyond this, the real economic impact from the coronavirus pandemic will come in the weeks and months to come. Many large companies are also helpless in this time, yet they are trying to manage things. But this pandemic has left small businesses & startups with no more option but to downsize & layoff.
Layoffs and downsizing in the startup ecosystem are set to accelerate as businesses take a hard look at high operational costs and dipping demand in an uncertain environment made worse by the Covid-19 pandemic. Also, India has banned entry of all foreign nationals till May 17 with exceptions, such as diplomatic visa. This means that international firms have to put their business plans on hold.
Coronavirus have some far-reaching consequences – besides killing human beings, this deadly virus can result into unprecedented economic recession. However this will have more impact on startups than on bigger firms. Last couple of quarters has seen startups laying off thousands of employees.
Indian startups and SMEs(small and medium-sized enterprises) have begun evaluating their options to cut spending as demand for their products and services has taken a massive hit due to the Covid-19 outbreak as startups are finding it difficult to raise funds.
Nearly, 71% of businesses have seen reduced demand. The firms are also looking to cut spending on marketing and advertising, tech infrastructure, commercial rentals and employee costs to survive during this tough time.
Layoffs increased in Startups since COVID-19 Outbreak
Many sectors are greatly affected due to COVID-19. The sector, especially startups, is likely to see more layoffs if the virus outbreak continues to cause havoc. In this, travel industry, startups, IT firms seem to be the first casualty. For India’s venture capital industry, 2019 was a milestone year with $10 billion deployed into overall startups, that saw a 55% jump from 2018, according to Bain & Company, highlighting how the industry grew amid global economic uncertainty.
But now this situation is taking another turn; layoffs have already started happening. Rituparna Charkraborty, co-founder, Teamlease Services, a staffing firm, told that as demand slows down, it will impact startups and might result in layoff. She explained that unlike bigger firms, they don’t have deep pockets and have to be frugal.
Travel Startups
India’s biggest travel portal: MakeMyTrip has decided to lay off 350 employees as its business has been affected severely due to the Covid-19 pandemic. MakeMyTrip has told employees that MMT has analysed impact closely and has spent considerable time figuring out the path to business recovery. Founder Deep Kalra and CEO Rajesh Magow sent out a letter to all employees informing them about the layoff.
Kalra and Magow have writtten in their letter, “What’s evident is that the impact of COVID-19 crisis is going to be long drawn for us. It’s unclear when traveling will become a way of life, as it was pre-COVID-19. We are living through extraordinary times that have impacted individuals, communities, businesses, countries and our world at a magnitude unknown before and there is no let-up in sight.”
MakeMyTrip promised to offer support to laid-off employees compensation including Mediclaim coverage for individuals and their families till the end of the year, leave encashment, gratuity, retaining the right to exercise part of RSUs as applicable. Employees can keep the company laptops and will be provided outplacement support apart from salary payments as per their notice periods.
At the same time, MakeMyTrip’s associated companies like GoIbibo and Redbus can fire 60% of their contractual employees due to decreasing demand. There are 650 such contractual employees in these three companies. Majority of them are working in customer service and backend support.
Travel & Hospitality service Startups
Airbnb also plans to lay off nearly one-fourth of its employees. The 25% of the company includes nearly 1,900 employees who will be laid off. According sources, the news would be broken to employees by CEO Brian Chesky.
CEO of Airbnb,Brian Chesky stated in his memo, “Airbnb’s business has been hit hard due to COVID-19, with revenue this year forecasted to be less than half of what we earned in 2019. We are collectively living through the most harrowing crisis of our lifetime, and as it began to unfold, global travel came to a standstill.”
Chesky told that prior to the layoffs, Airbnb had 7,500 employees. Airbnb will halt projects related to hotels, a transportation division and luxury stays for some time. But Chesky has assured that laid off employees would get some facilities from company’s side.
Chesky said that U.S. employees laid off will receive 14 weeks of base pay plus an additional week for every year they worked at Airbnb. The company will also provide 12 months of healthcare for laid off U.S. employees. He also mentioned that May 11 will be the last work day for impacted Airbnb employees in the U.S. and Canada.
Similarly, around 5000 Oyo employees will be laid off across the world due to coronavirus outbreak. Oyo Hotels is laying off staff in the U.S., China and India as the company tries to find its way to profitability in turbulent times.
