Food delivery e-retail has come from strength to strength in India. Increasingly Indian households are now using various apps to browse through a list of restaurants (and cuisines) to order the food of their choice and get it delivered to their doorsteps. The growth in the industry has been backed by the increase in the migrant millennial workforce in the cities, higher participation of women in the workforce, and the overall rise in disposable income and internet penetration.
Like other e-commerce businesses, the pandemic has also helped the food delivery businesses in India. As dining-out was not possible, ordering food through App was the only possible choice for many. The norms of social distancing that continued further after the lockdown suspension, have also given impetus to food delivery businesses.
Though most of the regular retail and F&B operations have resumed in the country, the food delivery apps continue to gain popularity, as they offer a convenient option to order food online.
As per the market research by The India Watch, the aggregate revenue by top players amounted to USD 1287.1 million in FY 22. The market has grown at a CAGR of 44.27% between FY 19-22. The total GMV amounted to USD 5598.4 million in FY 22, jumping significantly from USD 1866.9 million in FY 19.
The market is duopolistic in nature with Swiggy and Zomato controlling 92.1% of the market share. This is a further shift from FY 19 when both major players contributed to 81.4% of the total market.
However, believing that the market will continue to act in a similar fashion with limited scope for other players to thrive might be far from reality. There is ample space for other players to enter, thrive, and evolve. The overall food delivery market in India is just the tip of the iceberg, and there is enough headspace to grow both horizontally and vertically. Already many players through innovative ideas are expanding their foothold in the industry.
Key Insights on Food Delivery E-Retail
Key Investments, M&A, and Tie-Ups
The Way Forward
India’s online food delivery platforms will continue on an upward growth trajectory, stemmed by general uptrend in overall online consumption, increased population of migrant working millennial bachelors & students and working couples. Besides higher demand, the supply dynamics will also favor the business.
Although COVID-19 has been a setback for the business, it has also introduced remarkable behavioural changes amongst millions of households in India. This is going to help numerous online retail categories including food delivery.
The overall space will be competitive and cash intensive. Hassle-free ordering, attractive UI/ UX, discount offers, and cohesive forward and backward integration will be essential to winning in the competitive landscape. Besides platforms need to focus also on basic parameters such as quality of food, taste, packaging, hygiene, and timely delivery. Besides, food ordering platforms, cloud kitchens will also gain prominence.
The leadership position held by Zomato and Swiggy might be challenged in the future if Amazon decides to scale up in the business. Amazon with access to robust consumer data and an extensive on-ground workforce, can shift the rules of the game.
There will be space for other smaller players to enter and scale-up, especially at the local level. In individual cities such as Bangalore, Mumbai Metropolitan Region, etc. new players are coming up to meet local/ city level demand. The market will also expand into smaller towns, which is a positive sign. Currently, ~ 70% of the market is run by top-8 Indian cities. However, the concept of food delivery is picking very fast in smaller towns marked by more than 200% growth in the past 12 months. In the foreseeable future, Tier 2 cities will also drive growth. Besides national-level players, this will unlock opportunities for local entities.
How The India Watch can Help?
The India Watch is an India-based market research and data advisory. The company works with businesses, investors, start-ups, etc. to offer tailored market studies, custom data, valuable insights, etc. We also help our clients with growth consulting, strategic insights, feasibility analysis for new businesses and ideas, etc. Investors & PE players also hire us to get valuable insights and information before taking key business decisions. For any query, feel free to drop us a mail at firstname.lastname@example.org