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Posted by on Mar 2, 2016 in Startups | 0 comments

Will Online food ordering platforms survive?

These days, online food ordering platforms mushroom everywhere. What is even more surprising is the fact that they are able to raise some serious funding from the investors. Let’s look into three such major applications in India and analyze their business model.

Zomato – It started as a restaurant review application providing user curated reviews on the food they cherished at their favorite restaurant along with rating, menu and photos. It thrived and thrived before evolving into a food ordering platform. Infact, Zomato’s presence is enviable not only in India but across the globe. Their USP is review+food ordering. They leave the food delivery to the individual restaurants to be taken care.

FoodPanda – The king of offers, I should say and they can afford it as their parent company Rocket internet is an E-Commerce biggie and is behind some of the huge brands in the sector. They are a food ordering platform that makes restaurants and customers use their platform. They provide you with a good mobile app which lets you order food easily. But, the killer shot is the seemingly insane offers which Foodpanda comes up with very frequently. I am sure they have blown investor money in a big way. Their USP is offers+food ordering. Again, the delivery is left to the individual restaurants to be taken care.

Swiggy – The new kid on the block that has bitten some serious investor money in a very short duration and in quick succession went in for more than one round of funding. These guys are very similar to Food panda except for the fact that they do the delivery themselves. Their USP is food order+delivery. I have been using Swiggy quite regularly and they look very promising. The best thing that I have experienced in Swiggy is that you can actually track their delivery boy in a map right from the moment you place the order. This is quite interesting and vanishes quite a lot of anxiety in you.

Now, tinyowl looked promising but vanished. It wasn’t a bad platform either. You may be wondering what the future holds for these maverick food ordering platforms and how they are going to make profits, which seems a really distant dream for them at the moment.

They have to compete against the individual online ordering apps that is being released by restaurant biggies these days combined with their efficient delivery mechanism. Another factor to consider is that Indian customers are comfortable picking up their phone for ordering and making cash payments as they consider online payments to be unsafe, though the trend is changing slowly with the introduction of technology like mobile wallets etc. There are also some small time players in the online food ordering space and their scope is restricted to the city which they exist.

My personal take is that it looks very bleak for these applications to really make big profits in the short run as they have to first recover the cost they have spent to acquire the customers. The loyalty of Indian customers to a particular platform is questionable as we give more importance to the current offers and value for money deals. Hence, the huge customer acqusition cost upfront also doesn’t seem to be a good strategy either.

It is really tough time ahead for these folks, but who knows they may be the next “big thing” in the E-commerce space. For this to happen, the online app usage habits of the Indian customers should change and internet penetration should happen across tier 2 cities in India.

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