Oyo expanded rapidly after its founding in 2013 and reached a valuation of $10 billion but investors have soured on money-losing businesses after WeWork’s meltdown and SoftBank has pushed portfolio companies to prioritise profitability.
The travel and hospitality service company TravelTriangle has laid off about 50% of its workforce in the past 10 days. “TravelTriangle has fired about 250-300 people since March 20,” said one of the sources. Impacted employees are from operations, marketing, customer support and business development functions.
In addition to this list, corporate travel planning company TripActions, that was valued at $4 billion last year, laid off 350 employees via Zoom. The reports state the layoffs consist of about one-quarter to one-fifth of the total company. The company said in a statement, “We’ve cut back on all non-essential spend and made the very difficult decision to reduce our global workforce due to pandemic.”
Online Food Delivery startups
On May 18, Bengaluru-based food delivery startup Swiggy announced that it will lay off 1,100 employees and shut down some of its businesses as the coronavirus continues to take its toll. The core food delivery business has been severely impacted and will stay impacted over the short term.
Co-founder & CEO of Swiggy, Sriharsha Majety stated, “While we are very fortunate to have raised capital just before Covid-19 hit and have sufficient runway today, it is incredibly important to prepare for worse scenarios in the macro environment and make sure we are protected.”
Swiggy will give at least three months of salary to all impacted employees. For every year spent by the employee, they will be paid an additional month’s salary. Along with this, Swiggy plans to provide medical insurance for impacted employees until 31 December, 2020, as well as career transition and access to free learning on Linkedin for upskilling. Moreover, it has allowed the staff to retain office laptops and communication allowance for the next three months.
Similarly, Gurugram based Food delivery platform Zomato decided to layoff 520 employees which is 13% of its workforce. Also it will temporarily cut salaries of the rest as the Covid-19 pandemic and resultant nationwide lockdown has hit its businesses, Zomato’s Founder & CEO Deepinder Goyal said in the email on May 15.
Deepinder Goyal said in his mail, “Our business has been severely affected by the COVID lockdowns. A large number of restaurants have already shut down permanently, and we know that this is just the tip of the iceberg. I expect the number of restaurants to shrink by 25-40% over the next 6-12 months.”
As compensation, the laid-off employees will receive half of their salaries along with health insurance for the next six months or till they find another job. Goyal also said that the company will provide impacted employees outplacement support to find jobs.
Cab Services Startups
Uber, American ride-hailing Mnc, announced on May 6, that it will lay off 3,700 employees which is about 14% of its total workforce. Also CEO Dara Khosrowshahi will forgo his base salary for the rest of the year as COVID-19 has crushed the travel industry because of lockdowns to stop the spread of the virus.
Uber has been hit hard by the coronavirus pandemic. Uber’s global gross bookings are down by 80%, according to reports. The company is set to lay off up to 700 people that is about 25-30% of its overall workforce in India as per sources. Uber has over 2,000 employees in India. The decision has been almost final and likely to be announced when lockdown will get lifted.
On May 18, Uber’s CEO, Khosrowshahi told employees Uber will lay off an additional 3,000 employees and close 45 offices globally. As part of the layoffs, Uber is expected to pay up to $145 million to employees via severance and other benefits, and up to $80 million in order to shut down offices, according to a filing with the SEC.
CEO of Uber, Dara Khosrowshahi said, “We are looking at many scenarios and at each and every cost, both variable and fixed, across the company. We want to be smart, to move fast, to retain as many of our great people as we can, and treat everyone with dignity, support and respect.”
On May 20, Indian ride hailing unicorn Ola said that it will lay off 1,400 staff which makes about 35 % of its workforce due to the uncertainty caused by the coronavirus pandemic. Ola’s CEO Bhavish Aggarwal said in a note to employees that COVID-19 has led to a drop of 95 per cent in Ola’s revenues in two months. The impact of the crisis will be long-drawn for Ola. Every affected employee will receive a minimum financial pay of 3 months of their fixed salary.
Similarly, other Cab service companies are also facing the heat as more people avoid taking public transport and cabs and have started working from home. Pravin Agarwala, co-founder of The Better Place, a blue-collar management firm, said cab aggregators are already witnessing drop in demand and this drop would go up to 30-40 % if the same situation continues.
Drivezy, a self-drive car rentals platform, has also cut part of its workforce to stay afloat, according ET’s report. Moreover, B2B platform Udaan has cut back on ground staff over the last few months at its pharmaceuticals and fresh division, according to four employees at the firm.
