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Dearth of adequate time to go out and dine, owing to urban lifestyles, seems to be fuelling growth of the segment.
Foodpanda (with its acquisitions of TastyKhana and Just Eat) is already an aggressive player in the Indian market. The space is set to witness greater action with Zomato making a foray next week.
While new companies such as TinyOwl, presently operating only in Mumbai, are also getting ready for a larger play, Zomato’s entry could further turn things around in the market.
The Deepinder Goyal-led company is the largest restaurant search app in India, with a sizeable presence across the world, including in the US.
However, technologies still need to be upgraded to provide a seamless experience to consumers.
“The scope is huge in this space. Zomato’s entry would enhance that but a lot of reconciliation is required at the moment in India. A lot of intricacies regarding the payments still need to be worked out to scale up the businesses,” said Harish H V, partner, Grant Thornton India LLP.
A key area which still needs greater attention is how to make sure the companies operating in the food ordering space get their share out of every order. At present, most companies get 10-15 per cent of the total order size being put via apps of these companies. The average order size via the apps so far in India is Rs 300-400. For Zomato, this will be an additional revenue stream. The company at present garners revenue from advertisements.
In India, the trend of ordering food online is picking up. For companies in the food ordering space, the acquisition cost per customer is also relatively lower than those in other segments of e-commerce. The average cost for a customer acquisition is about Rs 100 in online food ordering and the number multiplies 10-20 times in pure e-commerce dealing with fashion, consumer electronics, and such business.
“The dynamics are different in this business, compared to a typical e-commerce firm. While a lot of companies are operating in the space, there has to be enough differentiation for them to succeed. Also, lifestyle issues and a rising tax structure also hold one back many times from actually going out and dining,'' said Arvind Singhal, founder Technopak, a retail advsiory firm. The potential of the sector is significant but a lot of work needs to be done in the technology space by these companies, he said.
Berlin-based Rocket Internet, known for grooming start-ups, has already invested in Foodpanda in India and quickly made two acquisitions, TastyKhana and Just Eat. Recently, Rocket infused another $110 million in Foodpanda to strengthen it for the inevitable battle with Gurgaon-based Zomato.
If experts are to be believed, a lot more money is expected to be pumped into the sector and consolidation is inevitable.
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- Lack of time to go out and dine seems fuelling growth of the online-food-ordering segment
- Zomato will make a foray next week in this space
- Foodpanda (with its acquisitions of TastyKhana and Just Eat) is an aggressive player in the Indian market
- New companies, such as TinyOwl, presently operating only in Mumbai, are also getting ready for a larger play
