|Pop Quiz: How many of the eight companies that entered the Unicorn Club in 2018 were online food-ordering platforms?
Hint: Day of the year!
Answer: Two – Zomato and Swiggy!
Throw in fairly well capitalized UberEats into the mix and one can quickly see that there’s a three-horse big boy race at play in the Indian online food-ordering ecosystem, all of whom gained meaningful traction in 2018 and built up fairly deep coffers. Deep coffers meant aggressive discounting. Aggressive discounting meant robust user traction. Walk-in customers dwindled. User growth thrived while unit economics took back seat. Consumers benefited. Restaurateurs struggled to keep pace. Zomato, Swiggy and UberEats continued to build robust brands and consequently started commanding lofty margins.
As per this Business Standard article, restaurants on Zomato pay an average 15% cut to the platform. This compares to the 20% and 30% for Swiggy and Uber Eats respectively. How much margin upside do these platforms have? Will restaurateurs retort? Or are they seeing higher sales volume offsetting margin pressure? Maybe 2019 will give us some answers.
One thing appears to be fairly intuitive – with ‘pricing’ as a key differentiator, platforms will not cease to discount or compete, which perhaps will continue to bode well for consumers. We suspect there is lot more to happen in this space. We will be closely watching as the ecosystem evolves. Happy ordering in 2019!
Now to today’s Top Business Stories through our End Of Day Wrap Up: