Online food delivery and hyperlocal services in India
Consisting of meal delivery and grocery delivery, the online food delivery market gets a significant share of the revenue from the former even though the practical setup in the country overlaps largely with hyperlocal services.By 2021, two major home-grown competitors emerged to dominate the online delivery market in India - Zomato from Gurugram and Bengaluru-based Swiggy, both successfully acquiring local players as part of their expansion. Others in the market include delivery services of international quick-service brands like KFC, Domino’s, and Burger King.
Navigating profitability and competition
In this fiercely competitive market, industry leaders have employed strategic maneuvers to fortify their positions. Zomato’s acquisitions, including Uber Eats, and its expansion into grocery delivery services demonstrate a multifaceted approach. Additionally, in 2024, Zomato gained approval to operate as an online payments aggregator, indicating a move towards providing a more seamless and integrated customer experience. Meanwhile, Swiggy’s extensive presence across 500 cities provides a competitive edge, enabling it to secure a significant market share.However, profitability remains a critical challenge for food delivery businesses. Inflation has been exerting immense pressure, impacting their bottom line. Westlife Foodworld , McDonalds’ India's parent company, experienced a decline in quarterly profits due to increasing commodity prices. To mitigate the business loss, the company introduced a discounted meal to boost sales, doing little to boost overall revenue.
Food aggregator dominance in the market has led companies including Yum Brands, operator of KFC, Pizza Hut, and Taco Bell, to readdress delivery capacity challenges. With high commissions and the Goods and Services Tax, along with the risk of brand dilution, restaurants inevitably spend more than they would like.
Despite these challenges, the delivery food delivery market in India is set on its path of continued growth, supported by a robust start-up economy, and ever-increasing consumer demand.
