At a time, when online cab aggregrator Uber has entered food-tech service with UberEats in India, Foodpanda claims to be focusing on creating a sustainable business by creating a solid consumer base as the number of repeat purchases have increased. Saurabh Kochhar, CEO, Foodpanda India discussed with FE’s Hita Gupta & Anushree Bhattacharyya about the company’s newly launched delivery business called Dash and how it is beefing up its workforce. Excerpts:
In what ways does the entry of UberEats impact you?
The entry of players like Uber besides firms such as Google trying to enter the space only boosts our confidence, as this clearly underlines that the food-tech industry is full of opportunity. In some of the other countries where UberEats had entered, those places already had a robust ecosystem of restaurants and delivery partners. So, for them it was only about creating the discovery part. However, the scene is very different in India, where one needs to start from scratch right from building infrastructure, technology, capacity, etc. So if food delivery is not the core business then the chance of succeeding at it remains very slim.
With 85% repeat buyers, has the pace of growth for the business slowed down?
No, 15% of our consumer base are still new customers. Not to mention, while we continue to add new customers, we haven’t allowed cost of customer acquisition (CAC) to increase. CAC has not increased because we are acquiring 3-4 times the amount of customers than what we were doing almost two years ago at almost one-fourth of the CAC. We have made our marketing very efficient and that has worked very well for us allowing us to continue to acquire new customer economically.
The new business Dash under which you work as a logistic partner for restaurants, how will it increase earnings?
We operate as a third party logistics partner for restaurants using Dash delivery service. This means that we charge restaurants a flat fee based on different parameters such as – the distance between a restaurant and a customer’s house, time taken for the delivery, etc. Currently there are 500 such restaurants on the platform, and the plan is to add 1,000 more to take the total number of restaurants to 1,500 in the next three months. However, in order to increase the efficiency of the delivery service, we would also look at various combinations.
For example, an ideal combination would be to undertake all kinds of services for a restaurant – such providing them with back-end technology besides delivery support, so that we are able to reduce our delivery time from the current 35 minutes – which will allow us to earn a very high margin. Currently the margin we earn ranges between 10-15% to as much as 35%. To further build a strong team we are hiring workforce in areas such technology and support and delivery. Post hiring the workforce will increase to 4,000 including 3,000 riders on our delivery fleet.
Has the roll out of Dash helped in bettering the problem of wastage in delivery?
Currently, about 50% of the total orders are delivered by our own delivery fleet. We already had an existing fleet to deliver food, so the launch of Dash just allows us to service more orders in the same locality thus, increasing efficiency. So if earlier in a locality we were able to deliver 3-4 orders, with Dash we can take that number to 6-7 or more. We plan to expand the service of Dash to 10 cites – including Kolkata and Chandigarh from the current 6 cities.