Scooter Rental Startups
Electric-scooter startup Bird said it is laying off nearly a third of its workforce to survive damage done to its service by the coronavirus pandemic. Bird has already paused shared scooter operations in many markets around the world and drastically cut spending and is now “laying off” 30 % of its workforce, founder and chief executive Travis VanderZanden said in a memo to employees.
In the same way, scooter sharing app Bounce has begun laying off hundreds of employees across functions and levels. At Bounce, the job cuts are across verticals and levels, operations staff, call centre, and technology and product according to reports.
Number of Layoffs is likely to Increase more due to Covid-19
Startups are Terminating the Hiring plans
Apart of layoffs, some of India’s top companies have also stopped hiring plans and are moving talent internally. Meanwhile recruitment firms have announced that processes of hiring have dropped by 50%, as interviews are being cancelled. Meanwhile recruitment agencies are informing that Indian startups also have cancelled upto 50% of all hiring and interviews with layoffs going on parallel.
Bengaluru-based firm Rupeek, which operates an online marketplace for gold loans, has terminated a human resource contract with Aasaanjobs, a recruitment marketplace for blue and grey-collar jobs. This will allegedly indirectly impact 600 jobs. Rupeek told it won’t renew the contract with the human resource contractors and reduce the number of outsourced staff in the current economic environment.
Rupeek said in a statement. “Considering current business and economic environment, we had to take the unfortunate decision of not renewing our contract with our human resource contractors & the consequent reduction in the number of outsourced staff. We regret the unfortunate timing of this event. To protect their interests, we are offering a generous severance package over and above contractual dues.”
Kamal Karanth, co-founder of Xpheno, a staffing agency said, “Almost 50% of ongoing interviews, new requirements, on-boardings have stopped for the last two weeks now, particularly in the IT sector.” He also added that close to 25 captives opened in India last year and hired close to 5,000 people. However, this number is likely to come down as the coronavirus has made the execution a challenge.
According to experts, most firms have delayed the hiring process by 4-6 weeks. Appraisal hikes may also see a 2-3 % drop as well this year. In addition, with sectors across under stress, performance pressure will also be high, leading to more layoffs, said the experts.
Due to this laying off process going on all over the world, the United States, Europe, China and India are experiencing slowing economic activity that analysts predict will likely last through at least two quarters. India’s stock market has already taken a beating over the last week, and the pressure has now trickled down to private markets as well. India’s GDP growth slowed from 2.5% to 5.3% since the crisis began.
To add to that, the coronavirus outbreak has emerged as a new threat to the global economy and Indian manufacturing. India is currently in its fourth week since the first batch of Covid-19 positive cases were identified. The startup ecosystem in India has taken a major hit and entrepreneurs are trying to figure out how to run their operations by cutting costs in trying to stay afloat.
The e-commerce giant Amazon, now a days is to expand all of it’s service in all the sectors by entering in the new sectors trying to build tough competition for the existing players of that sector. Now, the company has joined India’s online food delivery market, and now focusing on becoming the market leader in this sector by giving tough competition to the top local players i.e. Swiggy and Zomato. Let us see the complete report on the topic, Amazon experimenting in food delivery services in India.
Insights of Amazon Food
The American-based e-commerce giant Amazon, has invested a good amount in their new venture i.e. around $6.5 billion in India. The name given to their brand new food delivery service is Amazon Food. At the present moment, the Amazon food is working in selected pin-codes of Bangalore i.e. 560048, 560037, 560066 and 560103. From the past news from many sources, it was heard that the company was originally planning to launch their food delivery service in India last year, which they pushed to match. No clear reason was provided by the company in this regards but later on they had to push it further more due to the nationwide stay-at-home order (National lockdown) by the Indian government, which they issued in late March before the immediate starting of their services.
E-commerce giant at present testing the food delivery service with the selected restaurant partners in Bangalore with some of the employees. They are going to expand this venture in the upcoming span of time.
Competition in food delivery services
The basic idea behind the Amazon’s entry into the food delivery market sector to try the new sector. Also, many of it’s rival in their sectors are presently started working in this sector. Google is also working in this sector indirectly with the help of their funded company i.e. Danzo. At present, Danzo (Google backed startup) is working in all types of delivery services and now has started delivering the food services.
