The Rise of Online Food Aggregators in India

Remember the time, when you had to rush through the traffic and somehow reach a restaurant, only to find that it is filled. Or the time when you painfully found that your favorite dish is out of stock. Or the agonizing decision to skip your favorite TV show to eat from outside. We all have experienced one or all of these at some point or the other. But these are all becoming myths, thanks to the internet.

The internet has changed our life as we knew it. Today we are accessible to news, information, entertainment and much more at the click of a button, anytime anywhere. The advent of social media opened a new horizon to us, whether to find new relations and friends or to rekindle the old ones. That is when companies and firms began to realize the potential of internet to expand their business thereby resulting in ecommerce. E-commerce sites revolutionized shopping and took it into a new level. At once we are provided with thousands of choices for each and every item we need within the comforts our homes. As the e-platform’s popularity increased, more and more items and products became available to buy online. From groceries to automotive parts, anything we ever needed became available. So it was only a matter of time before the food industry followed suit.

Home food delivery system has been established over long years. Traditionally, customers place their order via phone calls and the restaurants make the subsequent delivery. But this system had many drawbacks. First of all the customers usually ordered dishes or items they are already familiar with. They were wary of trying new items as they weren’t confident to order something without knowing the complete details. Moreover customer experience depended a lot on the communication expertise of the telephone operator at the restaurant. Also the lines tend to get busy during the busy hours thereby making it difficult for the customers to make an order. The restaurants also had problems tracking and dealing an order.

But with the advent of internet and smart phones with every individual, things took a better turn. Now customers are able to place an order on the go without any previous hassles. Through online, the restaurants are able to display their menu, which makes it easier for the users to order and even tempt them to try new dishes. Also another great advantage is that the problems associated with the language barrier can be avoided. For example, a south Indian living in Mumbai can order their food via online without the trouble of dealing with the local language. Here are the key features of online food ordering.

User Convenience

The greatest advantage is the convenience to both user and the restaurants. The customers no longer have to wait in long lines to make their order. They can make their orders from anywhere at any time from their mobiles or laptops. The customers can cite their preferences directly with their order leaving no space for misunderstandings. As for the restaurant’s point of view, the overall efficiency is improved. They no longer have to employ someone to take care of the calls and orders. It is also easier for them to understand each customer’s order and preferences better than when done by a phone call. Also, with online ordering system, the customers can place their order anytime even during the odd hours.  If outside the business hours, they can schedule a later pickup or delivery time.

Online Menu

An online menu (E.g. McDelivery Burgers Menu) is more attractive and descriptive. More details like ingredients, calorific value and also pictures about each dish can be contained in an online menu. Online menus are also very flexible; changes can be made any time, handle items with limited availability or setup daily offerings.

Easier Promotion

Advertising and promotion of restaurants online are much effective than offline promotions. With less cost they can reach out to maximum potential customers. Ads and promotions in social sites will generate more customers to the website, thereby improving the sales. Also promotional offers discounts etc can be easily publicized online.

Powerful Analytics

The analytics provided through online is an added benefit tom the restaurants. They can easily realize the user response to their products, sort out the popular ones and the unpopular ones. Similarly the tracking of offers and other promotional features can be done and thereby devise a successful business strategy. Online ordering can also assist restaurants with customer loyalty campaigns. When a customer places an order through the self-service ordering platform, they are offered a chance to “opt in” to the restaurant’s email database program. Since most customers choose this option, and since they will love the ease of online ordering, they become loyal customers willing to listen to emailed offers and promotions. Further, the online ordering platform keeps a detailed account history of online orders for each customer, so savvy marketers can target customers with just-right promotions.

Advantageous for start up’s

Going online is especially beneficial for new or budding restaurants. They don’t even have to bother about the location and infrastructure of their restaurants. Even start up restaurants with no infrastructure and facilities can gain sales through online. It is also advantageous for small scale food businesses like home made lunch or snacks, as they can promote and sell their products at relatively low cost.

User Reviews

Another great advantage to customers is that they can share their opinions and reviews about the diner. If they have good experience from a particular diner, they can share positive review and vice versa. This plays a major factor in a restaurant’s popularity as customers give high priority to other customer’s reviews. So if a restaurant provides quality food and service, it will earn positive customer reviews which will eventually encourage other customers, thereby resulting in increased sales.

Because of all these mentioned advantages, online food is gaining huge. In India, the current restaurant business is estimated around $48 billion and it is expected to double by the year 2020. Majority of this business is still done offline, but it is witnessing a tremendous increase the number of users ordering food via online, especially in the cities. Brands are recognizing this changing trend and are facilitating their services online. In recent times, huge investments have been made by restaurants and other brands in online food market.

