The country’s online food order segment witnessed a 30% jump in daily order handling in the first quarter of 2018 against the previous quarter.
The country’s online food order segment witnessed a 30% jump in daily order handling in the first quarter of 2018 against the previous quarter. According to data from Redseer Consulting, an internet-focused consulting firm, the number of orders handled by the leading food delivery companies in the first three months of 2018 was an average 600,000, against 460,000 orders in the October-December quarter of 2017. The growth for average order handling in the last quarter of 2017 was 15%. The data includes companies operating in both the cloud kitchen model and the restaurant aggregator model.
One of the major reasons for the strong growth in the order is primarily due to the promotional activities conducted by players like Swiggy and Zomato, aiming at the recently-concluded Indian Premier League cricketing season. According to Redseer, the major portion of the overall sales number in January-March was contributed by the steep increase in the month of March.
The average daily orders handled by majors like Swiggy, Zomato and FreshMenu during the July–September quarter of 2017 was 400,000 daily. On an annual basis also, the food ordering segment has seen good growth in the last one year. For example, the average daily orders handled by the companies in January-March 2018 witnessed a growth of 93% when compared with the same period in 2017. Similarly, the daily orders in October-December witnessed an annual growth of 70% in 2017. The average daily orders in October-December of 2016 was about 270,000 and the same in January-March 2007 was 310,000 orders.
The online food delivery market was pegged at $700 million in 2017. Cities like Bengaluru, Delhi and Mumbai majorly contributed to the business. “The daily order numbers of the food delivery segment is increasing in the country. During the first three-month period in 2018, there was an increase due to the IPL season. In this segment, quarterly daily-order growth was about 10-15% in the earlier quarters,” said Vaibhav Arora – associate general manager, RedSeer Consulting.
The addition of more restaurants and the increased focus of captive delivery by the leading players have also fuelled the growth in the number of average orders handled by the players. Analysts who track the segment also state that customers who were ordering peak-hour meals like a dinner or lunch have increased the number of orders during non-peak hours, also as the average delivery time has come down. “The increase in the number of new customers and the focused captive delivery models are helping the growth of the business. The restaurants are also now realising the value of the aggregator model of food delivery,” added Arora.
The food delivery sector primarily consists of two major categories — the cloud kitchen model and the restaurant aggregator model. Companies like FreshMenu fall in the first category while companies like Swiggy and Zomato are in the latter segment. The food delivery business, which witnessed a bloodbath and restructuring in 2016 because of the dearth in funding, is now seeing interest from investors. The segment has also become hot due to the entry of new players like Uber Eats and the re-entry of Ola through the acquisition of Delivery Hero’s Foodpanda.
According to Venture Intelligence, a research firm, in the first quarter of 2018 alone there were 11 deals amounting to $311 million in the food tech space. With the fresh inflow of capital, the companies are widening their reach to smaller towns and also expanding, introducing new business models especially focusing on the captive delivery model.
By- Pradeesh Chandran