Hungry for speed: The 10-minute food delivery saga

Wooing the hungry masses

A Grant Thorton Bharat report highlights the rapid growth of quick commerce in India. In 2018, e-commerce was 0.14% of retail, and quick commerce was just 0.003 per cent. By 2023, e-commerce rose to 4.8%, with quick commerce at 0.3%. By 2028, e-commerce is projected to reach 17% to 30% of retail, and quick commerce is projected to reach 2-3%. 

Experts opine that food delivery platforms are deploying a smorgasbord of aggressive discounts, loyalty programs, and strategic partnerships with restaurants to lure customers into their ecosystem. Magicpin, for instance, has leaned into its cashback and reward-driven model to stand out. By offering real monetary benefits instead of mere discounts, it targets a more cost-conscious demographic. The result? A slow, but steady increase in brand loyalty among users seeking better value for money. 

Their strategy has paid off: in 2023, Magicpin partnered with over 200,000 businesses and reported a 35% year-on-year increase in monthly active users, according to a report by Canvas Business Model. “We are India’s third-largest food delivery app, handling 1.5 lakh daily orders on ONDC. Our customer acquisition is largely organic, with 90% of users coming through non-paid channels. Referral incentives tied to user behaviour ensure long-term retention without heavy discounting. We also launched ‘magicNOW,’ a 15-minute delivery service for fresh, restaurant-prepared meals within a 2km radius. After delivering 75,000 orders in Delhi-NCR and Bangalore, it’s now available in major cities across India, working with over 3,000 restaurants and brands,” Anshoo Sharma, CEO and co-founder, Magicpin, said. 

 “At Zepto, we focus on sustainable, long-term campaigns to build engagement and loyalty through year-round brand activations. In February 2024, we launched Zepto Pass, a loyalty program offering free deliveries and up to 20% discounts, which quickly crossed 1 million subscribers, increasing spending by 30% and retention by 10%. For bulk buyers and budget-conscious shoppers, the Zepto SuperSaver program offers competitive pricing and free delivery on orders above Rs 1,000. Meanwhile, Zepto Café, now operational in 120+ locations, caters to urban users with premium food and beverages delivered rapidly, fulfilling 30,000+ orders daily,” Chandan Mendiratta, chief brand and culture officer, Zepto, said. 

Meanwhile, Ola has leveraged its existing ride-hailing infrastructure to integrate food delivery into its ecosystem. The company hopes to convert its captive audience of millions of app users into food delivery customers. Whether this strategy will translate into sustained engagement remains an open question, given Ola’s smaller market share compared to entrenched players like Swiggy and Zomato. Similarly, Uber Eats, though exiting the Indian market in 2020, remains a force internationally by leveraging its ride-hailing expertise. DoorDash, a dominant player in the U.S., continues to expand into ultra-fast grocery and food delivery, adding to the global competitive heat. Furthermore, nearly 60% of Indian consumers prefer integrated platforms for convenience, according to a report by PwC, hence subjectively making Ola’s strategy a promising one. 

“As per a study, 32% of customers are drawn to quick commerce platforms primarily because of discounts. Customers often jump ship to competitors offering better deals. Food delivery and D2C meal-prep companies offer subscription-based food delivery models to increase retention. With new customer growth slowing down, the food aggregator platforms focus on increasing the frequency of existing customers to drive growth. For example, A leading online food delivery company introduced a restaurant loyalty programme in July 2024 to incentivise customers who order frequently. At the time of launch, 4,000+ restaurants were already live on the programme. The platform already sees almost 40% of its food delivery GOV come from high-frequency loyalty membership members,” Anand Ramanathan, partner, Consumer Products and Retail Sector Leader, Deloitte India, said.  Partnerships can make a platform more attractive by offering exclusive deals and a wider variety of food options. In 2022, third-party food delivery accounted for an estimated $29.8 billion in revenue for restaurants. While aggressive discounts can give a quick boost, loyalty programmes and strategic partnerships are for long-term growth, he added. 

The middle mile

Behind the scenes, companies are building last-mile delivery fleets, optimising routes, and leveraging artificial intelligence to enhance efficiency. “AI and automation offer significant potential, with AI-driven logistics expected to reduce delivery times by 30% by 2025. Strategic partnerships with local businesses have already boosted market penetration by 20%, expanding reach and diversifying service offerings,” Ramanathan added. Hyperlocal demand plays a critical role here, with players like Magicpin aggregating smaller businesses to meet the unique preferences of local neighbourhoods. 

Ola’s foray into cloud kitchens further exemplifies the industry’s innovative spirit. Cloud kitchens, which eliminate the need for physical dine-in space, are projected to grow at a CAGR of 17% in India from 2023 to 2027, according to Blueweave Consulting. “Quick commerce sustains itself through delivery fees, restaurant commissions, and subscription models, but fierce competition and high operating costs demand strategic measures. Companies are boosting average order values by 10-15% through personalized recommendations, investing in dark stores and micro-fulfilment centres to reduce delivery times and costs, and partnering with local businesses for exclusive deals to attract and retain customers. Additionally, loyalty programs and personalized experiences play a crucial role in fostering customer retention. By balancing these strategies, quick commerce players are working toward sustainable growth and long-term profitability in a highly competitive market,” Ramanathan added. Meanwhile, Swiggy’s private labels, such as Homely and Breakfast Express, account for nearly 20% of the company’s revenue pre-pandemic, according to media reports. 

