Zomato, Swiggy, Dunzo Or Zepto — Who Led The Indian Hyperlocal Delivery War In 2021

The Covid-19 pandemic has brought a massive shift in consumer mindset. Now the focus is on convenience and safety, and people look forward to doorstep deliveries at the earliest instead of venturing out. Therefore, finding an emerging trove of on-demand hyperlocal delivery apps in India is not surprising, as the model has become highly relevant in the current scenario.

The hyperlocal delivery space has evolved fast over the past year or so. To begin with, the entry of other platform players like Ola (ride-hailing) and Flipkart (ecommerce) in the quick commerce space raised a few eyebrows. But quite soon, instant delivery became all the rage.

Industry veteran Grofers quickly scaled up its operations and rebranded itself as Blinkit to disrupt food and grocery deliveries, traditionally led by Zomato, Swiggy and BigBasket. Piqued by the immense potential of this space, Mumbai-based Zepto also made a beeline for the instant-delivery market and recently raised $100 Mn in Series C, led by Y Combinator’s Continuity Fund, at a valuation of $570 Mn.

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Interestingly, the less-than-a-year-old grocery delivery platform raised around $160 Mn within five months of its launch. But that is not all. The latest development in this space also marks the entry of the Mukesh Ambani-led oil-to-telecom conglomerate Reliance Industries (RIL) into quick commerce. Reliance Retail Ventures (RRVL), a subsidiary of the parent company, recently led a $200 Mn funding round in the hyperlocal delivery firm Dunzo for a 25.8% stake. Existing investors of Dunzo, including Alteria Capital, Lightbox ventures, Lightrock and 3L Capital, also took part in this round. Dunzo’s post-money valuation has jumped to nearly $775 Mn after this round, as per Inc42’s estimates.

The funding galore further underlines strong investor interest in the space even though the trend started picking up well after the pandemic struck.

However, there is a marked difference here, unlike what is happening in mature global markets such as the US, the EU, Japan, or even Russia. Driven by a rising number of startups, India’s hyperlocal segment currently focusses on delivering essentials, especially food and groceries, instead of non-perishables or home utility services such as home cleaning, repairs, or personal grooming. According to industry insiders, this unequivocal focus on essential goods is the direct outcome of the Covid impact. And the trend has been further bolstered by substantial discounts, combo offers, zero delivery charges and extreme convenience.

Hyperlocalism has its drawbacks, too. Especially when the market becomes hypercompetitive and deep-pocketed players seeking a holistic backward-and-forward integration get their foot in the door. As on-demand services near the end of the innovation runway but still require a cutting edge USP to grab market share, it is now boiling down to the instant-delivery phenomenon — how fast order can reach its destination.

Inc42 partnered with AppTweak to understand how Indian hyperlocal delivery apps have performed in the past year in terms of downloads, pageviews, app power and more. Here are a few takeaways:

Most Downloaded Hyperlocal Apps In 2021 

Restaurant aggregator and food delivery company Zomato outshone its closest rival Swiggy in 2021, topping the list of ‘most downloads’ with 28.5 Mn. Swiggy emerged a distant second with 18.7 Mn downloads. Online grocer BigBasket beat Blinkit (previously Grofers) to the third spot with 6.1 Mn downloads, while the latter saw 3 Mn downloads.

Zepto, the new kid on the hyperlocal block with substantial funding in its kitty, was started in April last year and saw around 0.3 Mn downloads.

Zomato Was The Most Powerful Hyperlocal Delivery App In 2021

According to AppTweak, app power is a key performance indicator (KPI) for assessing the overall performance of an app in the Google Play Store. It considers various factors such as an app’s competitiveness by category and the app store region overall.

Although Zomato and Swiggy led the hyperlocal segment throughout 2021, the app power of Grofers and BigBasket posed a tough challenge for them. Zepto, the dark horse of the Indian hyperlocal space, also marked its presence on Google Play Store and raced past both Dunzo and Milkbasket in terms of app power by December 1, 2021. Milkbasket had the lowest app power among its Indian peers.

Zomato Vs Swiggy Vs Bigbasket: Who Poached Most Views From Other Hyperlocal Delivery Apps In 2021?

App stores are a significant tool facilitating app discovery and recording the download number of each application. The purpose of app store optimisation (ASO) is to create a narrative that entices customers to download the app and also includes a host of factors that enhance visibility and traffic. Understandably, ASO has become critical for hyperlocal apps to acquire more users and poach downloads/views from competitors. 

‘Similar views’ play an equally important role. According to AppTweak, this indicates the estimated number of impressions an app gets when it appears under the ‘similar apps’ suggestions on a competitor’s page.

Between January and November 2021, Zomato recorded the maximum number of similar views among all hyperlocal delivery apps on the Google Play Store — a total of 310.6 Mn. Zomato got around 38% of similar views, or 118.5 Mn, from its rival Swiggy’s app page. This means 38% of Zomato’s app page impressions came from users who actually landed on Swiggy’s page on the Play Store. 

Swiggy clocked the second-highest similar views at 309.6 Mn. Interestingly, it also gained 38% of similar views, or 118.5 Mn, through its closest competitor Zomato. 

Tata group-owned BigBasket gained 127.4 Mn similar views, poaching around 33% (42.8 Mn) views from Swiggy. The grocery app also gained significant impressions from Zomato (21% of total similar views), JioMart (10%) and Blinkit (9%) in 2021.

What The Future Holds For Hyperlocal Delivery In India

The Race For Delivery Speed

The Covid-19 pandemic has led to the rapid adoption of online shopping and turbocharged the demand for quick and easy access to everyday essentials like food and groceries. In sync with this market trend, most hyperlocal delivery startups have committed to 10-120-minute drop-off to win over customers looking for super-fast order fulfilment.