So let’s dive deeper into the world of food delivery sites. First of all, not all food delivery sites are the same. They differ in their mode of operation. Here is a classification based on their mode of operation.

Fully Integrated

These are basically restaurants which are renowned big brands. They have their own websites where the customers can place the order. Each and every aspect of the business, right from placing the order to the delivery is done by the restaurant its. Poster child for this type are the Dominos, McDelivery(online ordering system of McDonald’s), Subways etc. They ensure the quality of the service to keep up with their reputation. Nowadays more restaurants are building their own sites to cater the needs of the customers.

Delivery as Service

These are sites focusing just on the delivery aspect rather than the consumer aspects. These are B2B companies that deliver the orders received by the restaurants. They have a tie-up with the restaurants which doesn’t have the adequate resources for delivering their order themselves. So these are companies just involved in the logistics of food delivery. Their presence has added a lot of excitement in the industry as it enables even the smaller restaurants without fully fledged deliver fleet to engage in food deliveries.

Niche Players

As the name suggests these are companies who exploit the unmet needs of the industries. They are extremely focused on a particular section of the industry which is overlooked by others. Their services include providing gourmet meals, healthy meals for the diabetic, healthy diets for kids or even ingredients for particular diets. This is a particularly growing industry and more customers are availing for their services.

Aggregators

Last but not least the food aggregators. They are the fastest booming among the lot. Similar to ecommerce aggregators like Flipkart, Amazon etc, they are witnessing substantial growth. These are the companies who usually don’t handle the actual delivery but aggregate all restaurants that offer delivery. They focus more on search and discovery of the websites and providing quality response to the user’s query.

Here’s how they work. They make a database of restaurants and the details including their location, menu and cost. The details of each restaurant are available to the customers from which they can order from the one which they prefer. A small percentage of the sale goes to the aggregator. This is a win-win strategy for both the customers and the restaurants. The customers are now able to check out different variety of restaurants based on their criteria which would’ve been difficult otherwise. As far as the restaurants are concerned, it is a great platform for them to promote themselves and increase their sales, especially for the smaller restaurants which do not have their own websites and database.

For their service, the aggregator receives a particular share, normally 10 to 15%, of the sale generated through their website. Other than that they also raise revenue through ads and other services in their website. Many restaurants are seizing the opportunity to launch forward through aggregators. It opens a world of opportunities to reach out to their customers and gain new ones. It gives the smaller restaurants an equal chance to compete with the bigger brands.

In business point of view online food is investor’s new haven. Just like 2007-08 was the year of e-commerce, 2010 the year of online cabs, 2015 is turning out to be the year of food tech in India. Following the success stories of other countries like US, where investments in food-related startups, from delivery services to new restaurant chains to new types of foods and additives, have raised unprecedented amounts of cash and also considering the vast potential of food market in India, VC’s are keen to in invest in online food industry.

Also new entrepreneurs are eyeing the food tech industry as their green pasture. According to reports, food and food related startups has taken the centre stage and even overtaken the spotlight from ecommerce companies in terms of new investments. Over $3.5 billion has been invested across 380 disclosed deals in the first half of 2015.There are plenty of reasons why they are attracting big bucks.

  • First and foremost, the Indian food service market is estimated to be around 50 billion dollars that is growing 16 to 20% each year.
  • It is a massive market as everyone eats multiple times a day. So the potential is even bigger than e-commerce.
  • As it is food, there is high repeat order behavior thereby leading to brand creation and strong lifetime value for a customer.
  • There is lack of large national brands in the current space and thus potential to create such food brands and infrastructure.

But given all these factors, food tech industry in India is still in nascent stage. This is also a relatively unexplored venture. There are also much more challenges unlike the ecommerce business.

  • First, the product is food which the people are extremely passionate about.
  • The price may not be ultimate winner unlike in the case of ecommerce and cabs
  • Third, local delivery/distribution has to be built from the ground up; like hyper-local delivery companies. Except, food companies will be catering either from their own kitchens or combining home chefs, where the logistics can be nightmarish.
  • The companies would only succeed if they can challenge the quality and taste offered by the traditional market effectively.

But with proper planning and execution these challenges can be overcome. By the looks of it and ongoing investments, the companies seem to have found a successful formula to drive their business. It is only a matter of time before online food business will flourish. In customer’s point of view, all this is good news. We are presented with multiple choices when there is need for food. We can always resort to the traditional way of going to the restaurants to have a meal or enjoy a tasty cuisine within the comforts of our home. After all why wait in the restaurant when the restaurants are waiting with their delicious treats in your mobile phones, just a click away.

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