Ad-dendum by Sandhya Shama Rao: Food for thought

Updated: December 8, 2015 5:18:13 PM

Changing urban lifestyles, technology and an insatiable appetite for variety have opened up a whole new world in the online meal delivery space

Changing urban lifestyles, technology and an insatiable appetite for variety have opened up a whole new world in the online meal delivery spaceChanging urban lifestyles, technology and an insatiable appetite for variety have opened up a whole new world in the online meal delivery space

“Hungry kya? Get your favourite food in three simple steps.” That’s how easy it has become to get food delivered to your doorstep. No more pain of shopping for provisions, getting up early to cook or calling up mom for a quick recipe to stir up something edible. A desktop or an app on your mobile phone is all you need to satisfy the gourmet in you, every day.

According to a recent IAMAI-IMRB report, the online food delivery market in the country touched `350 crore in 2014. It is showing an impressive growth of 40% on the back of strong traction in metros like Delhi-NCR, Mumbai and Bengaluru. We took a look at the existing business models to try and understand consumer needs, preferences and how they are being fulfilled by existing players. A quick scan revealed five categories — tie-ups with restaurants, tie-ups with restaurants but with own delivery fleet, tie-up with caterers, tie-up with local chefs and an Integrated Supply Chain (ISC).

For those who love trying out new dishes but simply don’t have the time or inclination to go ‘restaurant hopping’ every day, models like Zomato and Foodpanda are the answer to their cravings. In this model, the aggregator has tie-ups with local restaurants across the country. All the end-user needs to do is search for the restaurant or menu of his choice and place an order from his desktop or mobile app mentioning his location. And the restaurant delivers it to him right at his doorstep.

But the restaurant model invariably involves delays in delivery. Hence, aggregators like Hungerbox, Swiggy and Foodpanda have ventured into the delivery space as well — to ensure excellence in customer service. Hungerbox not only has its own fleet for pick up from enlisted restaurants, it also has tie-ups with third party agencies like Roadrunnr for delivery till the last mile. Swiggy, on the other hand, has equipped its delivery boys with smartphones and an app powered by routing algorithms to create an efficient delivery system.

For those bored of eating the rich and monotonous fare dished up by restaurants, a model which can offer simple wholesome food is also available. In this model, the aggregator has tie-ups with caterers for meal preparation but takes care of everything else — from deciding the menu, taking orders, packaging and delivery, like Spoonjoy. Aggregators like these mainly compete with unorganised office meal delivery ventures where they seek to serve homely food as opposed to restaurant food.

And if you happen to be pining for ma ke haath ka khana, there is a delivery model for that as well. Here, the aggregator has tie-ups with local chefs comprising mostly housewives like Eatlo in Bengaluru. Each chef cooks from his/her own kitchen, offering simple home-made fare. Delivery is made by the aggregator with the photo of the chef stuck to the box to ensure accountability and indirect quality control.

ISC is another model where the aggregator is in-charge of everything, end-to-end. Here, food is cooked in the aggregator’s own central kitchen by his own chefs based on a pre-decided menu, and delivered through his own delivery boys. Eatongo and Faasos which belong to this model, are very popular among office-goers looking for a quick and healthy snack while at work.

But the story does not end here. Models are also emerging for supplying chefs to individual homes and models organised by menus like those offering diet food or only breakfast (for example Brekki)and so on. So, what has led to this huge demand for online meal delivery? Findings reveal that it is more of an urban phenomenon in keeping with changing urban lifestyles. With increasing penetration of the internet and smartphones, coupled with software that integrates kitchens, payment and logistics, ordering food online has never been easier. Yet another reason is the desire to experiment with different cuisines. Needless to say, a majority of the consumers are young office goers living alone or Double Income No Kids (DINK) couples who are either too busy or lazy to cook.

In terms of where the industry is headed in the near future, a shakeout seems imminent. With funding for online meal delivery drying up, one can expect to see consolidation in the coming years.

Already many have begun to feel the heat. According to reports, Spoonjoy has wound up operations in Delhi and parts of Bengaluru, while Dazo has completely closed down, pan India. In order to survive, players will have to crack a model where technology, packaging and delivery costs can be kept to the minimum.

Also, an ability to deliver without consideration for the minimum order value is needed. Finally though, the main focus area needs to be — building a strong brand. A strong brand would not only result in product differentiation but also help build an emotional connect with the target group resulting in customer acquisition and loyalty.

The author is general manager, brand & business strategy at Vertebrand Management Consulting

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