Food delivery apps in India: wherein lies the success strategy?

Abstract

Purpose

The purpose of this study is to understand the evolution, current competitive scenario, and future direction for the food-tech business in the Indian market.

Design/methodology/approach

The paper is based on press reports, industry reports, and secondary information about companies based on interviews of CEOs, analysts, industry trend watchers, and academicians.

Findings

The incumbents are competing on the basis of various parameters such as capital infusion (especially, funding), tie-ups with restaurants, customer loyalty, fleet size and management, and management of employees. High growth is driving volumes for all companies, although there is lack of differentiation in offerings. Companies need to build customer loyalty and seek diverse monetization models for profitability in the future.

Research limitations/implications

First, food-tech companies need to identify means of differentiation to gain competitive advantage. Second, customer loyalty is the key to long-term profitability and firms need to identify ways to build it. Promotions and offers cannot build loyalty. Third, firms would need to expand into different types of monetization methods, such as cloud kitchens, B2B food delivery services, to build revenues and profits.

Practical implications

Incumbents and prospective entrants in the food-tech industry need to understand the structure of the industry and the structure of competition to be able to succeed in the long term. They need to understand that promotions cannot be a differentiator and that funding will dry up. Therefore, it is critical to identify means of differentiation to build a loyal customer base.

Social implications

The food-tech industry in India has strong social foundation. More than 50 per cent of the Indian population is below the age of 25, the percentage of working population is increasing in India and so are income levels. In this context, the food-tech business is important as order outs are increasing. This, however, has also led to problems in the workforce for such startups as companies do not want to invest in employee training, safety or work conditions owning to high attrition rate because of the standardized nature of the job.

Originality/value

This paper makes an attempt to assimilate information about the progress of the food-tech industry in India in the last few years. It attempts to identify various factors that decide the nature of competition among incumbent players. It also identifies what factors these incumbents need to bear in mind while looking ahead.

Citation

Meenakshi, N. and Sinha, A. (2019), "Food delivery apps in India: wherein lies the success strategy?", Strategic Direction, Vol. 35 No. 7, pp. 12-15. https://doi.org/10.1108/SD-10-2018-0197