The COVID-19 pandemic has had a significant impact on the online food delivery startup business in India. When the country went into lockdown starting March 25th, 2020, the use of online food delivery apps reduced significantly. With the fear of contagion and lockdown restrictions, people preferred home-cooked meals. However, with the unlock phases, people have resorted back to online food delivery services.
The reason attributed to low business during the pandemic-imposed lockdowns was the change in consumer sentiment. During the early phase of the pandemic, when a food delivery boy was tested positive for COVID-19, the trust in the safety standards of food delivery operators was questioned, and it triggered a further shift in consumer sentiment towards home-cooked meals.
However, steadily growing on the back of stringent safety measures like contact-less deliveries, cash-less payments, delivery boy sanitization, among others put in place, the online food delivery operators managed to win the trust of consumers. Furthermore, many online food delivery operators have tried venturing into adjacent categories like pharma, groceries, alcohol, and more to make up for their lost business.
The COVID-19 Impact On The Online Food Delivery Startups In India
The COVID-19 pandemic is one in the century event that has brought about a colossal social and financial bearing on humanity, and the effects are anticipated to remain for a long time. As India now slowly and steadily embraces the ‘new normal,’ the online food delivery platforms are putting their best foot forward.
The online food delivery companies have made significant changes in their delivery methods to continue with their businesses in these difficult times. With the majority of restaurants being closed during the lockdown phases, there was a huge surge in downloads of online food delivery apps.
Swiggy, one of the leading food ordering platforms in the country, stated that by October 2020, their pan-India food delivery recovered to about 80-85% of pre-COVID levels of order value. The demand for food delivery apps was further fuelled by the ongoing cricketing season that led to a surge in orders. However, during the lockdown period, Swiggy had to let go of 1500 employees and scaled-down its multiple access kitchens.
The battle-bruised company has now adopted a multi-prong approach and has forayed into groceries and hyperlocal deliveries to make up for lost revenue. Swiggy is now offering a digital payment wallet in partnership with ICICI bank. The startup is also piloting cloud-based grocery stores and will use its delivery agents to deliver products.
Zomato, another leader in the business, sacked 500 people, which accounted for almost 13% of its workforce. Data released by Redseer, a management consultancy firm, shows that food delivery volumes tanked to 20% in March and April as compared to January 2020 and just rose to 40% by the first week of June.
Jubilant Foodworks, a Noida-based food delivery company that has stood the test of the pandemic in the country, has managed to double its market cap since March. The company holds a master franchisee of Dominos in the country.
What’s In Store For 2021?
The online food delivery business is a big opportunity in the country and will continue to be one. According to experts, the year 2020 may have pushed the businesses to an all-time low. However, it’s not a lost opportunity.
Amazon is piloting Amazon Food in parts of Bengaluru since May 2020 and will most likely operate on a similar model like Swiggy and Zomato. Amazon’s entry into the food delivery business means firmer competition for Zomato and Swiggy; however, industry experts feel that it is a vote of confidence for the market.
Google in India will be operating a third party model and has partnered for its last-mile delivery with Dunzo and other third-party APIs. However, it will be interesting to see if it considers Zomato and Swiggy as its potential competitors or partners.
The pandemic has been a trial by fire for the online food delivery platforms in 2020. The growing internet—penetration in the country and increasing demand for pre-cooked meals will see the food delivery market in India to grow huge in the coming years. However, the food business needs to transform technologically from analyzing consumer data to capturing trends is the need of the hour to improve business margins.
The online food delivery platforms will have to make more efficient models as more players join the bandwagon. It seems that competition will be tough, and consumers will have a bigger platter to choose from.
