Online Food Aggregator Wars!

The emergence of digital technology is redefining the market. After shopping for clothes, books, or furniture; customers are now accustomed to the ease and flexibility of ordering online through a website or an application. As a result, they demand the same experience when it comes to ordering food as well. In order to meet customer’s demands and expectations, online food ordering platforms are increasing the accessibility and convenience to enable customers to order their favorite food from several different restaurants just with a single tap on their phone.

Who are food aggregators?

Food aggregators act as a bridge between customers and restaurants. Building on the conventional food distribution model, food aggregators provide access to multiple different restaurants through a single online portal. Customers can log in to the same and can easily view the menus of a variety of food outlets, compare rates and can even view the feedback given by other customers.

The aggregator takes care of the ordering aspect and some even provide delivery agents to make the food reachable to the customer. In return for this, they charge a fixed margin from the order; which is to be paid by the restaurant. Along with managing their own business, the food aggregators help the restaurants to cater to more customers without even occupying their space. Apart from facilitating delivery, the food aggregators provide several other benefits and rewards to customers and restaurants as well.

India: Zomato and Swiggy

Swiggy was considered a late entrant when it entered the Indian food delivery business in 2014 compared to Zomato who had been there since 2008. However soon after entering the market, Swiggy leaped its way to become a million-dollar Valuation Company in a short span of just four years. Swiggy’s leap of success led Zomato to buckle up and soon they too started investing in advertising and streaming services.

Since its inception in 2008, Zomato which includes Ant Financial, Sequoia Capital and Temasek among its investors has raised $610 million in total, according to data cited by Crunchbase which collects start-up information. Swiggy which was established six years later has already outstripped it by raising $1.5 billion in total from investors like Naspers, China’s Tencent and Meituan Dianping and about $240 million of it came from the secondary offering.

Swiggy has been leading the Indian market in terms of the number of orders placed per month. Indians place about 50 million food orders each month via these apps combined. Out of which, Swiggy bags around 25 million of them, while the rest 19 million are ordered on Zomato. Swiggy has always been focused on building a strong logistics team while Zomato focuses on enhancing the overall customer experience.

Growth and expansion strategies

In an attempt to expand into an Amazon-like marketplace, Swiggy opened swiggy stores and introduced its pilot program after collaborating with over 3,500 local stores in Gurugram. The brand also has strong relations with leading names such as Guardian Pharmacy, Health HK Ark, Apollo Pharmacy, Ferns N Petals, and Liscious.

On the other hand, Zomato focuses on developing a complete ecosystem for foodies in the country by providing users with delivery and dining choices. Not just that, it has also ventured into streaming food shows on the Zomato app to add another dimension to the company’s offerings.

How Swiggy scaled itself

– To exploring new categories, Swiggy has focussed on developing their delivery ecosystem. They use their delivery workers to perform errands for those who don’t have the time or energy to do it themselves. They aim to provide convenience and comfort to their customers. Given that they already have immense manpower at their hands, they can easily expand into the B2B area. It’s similar to running errands for other companies rather than customers.

– Swiggy Daily, a meal subscription service similar to the home-style food, has been introduced in Gurugram, providing customers with access to a selection of home-cooked meals prepared by home chefs, tiffin service providers, and curated vendors.

– Swiggy also launched the Swiggy Access Kitchen, the ready-to-occupy kitchen that offers restaurant partners rent-free access with all the requisite amenities. Swiggy aims to provide restaurant owners with assistance in optimizing their kitchen with regard to demand forecasting, stock planning, and order editing, etc.

– On social media, Swiggy leads its competitors with a total of 174 K followers Every Swiggy campaign have been exceptional, as it’s highly entertaining and interactive.

– Campaigns like # EatYourVeggies, # SuperSwiggy, # EarnYourCheatMeal uses witty one-liners and puns to convey the notion of eating healthy.

How Zomato scaled itself

Many who claim that Zomato has lost the fight against Swiggy would do well to remember that Zomato operates in multiple countries and has built a different niche by focusing on Zomato Gold, which met remarkable success with diners.