Other startups like Zomato is itself working in this sector and has now acquired Uber Eats in the starting of the year. The biggest rival startup, Swiggy is also giving the tough competition in this sector, making this sector difficult for any type of future competition. After looking a great opportunity in this food and delivery sector, Amazon is also trying to experience this sector.
Amazon strategy behind Amazon food
Amazon is now promoting it’s Amazon prime services to their customers to experience all the facility under a single roof. The company was waiting to integrate this facility with their prime services. According to the company, this brand new integration of this service can help them in increasing their revenue and can help in achieving their goal of converting their business model into profits. This will also help them in acquire more customers which can become their potential customer and so they will be able to experience all the facility within the same brand name in the single servicing platform.
The Coronavirus or COVID-19 which started last year in December in Wuhan, China has impacted the global economy and no industry sector has remained immune to it. All businesses, startups and industries across the globe are coming up with safety measures to deal with the virus like asking employees to work from home, avoid social gatherings, etc. Foodtech startups are no exception to this.
Top Indian food delivery platforms Zomato and Swiggy together deliver an estimated 2.6 million orders every day. But they have taken multiple measures to deal with the situation. These measures ensure the safe food delivery considering the safety of delivery executive as well as consumers. The measures are helping these startups to keep operations going and to reduce any negative impact on consumer deliveries
Foodtech Startups to Follow Hygiene Practices
Indian foodtech startups Swiggy and Zomato have announced several safety measures in an effort to combat the novel coronavirus. While the Bengaluru based foodtech unicorn Swiggy already sent an email to all its consumers how they are taking the different measures to cope with the situation. Zomato soon followed suit with safekeeping measures of its own like contact-less delivery.
The main focus of the announcements is to inform people about different measures that food delivery platforms are taking to ensure that their delivery partners follow all the safety and hygiene guidelines approved by the Ministry of Health and Family Welfare(MoHFW). They also announced that the consumer will now have the option of choosing to ask the delivery partner to leave the food at their doorstep. Some startups are also offering insurance and financial support to delivery staff in case they are infected with the virus
There are certain directives that these startups are following. They ensure that the crew member who assembles the food, the one who packs food and the delivery executive do not touch the food with bare hands and take all possible precautions to ensure hygiene. The delivery packets are sealed and delivered by a runner who drops the order at a pre-appointed spot usually outside the door and then watches from a safe distance while you pick up your order and go back inside.
Co-founder and CEO of Zomato, Deepinder Goyal explained this through a tweet that “A consumer can now choose for this option through our ‘delivery instructions’ feature.” An app update over the weekend will make this explicitly clear to everyone.” Through this option, the delivery partner will keep the delivery parcel on a clean surface outside the door. When the consumer receives a photo of the delivered food, the consumer can then pick up the package at their convenience.
As India prepares to face the current health crisis, Westlife Development, the company that owns and operates McDonald’s restaurants in West and South India, has launched contactless delivery service to deliver food to the customers’ doorstep. According to the company, McDonald’s India is ensuring that food reaches customers without being touched by bare hands and delivered safely with by following social distancing measures.
“Our customers’ safety has been and will continue to be our top priority. On one hand, we have increased the safety and hygiene processes at our restaurants. On the other hand, we are ensuring contactless delivery to retain consumers’ trust in McDonald’s. Both our consumers and the industry look up to McDonald’s for path-breaking initiatives and contactless delivery,” said Smita Jatia, managing director of Hardcastle Restaurants.
Online Food Deliveries Declining Fast
Unfortunately, even after adopting the hygiene practices, online food delivery has seen huge fall in demand. Online food delivery orders for Zomato and Swiggy have dropped 70% in the last 10 days as customers step back and top restaurants shut shop during lockdown induced by the Covid-19 virus outbreak. The reason behind this is that people do not want to perform any practices, which in any way, can expose them to the virus.
Their investors revealed that even before the lockdown, the orders had started declining. In the first two weeks of March, food delivery orders declined 20%. When lockdown was imposed, Swiggy and Zomato said about 60 to 70% of its cities would be shut for food delivery including few prominent ones. As a result, steady state of 2.5 million deliveries a day, the deliveries have fallen down quickly. In the last 10-15 days, online food delivery orders have dropped 70% to under 1 million a day.
