Flipkart is in advance discussions with about 300 restaurants in Bengaluru for the pilot of its food delivery business. The e-commerce major is targeting to go live in the city in one to two months, according to multiple restaurant owners who are part of the pilot.

Sources indicate that the list includes large local eateries as well as quick-service restaurant chains with a pan-India presence. The offerings will be across price points.   

The discussions are being held by Flipkart directly, without an intermediary. An initial proposal to enter the category was discussed with the National Restaurant Association of India (NRAI), but the conversation did not progress beyond that, the people said, adding that Flipkart may take those discussions forward before a pan-India expansion.

FE had reported in July that Flipkart had decided to build a standalone food delivery app rather than launch as a buyer-side application on the government-backed Open Network for Digital Commerce (ONDC), a route that requires it to sign up merchants and build a delivery ecosystem on its own.

The commercial terms have shifted since the conversations began in February. Flipkart was initially offering a commission of 10-11% to restaurants with matching offline prices on the platform and a plan to run the service without discounts. The commission and the price-matching mandate remain but the app is now expected to carry discounts, people aware of the discussions added.

Discounts in the food delivery industry are funded either by the platform or by the merchant. In Flipkart’s case, the burden will vary by ticket size. On orders below `149-199, the discounts will be funded by the restaurants, the people said. On orders above `199-249, the burden will be shared, with the split varying by order value. The terms are expected to change depending on the results of the pilot, they added.

“A large portion of restaurants that are part of the pilot see that demand is higher in the value range. So it’ll be important to figure how discounting works for this pilot to be successful. Our push is for a platform that is fully independent of discounts and advertising fees,” said a person who heads operations at a large Bengaluru restaurant chain part of the pilot.

Discussions are also on around keeping listing and discovery free of advertising fees and paid promotions, with rankings based purely on customer reviews and ratings, though this has not been settled, the sources said.

Advertising revenue from restaurants is among the fastest-growing and highest-margin income streams for the incumbent platforms.

A rollout in one to two months out would place the pilot in the September-October window, more than six months after Flipkart’s food delivery plans were first reported in February.

FE had previously reported that building an independent marketplace is expected to take longer, as it requires onboarding restaurants, developing technology infrastructure and creating a delivery ecosystem from scratch.

Flipkart did not immediately respond to requests for comment.

Flipkart’s entry takes it into a market dominated by Zomato and Swiggy, which together account for the overwhelming majority of orders. According to Jefferies, the market is estimated at around $9 billion and is expected to nearly triple to about $25 billion by FY30. Competition has intensified over the past year with Rapido’s Ownly entering the sector with a zero-commission promise and a flat delivery fee per order, and Swiggy’s Toing, a value format that matches dine-in menu prices on lower restaurant take rates.