Second only to ecommerce, foodtech is the most capital intensive of startup businesses. Starting from discounts on food, to delivery networks, to additional seasonal coupons and offers, food delivery companies such as Swiggy and Zomato have had to raise billion dollar-funding rounds to just stay afloat, while Uber’s unit UberEats and Ola-owned Foodpanda are having a tougher time keeping their heads above water.
However, off late India’s foodtech companies are showing signs of maturity and an increased focus on sustainability rather than grabbing market share at all costs. Food delivery majors Swiggy and Zomato have announced plans to break the reliance of consumers on cashbacks and discounts for food orders. While Zomato is looking to gamify discounts and cashbacks with its prediction-based in-app games, Swiggy is looking at repeat orders at an affordable price point to be its next big growth driver.
However, for much home-made food has always had a charm that restaurants do not. To address such cravings, neighbourhood food networks which function through WhatsApp or hyperlocal apps such as FoodBuddy, or Oota Box which connect home chefs to buyers. Recognizing the potential in this business, Swiggy has launched the Swiggy Daily subscription service in Gurgaon and said it will expand it to NCR and other cities soon.
Swiggy Daily allows consumers to order a single affordable meal or subscribe to a 3-day, 7-day, 30-day plans, priced at INR 50 – INR 150 per meal. The focus is on homestyle food in Indian cuisines ranging from Gujarati, Rajasthani, Tamil, Punjabi and more. In the coming months, Swiggy will add snacks, beverages and fruits to the daily menu and to start with users will get 20% off on Swiggy Daily orders for the first month.
Swiggy has tied up with readymade food vendors such as Homely, Lunchly, Fig, iDabba and Caloriesmart, popular tiffin services such as Dial a Meal and Dailymeals.in as well as home chefs such as Sumita’s Food Planet, Mrs. Ahmed Kitchen and Shachi Jain, for the meals under the subscription plan.
Discounts In Delivery Business
The Bengaluru-based foodtech unicorn is present in over 160 cities with a fleet of 1.8 lakh active delivery partners from over 90K restaurant partners. But the company has been looking to diversify its revenue channels by bringing in more repeat orders and entering new verticals. If Swiggy Pop was its affordable, single-meal offering, then Daily is its logical extension. Secondly, the company is run
Related Article: Will You Continue To Order Online If Swiggy, Zomato Cut Discounts?
ning a loyalty programme called Swiggy Super to bring in repeat orders and reduce customer reliance on discounts to push sales.
A media report last month had said that discounts by Swiggy and rival Zomato will be going down by at least 40% in the next few months. These companies have been burning $30 Mn – $40 Mn every month as they offer discounts to onboard new customers and retain old ones.
However, decreasing discounts are already a part of food ordering nowadays as the minuscule discounts transform into restaurant handling charges, taxes and delivery charges.
Looking For Repeat Orders
Swiggy COO Vivek Sunder told ET recently that Daily is part of the plan to carry forward the momentum that it’s seen in recent months. The company claimed its monthly repeat customer base grew by 150% in the last nine months and a quarter of Swiggy users subscribe to Swiggy Super.
The loyalty programme offering, which is available in over 100 cities has been a success, according to the company. Swiggy Super users visit the app 50% more often than regular ones, Sunder had claimed and added that these users are also 20% more likely to continue being on Swiggy for the long term.
Breaking Into Dabbawala Territory
When it comes to daily tiffin services or dabba as it’s known in many parts of the country, Mumbai’s legendary dabbawala delivery network is renowned around the world. The service has a low failure rating of one in 16 million deliveries and has held its own despite the onslaught of food delivery services in India’s financial capital.
Dabbawalas rely on home cooks to prepare food which is delivered to office-goers but lately, the emergence of discount-led food delivery apps, and the increase in the number of women workers has forced a shift for dabbawalas. A KPMG and the Federation of Indian Chambers of Commerce and Industry (FICCI) report claimed a 5.6% annual growth rate since 1991 in India’s urban female workforce participation. The report also mentioned that India’s youth population, with a median age of 27.6 years in 2016, preferred to eat out or order in on most days. This also partly explains the surge in adoption of food delivery apps, and with rising competition in this arena, came the discounts and cashbacks, which are now becoming harder to withdraw.
Moreover, thanks to the emergence of tech hubs such as Bengaluru, Hyderabad, Gurgaon and Noida have forced a lot of the tech talent to move around from various parts of India and created a parallel economy of migrant tech workers, students and those who live away from home due to their occupations.
The Indian startup ecosystem is a large employer in the country and there’s no doubt that urban migration today is directly linked to some of the job opportunities offered by companies in hyperlocal deliveries, food deliveries, mobility platforms and other startup sectors.
Access to home-cooked food is a real gap for many of these migrant workers, as Swiggy hints at in its blog post introducing Swiggy Daily. In fact, Swiggy Daily is starting in Gurgaon, which is one of the cities in India, with a sizeable tech migrant workforce, if the number of startups based in Delhi/NCR is any indication. Swiggy is tugging at their homesick emotions to deliver what it calls homestyle food daily. But the question is will customers really want to pick up yet another tab in a world already chock-full of subscriptions.
Written by Aditya Kondalamahanty and Nikhil Subramaniam