“Our revenue grew 120% year-on-year, from Rs 2,025 crore in FY23 to Rs 4,454 crore in FY24, while absolute losses reduced, and PAT as a percentage of revenue improved from -63% in FY23 to -28% in FY24. We anticipate achieving PAT profitability in the near term,” Mendiratta added. 

Counting the beans

The food-delivery business, despite its growing user base, remains a challenging one to monetise. “The space is heating up and we’re likely to see a lot more competition in 2025, with incumbents looking to gain share in each other’s home markets and challengers looking to maximize on the opportunity. QC opportunity is lot more about executing it right (after establishing the value proposition), and hence players’ focus would be on tightening up their supply chains, delivery models etc,” Kushal Bhatnagar, associate partner, Redseer Strategy Consultants, added. Delivery fees, restaurant commissions, and subscription services represent the primary revenue streams. Swiggy’s Swiggy One subscription and DoorDash’s DashPass are popular examples, offering benefits like free deliveries and discounts for a monthly fee. Magicpin, however, differentiates itself with additional revenue through cashback partnerships and targeted advertisements. By positioning itself as both a discovery platform and a delivery service, it unlocks monetisation opportunities that traditional players miss. Yet, scalability remains a challenge in a market saturated with similar offerings. 

Profitability, however, remains elusive. Competition forces heavy spending on customer acquisition and retention, with razor-thin margins exacerbated by operational costs. Zomato, for instance, has faced significant scrutiny over its inconsistent financials despite dominating the market. Uber Eats and DoorDash, while operationally more diverse, face similar profitability struggles globally.

The challenge of the profitability puzzle

As companies burn cash to stay competitive, the cracks in the quick commerce model are beginning to show. In 2023, mergers and acquisitions activity grew by 25% compared to 2022, with deals like Zomato’s acquisition of Blinkit showcasing this trend. Sustainability is also a priority, with 60% of quick commerce firms projected to implement green initiatives by 2025. These include electric delivery vehicles, AI-optimised routes, and eco-friendly packaging to reduce carbon footprints. “Despite the explosive growth, QC is less than one per cent of retail and approximately nine per cent of e-commerce. The large headroom offers a strong growth opportunity for the platforms to expand further. Moreover, the top three cities (Bangalore, Mumbai, Delhi NCR), contribute ~60% of the QC business in India, hence there is huge potential to scale in the next set of markets,” Bhatnagar commented.

Technological advancements are further transforming the sector. By 2025, AI-driven logistics could cut delivery times by 30%, while drones and autonomous vehicles are expected to streamline last-mile delivery. “Meanwhile, investments in local warehousing and micro-fulfillment centers are on the rise, with 70% of companies likely to adopt them by 2025 to speed up deliveries. The industry is also seeing intense competition, with platform numbers expected to grow by 15% by 2025. To stay ahead, companies are innovating with private labels, offering curated products to boost visibility and sales while focusing on partnerships, technology, and sustainability,” Ramanathan commented.

By 2025, quick commerce players will face both substantial opportunities and risks. The sector’s growth is highlighted by a Meta report, which shows 91% of Indian online consumers surveyed are aware of quick commerce, with over half using it recently. A Deloitte study reveals that 18% of respondents prefer buying food and beverages through quick commerce, a 230% growth between 2021 and 2023, with some large FMCG brands seeing 35% of their online sales from this channel.

However, competition is intensifying, driving up customer acquisition costs by 15% in the past year. The challenge of balancing rapid delivery with profitability is significant, as logistics and labour costs account for 40% of total expenses. Regulations on data privacy, labour practices, and sustainability are also increasing costs. New data privacy laws may raise compliance costs by 10%, while the push for eco-friendly practices, like electric delivery vehicles, will require substantial investment, with 60% of firms expected to adopt these by 2025.

The allure of 10-minute food delivery has captivated customers, but it has also set an unforgiving pace for companies in the quick commerce space. As the market matures, the initial frenzy for 10-minute deliveries may give way to a more balanced approach. “While Q-commerce serves a specific purpose and is growing at a rapid pace, I am not really gung-ho about its product promise. In a country like India with adverse traffic conditions, it is unreasonable to expect deliveries in 10-15 minutes. Surely heavens won’t fall if the consumer has to wait for half an hour or so. I think dark stores is a good idea. But here again, instead of just creating neighbourhood warehouses, I would have liked to see tangible benefits being offered to the consumers in terms of building loyalty and engagement. Speedy delivery, indeed, is a huge benefit but 10 minutes delivery imposes a huge pressure on the service provider. Currently everybody is jumping on to this bandwagon but I wonder if it’s sustainable?,” Sanjay Trehan, digital and new media advisor, commented. Companies will need to re-evaluate whether this model is a sustainable solution or a passing trend fueled by aggressive competition. The next phase of the industry will likely hinge on technological innovation, regulatory adaptation, and consumer demand for both speed and quality.

Ultimately, the race for ultra-fast delivery is not just about winning over customers—it’s about defining what the future of food delivery should look like. For players in this heated battle, it’s no longer just a sprint; it’s a marathon where adaptability, foresight, and responsibility will determine the true winners.

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