– Zomato is aiming to be a country- wide destination for foodies. The focus of Zomato is on food and food alone. And it wants to capture the entire value chain-from discovery of restaurants to delivery.

– Zomato, by releasing ‘Zomato Originals’ has entered the streaming network market in India. It is made available on the app under the ‘Videos’ tab and its ideal for mobile app viewing since they are shot in a vertical frame. The length of the episodes ranges from 3 to 15 minutes and will be covered by various categories such as cooking shows, recipes, and restaurant stories.

– Zomato develops creative schemes to keep the clients engaged. The Zomato Gold membership is an exclusive loyalty program that provides customers with BOGO (Buy One, Get One) and 2 + 2 complimentary drinks to provide an absolute dine-out experience.

– Zomato sources pesticide-free clean ingredients for restaurants, including meat, vegetables, and consumables, with a profit margin of nearly 15 percent, through HyperPure program in Bengaluru.

– Food technology firm Zomato also cracked an all-stock deal to buy Uber’s food distribution business in India. The contract offers Uber ownership of 9.99 per cent equity in Zomato. The deal was valued at $172 million as reported by Bloomberg.

Europe: Just eat and Deliveroo

Britain prefers takeaway food. Inspired by the vast array of international cuisine adopted in the country, the UK spends nearly £ 10 billion a year on Chinese, Indian, and other pizza-like takeaway foods. Comprising tens of thousands of small, independent takeaway restaurants, the industry has now been brought together by firms that operate effectively by aggregators like Just Eat and Deliveroo.

In May 2019, Deliveroo raised the biggest fundraise ever to a whopping $575 million, bringing the overall sum of funds raised up to $ 1.5 billion. It was led by Amazon and backed by Fidelity, Greenoaks Capital, and T. Rowe Price will be used to extend the product deals and regional reach of the British food delivery business. However, two of Deliveroo’s largest competitors were accepted for their own £6.2 billion deal, taking up an additional $756 million to battle.

The UK competition watchdog officially gave a nod to the merger, initially valued at $10 billion but now priced at £6.2 billion, between UK’s JustEat and Takeaway.com from The Netherlands.

Business model of Just eat

Just Eat makes much of its money by charging a fee on every order made through its website to its restaurant partners, offering more sales through its app, and assisting with promotional work-likes. Customers order using the Just Eat app or online and this is transmitted to the restaurant by the company’s technology. They are not responsible for the actual delivery or distribution of the ordered food which the restaurant still handles.

– Just Eat achieved 92 percent of its annual revenue in 2017 from the commission that restaurants pay on their online or smartphone app orders, with 2 percent coming from the one-off access fees that restaurants are charged to join their network. The remaining 6%, which is rising, comes from ancillary resources such as its highest advertising placement company, which would drive restaurants to the top of the list.

– Just eat has continued to be rolled out at home and abroad, with over 23,000 app installments by the end of 2018 in the UK, Canada, Denmark, Ireland, Italy, and Spain. Currently, 69 percent of all orders in such countries are managed by Orderpad out of which 77 percent in the UK.

– Just Eat has formed relationships with restaurant brands such as Pizza Hut and has been working on its experiential operation with agencies, including Synergy, tpf and Verve. @JustEatUK has 126,000 followers on Facebook, 1.3 million shares on its Facebook page, and more than 10,000 followers on its Instagram site.

– As a part of the marketing and engagement process, in 2019 Just Eat brought back its Food Fest to London welcoming visitors to enjoy three days of food and live music. Desert Island Dishes was the theme that inspired tourists to think about their ultimate meal. Just Eat helped make the choice simpler by serving some of the most common takeaway dishes in Britain. The beach-inspired atmosphere offered space for the festival-goers to relax while trying world cuisine, sipping cocktails, and enjoying live music.