But considering food delivery startups, the Grocery delivery apps are in demand more than ever not only in India but in many countries during this health crisis. As many countries are under lockdown, the governments are asking people to strictly avoid getting out of their houses to maintain social distancing. Hence, majority of the people are relying on the Grocery delivery apps to avoid social gatherings.
As the COVID-19 pandemic spreads across the countries, grocery delivery apps have begun seeing record numbers of daily downloads, according to new data from app store intelligence firm Apptopia. The firm said that online grocery apps like Instacart, Walmart Grocery and Shipt hit yet another new record for daily downloads for their respective apps.
Typically, these apps see tens of thousands to as many as 20,000+ downloads per day. But on April 12, Instacart saw more than 38,500 downloads and Walmart Grocery saw nearly 54,000 downloads. Experts told the delivery strategies need to be better optimised at this time of uncertainty. Considering grocery is in high demand, this makes sense for all players involved in it.
In India too, Grofers, BigBasket and other grocery delivery apps have seen a boom in demand over the past week on the back of panic buying. As many consumers are stuck at home, they are heavily relying on these online grocery stores offering doorstep delivery. Seeing these demands, many foodtech startups are also turning towards these grocery sales to earn some revenue.
Food-delivery and restaurant discovery app Zomato has decided to try hands at the grocery sale as the category sees a major demand amid the Covid-19 outbreak. The Gurugram-based startup Zomato has decided to partner with e-grocers, Grofers and BigBasket, to sell food products and essentials on its platform by facilitating their deliveries.
Zomato & Swiggy have started to Deliver Grocery in Major Cities
Zomato has begun delivering grocery in more than 80 cities in India. Users can access this service by downloading the Zomato app and visit the Zomato Market section. Zomato Market identifies nearby grocery stores that are available and open for delivery. They have started grocery delivery in 80 plus cities across India to help with the supply of essentials.
CEO & founder of Zomato, Deepinder Goyal said, “Our delivery network in the country is the second best after India Post. Thus, we are ensuring that in every effort we put it to good use to serve the community. We would like to thank the government authorities, grocery stores, FMCG companies and other startups that have come forward to partner with us and support the community in this endeavour.”
Apart from its grocery deliveries, Zomato has also extended paid Zomato Gold memberships by two months at zero additional cost. This new extension is valid in India, UAE, Australia, Indonesia, Philippines, Lebanon, Turkey, New Zealand, Portugal, and Qatar.
The food delivery app Swiggy is also not behind in this league. Swiggy has announced a new service to deliver groceries through the application. The lockdown has encouraged the company to spread this service to over 125 new cities across India. Swiggy will be providing essential commodities by partnering with numerous national brands.
Swiggy has launched a hyper local delivery service called ‘Genie’ that will pick and drop items from any local store that is open. The service is currently only available for essentials and even medicines. During the launch of the service in September last year, the service was labeled ‘Swiggy Go’.
Swiggy will be partnering with Hindustan Unilever Ltd., P&G India, Godrej Consumer Products Ltd., Dabur India Ltd., Marico Ltd., Vishal Mega Mart Pvt. Ltd., Adani Wilmar Ltd., Cipla Ltd to provide essential items across various cities.
Due to lockdown, Swiggy and Zomato are finding it difficult to grow online food deliveries but this has led them to partner with local grocery shops to provide essentials to the people who want to avoid social gatherings. But this has given people a good opportunity to maintain social distancing by ordering groceries from home only.
“Some battles are better left with honour rather than victory.”
21st January 2020, saw a sweeping acquisition which can deftly be called megalithic. Uber Technologies Inc.’s made the decision to retreat from its food delivery business in India, UberEats. Zomato, the online food delivery and restaurant aggregator platform, announced that it has acquired UberEats’ business in India in an all-stock deal giving 9.99% shareholding. The exit from the business can result in annual savings of nearly $750 million for UberEats, numbers from a regulatory filing last year suggests.
The deal had been in progress since months, with wide conjecture over Uber’s decision to completely exit food delivery business in India as a resort from the piling pressures on the ride-hailing company to curb losses especially after it went public in 2018. The move, said a source, vibes with Uber’s philosophy to either lead the business or to leave the business.
Since PizzaHut initiated the first-ever pizza online order back in 1994, online food delivery has become a billion-dollar business. The Indian food delivery industry has exhibited robust growth.
