India’s food ordering and delivery giants face losses due to the furnishing of discount to build up customers

online ordering - startup article

Key Highlights

Company’sfood delivery giants faced a loss of Rs. 731 Crore till March 2018 and Rs. 640 Crore till a previous fiscal year.

Revenue of Swiggy, Foodpanda and Zomato doubled to Rs. 997 Crore till March 2018.

Swiggy and Zomato raised $2 Billion last

 

zomato offers - startup article

Food delivery is one of the fastest accelerating segments of India’s e-commerce market. Since the past 5 years, several online food delivering startups are set up in the market. Several Bangaluru based startups with different colored symbols for unique identification including the orange logo for Swiggy; scarlet color for Zomato, black-clad for UberEats has emerged in market.

According to estimates of Redseer, A management consultancy firm, 40 Million online food orders worth $135 Million were made in India last year and it is predicted that by 2020 the online food delivery market will double again as much as $3 Billion per year.

According to a survey with customers interested in online food ordering, they used Foodpanda till it offered huge discount and ceased completely availing services of it as huge discounts are removed and yet now Foodpanda is giving good deals but they are more comfortable with Swiggy and Zomato. In India’s online food delivery market Swiggy and Zomato dominate in spite of charging food delivery services and Foodpanda.

foodpanda offers - startup article

Foodpanda, Swiggy, and Zomato have spent more than half a billion in offering discounts, cash back and other deals to lure customers while ordering food using their platforms for the past two years. According to filings made with the registrar of companies food delivery giants faced the loss of Rs. 731 Crore till March 2018 and Rs. 640 Crore till a previous fiscal year.

Swiggy faced a maximum loss because it doubled its expansion to make a grip in India’s online food delivery market and lead against Zomato and other peers. Swiggy doesn’t have a monetization model to list advertising on its discovery platform as in Zomato. 

swiggy offers - startup article

Since the establishment of Swiggy, Zomato and Foodpanda they’ve not gained any profit till now still investors are burning money in the food industry. Swiggy and Zomato raised $2 Billion past year and Foodpanda invested $200 Million to speed up operations. Zomato Gold was launched in November 2017 and advertisements reduced their cash burn from $15 million to $11 Million for Zomato. Swiggy also introduced a subscription model, Swiggy Super in July 2018 in which Swiggy Super subscriber is liberal from delivery charges.

Zomato and Swiggy have reached a point where users are ordering food in spite they are charged by delivery fees, distance fees, and restaurant packing charges. Revenue of Swiggy, Foodpanda and Zomato has doubled to Rs. 997 Crore till March 2018. 

Zomato and Swiggy sum to about 45 million to 55 million monthly orders placed by their apps. Expenses are rising of these firms and discounting is not ceased yet. Still, Zomato and Swiggy are offering a 50% discount; therefore, gaining profit from food delivery business is becoming a challenge. 

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