– The Just Eat Jukebox activation used a tailor-made touchscreen app as part of 2018’s X Factor sponsorship to give participants the chance to sing along to the hit songs from previous X Factor contestants. A video of the event was recorded and compiled into a gif which was then delivered to each fan directly via email. This could then be posted on Twitter for a chance to win a pair of tickets to the X Factor final. During the X-Factor run, the jukebox shows up at venues across the UK.

The business model of Deliveroo

Deliveroo’s main market is in the UK where it works in more than 100 cities and towns, delivering food from more than 10,000 restaurants with a 15,000-rider fleet. But in Australia, Belgium, France, Germany, Hong Kong, Ireland, Italy, the Netherlands, Singapore, Spain and the UAE, the company is also active.

Deliveroo PR library imagery © Mikael Buck / Deliveroo

– Customers put an online order or use the Deliveroo app that delivers the order to the restaurant. A Deliveroo driver then picks up the food from the restaurant and brings the food to the customer and takes over customer service efficiently. This charges consumers £2.50 for each order, in addition to the commission charges from the restaurant. Deliveroo’s concept of charging consumers and the metropolitan outlook has seen it becoming synonymous with a more affluent customer base.

– Customers may also apply to a premium loyalty card that requires them to pay one flat charge every month (£8.99) or every annum (£89) and reduce the cost any time they purchase something. Notably, Deliveroo only takes payments by card; with no cash payment option like Just eat.

– Deliveroo has begun to infringe the space of Just Eat after launching a new service called Marketplace+ that will allow restaurants to sign up with their own delivery operations which is similar to Just eat’s prime customer.

– While the assistance it offers to restaurants is growing, allowing them to get subsidized energy bills, Wi-Fi clients, printing or packaging services, Deliveroo’s business model is focused on delivering logistics to restaurants that may not otherwise have a delivery service, allowing them to optimize demand by centralizing processes, enabling purchases and digitizing business.

– Deliveroo says the delivery time has now been cut by 20 percent, enabling restaurants to accept more orders and riders to complete more deliveries while reducing the time it takes for consumers to get their meals.

– @Deliveroo has 47,500 followers on Twitter, 660,820 likes on its Facebook page, and 38,200 followers notched on its Instagram site. Deliveroo once installed a burger’s advertisement outside the Old Truman Brewery in east London in March. Passers-by might pick up a beef, chicken, or vegetarian burger made by one of the restaurant partners at Deliveroo. In July the brand celebrated London Pride by briefly changing its name to ‘Deloveroo’ and in collaboration with restaurants serving a range of rainbow-themed dishes.

USA: Doordash, Grubhub, Postmates and UberEats

Analysts in the US report that only 10 percent of restaurants accept orders online. The 90% of the market left to win has triggered a gold rush by companies seeking to cash in on it. There are four major services for takeovers and deliveries: Uber Eats, DoorDash, Postmates, and GrubHub.

These thriving businesses are in the spotlight during the COVID-19 era — and with the latest news that Just Eat Takeaway will acquire Grubhub for $7.3 billion — while Uber plans to acquire Postmates in an attempt to stabilize market share and improve profitability. The firm is still looking for opportunities to diversify its current market model, and recently announced plans to start a U.S. grocery operation in July 2020. Elsewhere, DoorDash’s collaboration with CVS is the first pharmacy distribution move the service has made.

Doordash and its partners received 45 percent of the meal delivery revenue from U.S. customers in June 2020, while Uber Eats beat out Grubhub with just over 24 percent for the second position. In June, Grubhub and its subsidiaries, including Seamless and Eat24, accounted for just 22 percent of U.S. consumer meal delivery expenses. Postmates, the fourth major U.S. meal delivery service, confidentially applied for an IPO last winter and received $225 million last falls. Postmates won in June, 8 percent of the U.S. meal delivery market.

Grubhub

Grubhub’s platform has over 300,000 restaurants in 3,200 cities across the United States. Delivery fees are often less than $7, but for every $100 you spend, Grubhub+ allows one to get unlimited free delivery from thousands of restaurants and 10 percent cashback. Although their app is much more active than most, their robust search tools will help a customer find just what they want. One can check by food category, and filter out results by size, rank, distance, and delivery time and delivery fee.