Revenue in the Online Food Delivery sector amounts to US$9.2 Billion in 2020. The market’s largest share is Restaurant-to-Consumer Delivery with a market volume of US$4.9 Billion in 2020. India’s online food delivery market is projected to touch $12.53 Billion (CAGR 2020-2024) on the back of high growth rate, according to a recent report by DataLabs by Inc42.
Compared to the global growth rate of 9.01%, the online food delivery market in the country is growing at 15%, the report said. 56% of all startups accounts for the food startups who have raised $5.24 billion between 2014 and 2019. Food-tech startups contributed 42% of the total consumer services deal count between 2014 and 2018.
Swiggy so far gained up close to $1.5 Billion of funding, Zomato raised close to $800 Million funding. The cloud kitchen market owns the potential to reach $1.05 Billion by 2023. There have been many reasons which propelled India’s shift to the online delivery system. Impale of internet and smartphones have further provided the environment for growth.
The growing role of Indian women in the workforce has also increased the preference for prepared meals and a large young population expands the customer base.
The pioneers in the Indian online food delivery market are Swiggy, Uber Eats and Zomato, which claims to deliver in 500 cities across the country. Innovative marketing campaigns have also conferred the popularity and set a new trend.
Uber stepped into the Indian food delivery scenario in May, 2017.
India, of course, was a huge global opportunity making Uber even more committed to it than the Chinese market. With a growing population of 450 million – 465 million people by June 2017, Uber took the opportunity to connect people, be it to taxis, cars, food and more.
The platform experienced nearly 50% month-on-month growth, in its first year of operations.
But the competition took all its zeal away, UberEats never managed to attract many restaurants or customers in India, despite the company’s ride-hailing. The business dragged down by 2019 with the average net revenue dropping by 0.4% according to the CFO Nelson Chai.
Going by the company’s statement Uber’s total revenue grew nearly 30% to $3.81 billion, while net loss went to $1.16 billion in the quarter ended September 30.
According to regulatory disclosures , UberEats projected a negative revenue of 762.5 crore for the five months ending December 2019. Uber hoped that the business in India will be profitable by 2026, according to a valuation report prepared by KPMG affiliate BSR but looks like the hopes turned to dust.
Uber projected higher operating losses of 2,197 crore in UberEats for the five month period – August to December 2019.
In the last quarter earnings call, Uber chief executive Dara Khosrowshahi said the food delivery market in India is competitive, and admitted to being the number three player in the space. Yet, there is no clear market leader in the space.
According to The Economic Times, Uber had halved its annual cash allocation to its food-delivery business in India to $90-$120 million.
The stiff competition faced by UberEats, compelled it to take the back foot despite the growth and expansion.The two food delivery giants control about 80% of the food delivery market.
Although Uber seems to be at the weak end here , the deal might prove to be an advantage. The multinational will now be able to cut losses and as part of the deal, acquire stakes in a start-up that was valued at $3.55 billion this month.
Zomato said they will now be able to add 10 million monthly food orders to their existing 40 million, they expect to surmount Swiggy.
According to a report by New York Times, for the first three quarters of 2019, Uber Eats in India amounted for 3% of the gross booking for Eats globally and at least 25% of its adjusted operating losses.
The venture also had a setback when co-founder and former CEO Travis Kalanick resigned from its board of directors in December last year. Kalanick, who helped found Uber in 2009, stepped down from the company’s helm in June 2017 under pressure from investors after a string of setbacks.
On the other side, the deal seals days after Zomato had raised $150 million in funding from existing investor Ant Financial, an Alibaba affiliate, at a $3 billion valuation.
It helps in terms of harmony regarding customers, regarding the restaurant supply chain and also very importantly, UberEats had a stronger network in small towns and in the southern region. This will significantly influence Zomato’s customer reach, it will also get about 70,000 active delivery partners existing on the Uber Eats network.
It will raise the combined market share to 52% as opposed to Swiggy’s 43%. Though there’s a looming fear of Amazon’s breakthrough in the food industry, Zomato can enjoy a new zenith if it plays the right cards.
Although, the competition would now be cut-throat between the two pioneers, there might be some tremors for the customers. The companies will now focus on lower discounts and more profits.
Conclusion
As Zomato quoted in its statement, “The obstacles of your past can become the gateways to new beginnings”, the further developments would be interesting to observe.
Zomato has expanded to 550+ cities over the last year, with a commitment to operating excellence. The competition in this space is going to continue to be intense, and Swiggy might already be working on a foolproof plan.
