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Zomato Acquires Runnr To Boost Food Delivery

Zomato Acquires Runnr To Boost Food Delivery

Post Acquisition Runnr Will Serve As An Independent Entity Offering Logistical Services To Players Other Than Zomato As Well

In a recent blogpost, Zomato founder and CEO Deepinder Goyal has confirmed that the foodtech startup has acquired Bengaluru-based Runnr. Runnr is a B2B online service provider platform for hyperlocal logistics services. It is expected to strengthen Zomato’s food delivery capacity.

Post acquisition, Runnr founder Mohit will remain the founder and CEO of the hyperlocal startup. He will continue developing his vision along with the rest of the founding team – Arpit, Mukunda, Gnanesh, Vatsal and Aravind.

The speculations for the deal first emerged in May 2017, Zomato was reported to be in talks with Runnr to optimise its logistics costs for hyperlocal food delivery.

Talking about the acquisition Zomato CEO Deepinder Goyal said, “I’m very excited to share, that beginning today, you will see our team in their red Zomato t-shirts delivering food to you. We’ve been adding to our Runnr team steadily over the past week; it is already 1500 strong and growing by the day. Just to ensure that you get your food with a smile and on time! Yes, that’s right, we just signed our long-rumoured acquisition of Runnr.”

A Good Year For Zomato

In his current blogpost, Goyal revealed that the deal has been in place for a while now. Runnr founder and CEO Mohit Kumar, has been in delhi to look after the partnership. He termed the acquisition to be an amalgamation of “many companies (online ordering, point of sales, infrastructure services, advertising, etc.) sharing a unified mission.”

His post also indicates that post-acquisition Runnr will work independently. Runnr will act as an “independent logistics company (owned by Zomato) offering the full stack of logistical services to players other than Zomato as well – e.g. pharma, grocery, ecommerce, etc.”

Talking about the move, that propelled the acquisition, he said, “For us at Zomato, we saw that we were going to be working with a team of extremely driven individuals who had figured out how to solve for a vital piece of our puzzle—the one that affects our user delight: logistics. With the combination of Zomato and Runnr, we have everything in the stack of building a delightful food delivery service in India and UAE – end to end – listings, discovery, reviews, ordering, and now, logistics.”

Later, the company’s food delivery service managed to rake in over 3 Mn monthly orders for the first time in July 2017. As per recent blogposts by the company, Zomato’s food business has high customer retention. The company claims that about 65% of its newly signed up users for the food ordering business order again from Zomato in the next 12 months.

However, it managed to trace an upward trajectory from last quarter. Zomato witnessed a 34% decrease in its total losses for 2016-2017. In the annual report for FY17, it reported an 80% surge in revenue to around $60 Mn. The restaurant discovery and food delivery platform witnessed an 81% drop in the annual operating burn for FY17 at $12 Mn compared to the $64 Mn in FY16.

Earlier this month, it was reported that the foodtech startup is also reportedly in talks to raise up to $200 Mn from Alibaba and its payments affiliate Ant Financial. If the investment goes through, the Chinese ecommerce giant is likely to pick up a stake in the company.

Indian Food Delivery Space- An Overview

A recent report by RedSeer Consulting claims that online food delivery grew at a pace of around 150% to reach $300 Mn in GMV in 2016. And the online food delivery players handled, on an average, 160K orders in a day with an average order value of $5.

Naspers-backed Swiggy recently raised $80 Mn in a round led by Naspers. The startup claims to have clocked 4 Mn orders per month. However, the ticket size of Swiggy orders is arguably smaller than Zomato. On other hand, Naspers has also pumped about $435 Mn in European food takeaway service Delivery Hero. Delivery Hero acquired Foodpanda India in December 2016 and is an active player in this space.

The entry of new players with deep pockets, like Uber’s UberEATS that marked its entry into the Indian market in May 2017 and Google Aero. This painted a new picture Indian food delivery space which was once considered a dead pool, with over 150 foodtech startups seen to shut shop in 2016. While Google Areo launched services in Mumbai and Bengaluru to provide hyperlocal and food delivery services to its users, UberEATS after launching in Mumbai has expanded to Gurugram, Bengaluru and Delhi.

Zomato’s Runnr For Food Delivery?

Runnr was founded in 2015 by Mohit Kumar and Arpit Dave. It is a B2B hyperlocal on-demand delivery service that helps book, track and manage deliveries at scale. In 2016 Runnr (earlier Roadrunnr) acquired Tinyowl. The merger was completed in June and the combined entity launched a customer centric app. Post-acquisition, the combined entity aimed to build out a consumer-facing product called Runnr.

Runnr is currently fulfilling 300K orders per month. This is less than 10% of Zomato’s monthly order volume of 3 Mn. Given the current order fulfillment of Runnr, it seems that Zomato is not planning to heavily rely on Runnr for food delivery. Zomato has insisted to utilising the cost-efficient delivery fleet of the partner restaurants. Acquiring Runnr will empower Zomato’s food delivery service upto an extent. But the fact that Sequoia Capital is a common investor in both the startups, leaves room for speculation if the consolidation was orchestrated by the investor.

Author

Aparna Mishra

Inc42 Staff

After a 2-year-stint at Ernst & Young, Aparna moved to Journalism. Her prior experience enables her to understand business management. An avid reader and a traveller she hopes to gain insights on the startup ecosystem at Inc42.

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