GrubHub has a benefits tab tailored for repeat users, with different incentives. 73 percent of Grubhub’s customers did not use other meal delivery services in the second quarter of 2018. It fell to 45 percent two years later as alternative services attract users with innovative restaurant offers and promotional prices.

Uber eats

Even though Uber Eats came on the scene a little later than his rivals — beginning in 2014 — he proved to be a formidable rival. Uber Eats operates internationally with 320,000 restaurant associates in over 500 towns. Delivery prices are easy to find when browsing through the Uber Eats app and usually appear to come into a range of $0-$5.49. But to further reduce prices, the Eats Pass provides unlimited free delivery for one’s region as well as 5 percent off orders of $15 or more. Customers can also benefit from special promotions for new users, such as 40 percent off your first four orders. According to Uber, the total delivery time is less than 30 minutes.

The Uber Eats app is pretty user friendly and easy to use. Delivery fees are easy to find on the main search page, and one may even narrow your choices by size, delivery fees, and even dietary preferences such as vegetarian, vegan, and gluten-free.

Doordash

DoorDash, established in 2013, is now available in more than 4,000 US locations, with 300,000 restaurants. Delivery prices on DoorDash vary as with Grubhub but usually range from $1.99 to $8. The DoorDash plan called as DashPass provides zero delivery charges for eligible restaurant orders, as well as free delivery costs and discounted service charges on orders above $12.

Additionally, DoorDash offers several deals and discounts often giving first-time users priority — such as free delivery for orders over $10. You will see their ratings, delivery costs, estimated time, and distance from you when you tap on a restaurant. Menus can be conveniently navigated and separated by common products, followed by regular appetizers, desserts, etc.

For many restaurants, the partnerships pay off. The Cheesecake Factory and Chipotle have credited DoorDash publicly with increasing their sales. Data shows 27 percent of the sales of The Cheesecake Factory came via DoorDash in June 2020.

Postmates

Postmates is popular among the food distribution companies, largely because of what they offer- “anything from anywhere.” Launched in 2011, Postmates currently works in 4,200 US cities and has more than 600,000 enterprises on their website.

Postmates’ delivery fees fluctuate based on the time of day — increased during busy times, which they call “blitz pricing”. Delivery costs will range from $0.99-$3.99 for partner retailers everywhere and $5.99-$9.99 for everything others. However, you can receive free delivery for orders over $12 with their subscription service – Postmates Unlimited, no extra fees during “blitz” hours, as well as additional perks and offers.

The Postmates app has a much-simplified interface which makes it easy to use as well, Customers can choose from three choices at the top of the screen – Delivery, Pickup or Party which is a feature that provides free delivery from currently trending restaurants in the app; eligible for orders over $10. One can even scan for categories such as fast food, beer, Mexican, and more. Postmates still provides 24/7 delivery, unlike any of the other apps, so long as the restaurant or shop you are ordering from is already open, we can get what we want.

Timeless lessons to retain market position:

New distribution innovations headed towards expanding food delivery to a new community of restaurants and customers. New-delivery companies are widening the overall market instead of dealing exclusively with the aggregators.

– New distribution systems, which by storing specific customer data personalize the ordering experience, are more sought after. When customers sign up, 80 percent never or rarely quit for another site, creating a clear winner, where the payout goes to the player who can sign up the most customers in the shortest period of time.

– Delivery speed is the biggest customer satisfaction aspect, with an average 60 percent of customers across markets citing it as a key factor. The maximum processing time shouldn’t reach more than 60 minutes mark.

– For the online outlets, the highest-volume days have been Friday, Saturday, and Sunday, when generally 74 percent of orders are posted. Most orders, around 82 percent are placed from home, while the office people place only 16 percent.

– Convenience is again a crucial differentiating factor. Customers are more likely to prefer apps that are more user-friendly and easy to navigate. An app that easily helps to look for outlets as per food preference and lists all the offers and discounts simultaneously are the ones who are most likely to retain a customer.

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