The Indian food delivery space has been growing at a lightning speed, thanks to increasing internet and smartphone penetration in the country, along with the improved logistics and last-mile delivery network in many cities. Zomato and Swiggy have made a killing in the Tier 1 cities and metros, and have also seen major traction in Tier 2 markets over the past year, according to a new report on the Indian app ecosystem.
Data released by Unomer along with Quartz shows that Zomato and Swiggy together fulfil over three-quarters of all food orders in the country. Zomato takes the lead with 12% of smartphones having the app installed, with Swiggy had 10% smartphone penetration in India. Other apps such as UberEats and Foodpanda have download penetration in low single-digit percentages.
The report further noted that the penetration of these apps is higher in Tier 2 cities than in metros. Unomer’s data was collected from six million smartphone users in the country in May 2019, so while it’s not a definitive indicator, it does take into account a lot of smartphone users.
The Unomer data also revealed that the Zomato Gold rewards programme has worked really well, driving repeat purchase, loyalty among consumers. The Zomato Gold paid subscription programme giving customers unlimited, exclusive deals on food and drinks in over 1,200 partner restaurants, bars, and pubs for an annual fee.
The Unomer report said that the discount spree around the cricket World Cup and the Indian Premier League boosted the number of Swiggy and Zomato orders in recent months. Overall, the food-delivery sector witnessed a substantial 7% growth in smartphone install base in the surveyed period.
In absolute numbers, metros like Mumbai, Delhi and Bengaluru have the most users with food-delivery apps installed. In terms of share of smartphone users in the city, penetration is higher in Tier 2 cities like Hyderabad and Jaipur. On a city to city basis, Zomato has an edge in Delhi, Kolkata, and Chandigarh while Swiggy leads in Chennai, Guwahati and Kochi.
However, as a category, the sector’s reach is not too high. It has penetrated just 17% of the market versus OTT apps, which have 79% penetration.
According to a 2019 report by research and consulting company RedSeer, the foodtech sector posted triple-digit growth for the third-year running and players in the space expanded their footprint like never before. From presence in just around 15 cities a year back, foodtech platforms expanded to over 100 cities in 2018 and about 30% of their orders now come from non-core markets.
The RedSeer FoodTech Leadership Index (FLI) ranked Swiggy at the top place with a total score of 96 in the fourth quarter of 2018. Zomato came in second with a score of 82.