Tomato, no…Zomato IPO, it’s time to look at the Indian takeaway business!

A new hot spot.

In India, food delivery is already a big business.

On the three mainstream local take-out platforms, Zomato, Swiggy and Food Panda, the total monthly average number of orders has exceeded 100 million.

This is not easy for India, which has long been ruled by Dabawala in terms of diet. “Dabawala” is a form of food delivery similar to long-term workers. Through these dabawalas, who wear dozens of boxes and walk around the streets by pushing or pushing an iron rack every day, Indians can get them at work. To the family cooked meals from home.

This ancient form of monthly meal delivery has been followed for more than a hundred years, and 5,000 meal delivery staff can deliver more than 200,000 meals a day.

Traditional Dabawala
Traditional Dabawala

But traditions slowly need to make room for new things.

I moved from Chennai to Prit in Bangalore last month. Because my work always needs to move around, I hardly cook my own food at home. Zomato became a way of life in another sense. “I don’t cook. The takeaway platform gives me more choices. For example, some other restaurants are better at making pork and broccoli food.”

And Zomato also IPO on July 14 and received a full subscription of US$1.3 billion on the first day. This local start-up will become a new listed company in India.

Zomato, established in 2008, was a platform that focused on restaurant discovery and evaluation in its early days, similar to the domestic public comment. It was not until 2015 that founder Goyal made up his mind to launch a distribution business. Zomato gradually approached the current take-away platform-based form. The landmark event was the acquisition of Uber Eats India for US$206 million in early 2020.

At present, Zomato’s income mainly relies on the take-out business, advertising and subscription-based Zomato Pro membership income. The information in the prospectus shows that the current Zomato business’s take-out income accounts for 75%. As of March 31, 2021, Zomato has operations in 525 of the 4000 cities and villages in India, has 389,932 active restaurants, and a delivery network with an average delivery time of less than 30 minutes.

In terms of the number of users, the average monthly average user of Zomato’s food delivery business has reached 32.1 million, and the average order value has increased from 279 Indian rupees (about 24 yuan) in April 2020 to 398 Indian rupees (about 34 yuan) in December. RMB), an increase of more than 42%. In addition, discounts on take-out orders have also been significantly reduced, which means that take-out has become a more proactive behavior in India.

Tomato, no...Zomato IPO, it's time to look at the Indian takeaway business!

India’s current population has exceeded 1.36 billion, and it is generally expected to surpass China in 20 years to become the world’s most populous country. In this new land of mobile Internet, Zomato is not without rivals, even it plays the role of a chaser to a certain extent.

Swiggy, which appeared in 2014, has been focusing on food delivery and distribution in printing areas since its launch, even one year earlier than Zomato. This start-up company, 6 years younger than Zomato, is currently on a par with the latter in the food delivery business, becoming the second pole in the Indian food delivery market. Swiggy also received a new round of financing of nearly US$800 million in the first half of this year. If it is rumored that SoftBank’s next investment of US$450 million can be realized, Swiggy’s overall valuation will exceed US$5 billion, not far behind Zomato. .

But looking at the timeline longer, Zomato and Swiggy are not completely similar.

Zomato has transitioned from a review platform to an aggregation platform with delivery capabilities. The core has always been around catering and online experience. This can be seen in its rapidly expanding distribution area and the number of cooperative restaurants. And in 2019, Zomato launched the Hyperpure platform, which is also intended to serve restaurants settled on the platform to optimize their raw material procurement chain.

In contrast, Swiggy, which has prospered from food delivery, has more diverse attempts.

In the same year that Zomato launched the Hyperpure platform, Swiggy launched the physical store program “Swiggy Stores” and conducted a pilot program in Gurgaon, a relatively leading city in the local financial industry in India. A Swiggy executive once revealed to the outside world that “Swiggy Stores does not belong to the groceries segment. Grocery is just one of the services provided by Swiggy Stores. We want to meet all the daily needs of people living in the city.” . And this daily demand includes pet food, flowers and even health products.

Also in 2019, Swiggy began to get involved in a more professional logistics business. One year after the acquisition of local delivery startup Supr Daily in 2018, “Swiggy Go” came out to cooperate with Swiggy Stores to complete the last mile delivery of daily goods.

Tomato, no...Zomato IPO, it's time to look at the Indian takeaway business!

India, which has a huge population but still has a low smartphone penetration rate, has long been regarded as an emerging market with great potential from a business perspective. As a relatively narrow market, takeaway delivery cannot escape the winner-take-all situation. Zomato has expanded the market in 200 cities in half a year, and both platforms, including Swiggy, have been using subsidies and discounts to lose money to make money. Before 2020, Zomato and Swiggy will lose about $0.1-0.4 for each order. .

But the two companies still have money to burn, and at least the international investors behind them are still optimistic about this far-unfinished market for a long time.

If you look at the investor lineup behind Zomato and Swiggy, Zomato is backed by Ant Group, Sequoia Capital, Temasek, and Swiggy has received capital injections from Wellington Management, Naspers, Meituan Dianping and Tencent. It is worth noting that among Chinese Internet companies, Alibaba and Tencent are once again separated from each other, just like the two e-commerce (including cloud) investment wars in India and Southeast Asia. Meituan Dianping, which relied on Dianping and food delivery business to gradually stabilize the local life barriers in China, also participated. It invested in Swiggy for the first time in 2018 instead of investing money in Zomato, which is more similar to itself. From this point of view, after Alibaba’s is lagging behind Meituan in China, the two have a new confrontation in India.

The eager attention of Chinese Internet giants may mean a judgment that the emerging Indian market will be more like a new Chinese market when it matures in the future, rather than the US market. Here, the competition for local life business will only become more and more decisive.

Popular takeaway platform in India
Popular takeaway platform in India

But for some locals living in different cities in India, the takeaway software they are using is still not so comfortable.

Prit prefers Zomato, because Zomato can provide more high-quality restaurants and brand choices, compared with Swiggy, which focuses on Indian restaurants. However, he sometimes encounters situations where the takeaway items are not delivered or mixed with others. “I think there should be some compensation measures such as refunds or discounts, but the attitude of the customer service is very poor, and sometimes they are not listening at all. This is a distress for Prit, who now basically relies on take-out for lunch and dinner every day.

For Imran, who lives in Mumbai, his trouble lies in the annoying traffic jams there. In a 2019 “Tong Teng Traffic Index” released by the Dutch company Tot Teng, Mumbai became the most traffic congested city in the world today, and the capital New Delhi ranked fourth. This macro ranking affects the residents of the city, and one of the problems is the overtime delivery of the food.

“Although the delivery of takeout is much faster than before, it still often overtimes, usually about 15-30 minutes late,” Imran said. This contrasts sharply with Zomato’s claim that the “average delivery time is less than 30 minutes”.

Imran returned to the countryside after falling into the epidemic in India, and he basically said goodbye to the takeaway that he was accustomed to. “Take-out services in big cities like New Delhi, Bangalore and Chennai are very common,” Imran said. “But the village I am now in is not within the scope, so I can only cook by myself.”

The epidemic that began last year has accelerated the popularity of online ordering and delivery services in India. However, large cities that are too crowded and backward areas with excessive development costs are putting pressure from both ends to squeeze out the difficulties faced by this highly potential market. Bureau. Doing food in India is a good business that a discerning person can tell, but it is far from an easy business.

Posted by:CoinYuppie,Reprinted with attribution to:
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