Although the online food delivery market saw multiple players closing operations, it still garnered a growth of 150 percent.
India’s online food delivery market — comprising aggregators and internet kitchens — grew at 150 percent in 2016 with an estimated GMV of $300 million, despite low investor sentiment and players scaling down operations or shutting shop, research firm RedSeer said.
“The Indian online food delivery industry experienced many roadblocks in its growth story in 2016 with multiple players scaling down their operations or shutting shop. This was also visible in low investor sentiment wherein the industry saw a total funding of less than $80 million in 2016 against $500 million same period year before,” RedSeer said in a report.
Despite this, the industry grew at 150 percent year-on-year last year with an estimated GMV of $300 million in 2016, it added. For restaurants, the online platforms have helped increase their reach and this additional business source has improved their resource utilization, it said. Besides, customers have also started to opt for multiple choices offered by online platforms in place of ordering food by calling individual restaurants. ALSO READ: Foodpanda, Zomato and other online food platforms may soon need licence to operate in India
“… share of online food delivery for partner restaurants (restaurants associated with online delivery platforms) covered in study has reached 30-35 percent of their total business and these numbers seem to be growing rapidly by the day,” it added.
With over 80 percent of orders coming in from top five cities (out of more than 20 cities where online food delivery is active), the established players are now focusing on achieving operational efficiency and profitability in these cities and have limited their expansion to newer markets. ALSO READ: IRCTC partners Paytm to let passengers pay for food online
“With customers and restaurants both embracing these online food delivery services, the order volumes have shown a healthy growth but the fundamental issue of unit profitability and operational efficiency need to be addressed to build a sustainable business in this sector,” RedSeer Consulting founder and CEO Anil Kumar said.