SUMMARY
The list was led by China’s Meituan, UK’s Deliveroo and the US-based consolidated entity of Uber Eats and Postmates
Food delivery sector continues to hold on to its pre-pandemic features of rapid consolidation, worker exploitation and a long way to profit delivery, the report said
The findings were a part of a report titled ‘Food Baron 2022: Crisis Profiteering, Digitalization and Shifting Power’ published by the ETC Group
Homegrown food delivery platforms swiggy
and Zomato are among the largest ‘ecommerce food delivery companies’ in the world, according to a report.
As per a report published by Canadian non-profit ETC Group, Swiggy is the ninth largest ecommerce food delivery company, while foodtech giant Zomato was placed one position lower at the 10th spot on the list.
The list was led by China’s Meituan, followed by UK’s Deliveroo, and the US-based consolidated entity of Uber Eats and Postmates.
The list was part of the report ‘Food Baron 2022: Crisis Profiteering, Digitalization and Shifting Power’ published by the ETC Group.
The report had a scathing take on food delivery companies across the world. It said that the sector still continues to hold on to its pre-pandemic features of rapid consolidation, worker exploitation and a lengthy way to profit delivery.
“From the beginning, the model has been, explicitly, less about food service and more about logistics, e-commerce (including customer-data collection) and attracting technology-focused venture capital investors. Competition in the new sector quickly heated up: some players were gobbled up, and those that remained raised even more investment cash – while buying and swapping stakes in competitors,” it said.
Pointing out the high cash burn and high valuation of many of the foodtech companies, the report said that these firms are resorting to different measures to make their businesses profitable including tweaking their algorithms, “sometimes with disastrous results for couriers”, to ensure faster deliveries.
It also noted that these platforms have slashed commissions for restaurants and raised prices for users to increase their revenues.
In India, earlier this month, the National Restaurant Association of India (NRAI) came out all guns blazing against both Swiggy and Zomato for allegedly forcing partner outlets to foot the ‘exorbitant’ prices of discounts and high commissions.
Alleging worker exploitation in the foodtech space, the ETC report claimed that the ambiguous legal status of couriers (food delivery agents) is integral to the business model of these startups.
“Along with related ‘sharing economy’ sectors such as ride-hailing – also now firmly in the grasp of Big Tech – food delivery has invited worker exploitation. Around the world, governments and courts have only recently begun to address the issue,” underlined the report.
It also said that a majority of foodtech players listed in the report are yet to deliver profits. Noting that venture capital and technology investment fueled the sector, the report said that the sector is yet to witness a turn to profits despite the global pandemic which favoured the delivery business.
It also added that these startups are now tweaking their business model to include grocery delivery to push for profitability.
The Indian food delivery space is led by Zomato and its rival Swiggy that together account for 90-95% of the total market share. While these companies started out as mere food delivery platforms, they have since also ventured into the grocery delivery industry.
Realising there was more scope in the space, startups such as Zomato even launched a 10-minute food delivery service. While the service was panned by critics across the board, Zomato stuck to its plans and rolled out the service. The listed company also launched an inter-city food delivery service last month to push up its revenues.
However, the startups continue to be marred by high cost of user acquisition and increasing cash burn. Having a higher valuation has only added to the problems of many of these players.
According to a report, the Indian online food delivery segment is projected to reach a revenue of $12.14 Bn in 2022, with the number estimated to soar to $20.27 Bn by 2027.
