Hyperlocal e-commerce platform Magicpin is aiming to carve a niche in the online food delivery market, dominated by Swiggy and Zomato, by focusing on small merchants and mom-and-pop food outlets rather than large fast-food chains.
“It’s hard for a single platform to do justice to all the segments of merchants,” said Anshoo Sharma, co-founder and CEO of Magicpin, in an interaction with FE. “On popular food delivery apps, you’re more likely to see slightly more up-end of the market. But if you think of a small local merchant, they don’t get discovered there at all,” he added.
Started in March 2023, Magicpin currently has over 80,000 restaurants on the platform and delivers 150,000 food orders a day. For comparison, Swiggy has 350,000 listed restaurants and averages 2-2.5 million orders a day and Zomato has about 1.4 million restaurants and handles around 1.3 million orders a day. The latter has an estimated market share of 57%, as per analysts reports.
While Magicpin has not filed its FY24 financials yet, Sharma is confident of doubling its scale year-on-year.
“In the last three years, we have doubled in scale each year and I believe we can continue to keep that trajectory of growing 50-70% year-on-year because it’s such a large market and we’ve got the frame right,” he said. In FY23, its revenue from operations grew by 83% to Rs 297 crore while losses shrank by 23.5% to Rs 114 crore.
Food delivery is currently 30% of its overall business by revenue, while the company’s main business remains the discovery of hyperlocal offline retailers and reward vouchers.
Magicpin dominates about 90% of all food orders on ONDC and has a 10% market share in overall food delivery orders in Delhi and Bengaluru, where it has decent penetration in localities. According to a joint report by Bain and Company and Swiggy dated July, India’s food delivery segment is expected to cross Rs 2 lakh crore by the end of this decade, growing at a compound annual growth rate of 18%.
To compete with the giants better, it had reduced the platform fee to Rs 5 from Rs 10 last month and does not plan to increase it in the near future, Sharma said. Both Zomato and Swiggy have a Rs 10 fee on each order. Sharma added that, on average, food orders on Magicpin are about 20% cheaper than other platforms.
“We are able to provide riders with shorter distances because the distance between our users and merchants is less and that also lets us have lower costs. The design of our business model is built around lesser distances and more density,” he explained.