Online ordering of food in
India is still in its early stages despite gaining visibility recently.
According to a report by Kotak Institutional Equities, though the total food
delivery and takeaway market in India was pegged at $12.8 billion in 2014, the
online food delivery market size is only around $95 million at about 0.7 per
cent penetration. “Despite the visible popularity of online food ordering, we
reckon only 27 per cent of the 40 million online shoppers are ordering food
online,’’ the report said. Kotak Institutional Equities (KIE) is a division of
Kotak Securities.
The report
concludes that break-even across models could be achieved with a ramp-up in
order run-rates and better margins. “While some consolidation in the form of
shut-downs and scale-back of operations has already happened, there may be room
for more consolidation,” the report said.
According to the
report, e-commerce companies in the food-tech space are present across the
delivery value-chain in the form of order aggregators such as Zomato, Swiggy,
Foodpanda and Tinyowl with outsourced delivery; as full-stack food delivery
companies such as Freshmenu and Holachef; and as B2B delivery outfits such as
Grab, Roadrunnr and Shadowfax, which work with aggregators and restaurants.
“None in the
three business models is currently breaking even (in EBITDA terms),” the report
points out, citing low order-values and volumes. “Some of this is also a
function of competitive intensity, with two or more players going after the
same set of customers and offering discounts, thus impacting unit economics,’’
it further added. “Broadly, the aggregator model requires sharply higher
order-values and commissions for it to break even, the full-stack model
requires both higher volumes and order values, and delivery companies need to
fulfil more orders per day per rider over shorter distances,” the report
argued. Compared to the 10-12 cities covered by the Indian food delivery
companies, comparable companies have scaled up operations to cover 200-plus cities
in China with online food delivery sales estimated at $20 billion in 2015 in
China.
Among the
reasons the report cited, as to why only a fraction of the 40-million-strong
online shoppers order food online in India, are - geographical limitations (as
most delivery companies service only 5-10 cities), wider delivery networks of
several restaurants (which themselves deliver food to clients), and lack of
active discovery by users, leading to ordering from only known restaurants.
“While the trend is changing in the metros, it may still take some time before
it takes off in Tier II cities,’’ the report noted.
The
restaurant business has found a new marketing strategy to accelerate sales and
that is by introducing an easy to use online food ordering system in their
restaurant website. Statistics have revealed that online food ordering system
is one of the best ways to increase the number of food orders that your
restaurant receives. This is a great way to improve your profit margins, and
your customer base and their loyalty also show drastic improvement. In fact,
many restaurant owners are of the opinion that this feature of online food
order acts as a revenue generating method. Research data reveals that online
food order is the best way to reach out to a larger audience base. But online
food ordering system cannot make your sinking restaurant business stay afloat
if you don’t improve quality. The quality of food offered in your restaurant
should maintain high standards because quality brings sales.
The
online ordering system is considered to be a cost-effective way of reaching out
to a larger audience base but it is not necessarily the all in all of the
marketing strategy. Entrepreneurs need to experiment with the food variety and
alter menu as per the eating trends in the market. These are some of the
effective ways to reach out to your clients and keep them enthralled. But the
task of restaurant owners is to always foresee trends and offer just that. Now
that we know that the best online food ordering system is
something that a restaurant needs, let us take a look at the
important aspects that this system must include to give users a seamless and
user-friendly experience. If you are interested in online food booking services visit http://allindiayellowpage.com/ to get detail information about online food booking services.