Interestingly, foodtech company Swiggy got the ball rolling in this space when it promised deliveries in 15-30 minutes through its InstaMart service in 2020. Days after Swiggy, industry veteran Blinkit (then Grofers) said it was planning to launch 10-minute grocery deliveries in 10 cities. The company gave it a try in 2019 but called off the service, citing sustainability issues. It has been rebranded since as part of a pivot to “instant commerce indistinguishable from magic” and its promise of 10-minute delivery. Dunzo, yet another hyperlocal service, also followed suit by promising deliveries in 19 minutes in Bengaluru through its Xpress Mart dark store network.

Mobility unicorn Ola has also kickstarted its pilot for a quick delivery service called Ola Store in some parts of Bengaluru. The company promises to deliver groceries, personal care and pet care products within 15 minutes. Then there is the newest kid Zepto, with its USP of 10-min grocery delivery.

It was a different story for the online grocery platform BigBasket. The company launched its express deliveries in 2019 but shut it down as the market was not ready. However, the platform has matured in the past couple of years, set up robust supply chains and established smart hubs within short distances to cater to ultrafast delivery.

Ecommerce giants like Amazon and Flipkart have also ventured into the online grocery space and embraced the quick commerce model, thanks to its immense potential. Amazon Fresh has been into grocery delivery since 2019 and offers a convenient two-hour delivery slot. To make this segment more sustainable and efficient, Amazon India unified its entire grocery business by integrating its Pantry services with the Amazon Fresh store in November 2021.

Flipkart Supermart dealt in online grocery from 2019 and forayed into the hyperlocal space with Flipkart Quick in 2020. It promises a 90-min delivery and has expanded to six cities, including Delhi, Gurugram, Ghaziabad, Noida, Hyderabad and Pune, in April 2021. Flipkart’s social commerce venture Shopsy has also entered the grocery segment. The venture will host 6K+ products across 230 categories, deliverable in 700 cities spanning more than 5,800 pin codes.

Rise Of Dark Stores, Focus On Private Labels

As hyperlocal delivery players aim to deliver faster, most of them are setting up multiple dark stores/mini-warehouses across neighbourhoods to meet the delivery rush in the shortest possible time. Both dark stores and cloud/ghost kitchens are B2B delivery-only facilities, and consumers cannot directly purchase from these units. 

According to an EY report, the cloud kitchen market saw a 30-35% dip during the first phase of lockdowns. But the demand is rising again as the pandemic continues to rage in 2022, and many restaurants explore these options to maximise their revenues. This will be a boon for hyperlocal companies keen to get into neighbourhood food deliveries without competing with Zomato and Swiggy.

Grocery players like BigBasket and Blinkit are also looking to expand their private labels to offer a wide range of products at affordable prices, thus driving revenues. Focus on private labels also creates distinct brand narratives that will help companies stand out from the rest.

A significant glitch here is the rise of overhead costs. Setting up multiple dark stores is bound to increase the capex, which is not sustainable given the comparatively small ticket size. However, experts think otherwise. 

To start with, rental costs may not be prohibitive even in Tier 1 cities as these dark stores will not be set up in prime locations. Second, the larger game here is to get more transactions despite low ticket sizes. The core idea is to deliver customer value and increase stickiness, thus ensuring repeat purchases. In simple terms, although the average ticket size may not grow, the purchase frequency should grow with time. It also means companies do not have to spend a huge amount on customer acquisition, ultimately leading to profitability.

Rise Of Data Analytics

As hyperlocal deliveries focus on limited areas and a narrow set of customers, decoding user data will help track consumption patterns, predict demands and stock up inventories accordingly. This will improve delivery logistics and enhance customer experience while keeping the supply chain more efficient and cost-effective. Moreover, unlike food, online grocery thrives on delivering orders faster. So, the player with the right product assortment in place will get a larger share of the market than those offering deep discounts.

Riders’ Woes

While dark stores ensure better business opportunities and more flexibility to hyperlocal delivery companies, sticking to a strictly time-bound delivery slot may put delivery partners under tremendous pressure. For starters, they may end up getting penalised for not fulfilling the minimum number of orders within this short window. Add to that increased traffic risks, poor pay and the lack of labour rights, and the new hyperdelivery trends may not augur well for food/grocery couriers.   

Competition And Consolidation 

A quick look at the segment underlines how big players from different platforms have made a foray into the hyperlocal delivery space. Besides industry veterans like Dunzo, Blinkit or BigBasket, ecommerce behemoths Amazon India (Amazon Fresh) and Flipkart (Flipkart Quick and Shopsy), foodtech leaders Zomato and Swiggy, tech giant Jio (via JioMart) and mobility unicorn Ola (Ola Store) have already jumped on the bandwagon to leverage its potential.

Although players like Swiggy, Zomato and Ola are new to the express delivery game, they are keen to make use of their efficient supply chains and mobility networks to focus on the hyperlocal opportunity.

But there could be more. Lately, legacy players like RIL (via JioMart and its recent funding of Dunzo) and the Tata group (through its acquisition of BigBasket) have quickly entered the hyperlocal segment. Given their dominance in physical retail and super-app ambitions, they have the potential to build end-to-end (offline to online) business entities stronger than digital-only potential super-apps like Paytm or PhonePe. The presence of ecommerce giants can also disrupt the space, and one cannot rule out a glut of M&A deals, massive market consolidation or the emergence of a duopoly a la Zomato-Swiggy in the foodtech segment.

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