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The Foodtech Face-off: How Swiggy and Zomato are Competing Beyond Food Delivery

The Foodtech Face-off: How Swiggy and Zomato are Competing Beyond Food Delivery

As the market for quick grocery delivery heats up, two major foodtech firms -- Zomato and Swiggy -- are locking horns to emerge as number one in this category.

The Foodtech Face-off The Foodtech Face-off

One sector which came to the rescue of people stuck inside their homes during the height of the Covid-19 pandemic was food delivery—even as the pandemic raged on, food delivery riders took the risk head-on and delivered orders to customers at their homes. Consequently, despite the pandemic, the foodtech sector saw handsome growth in numbers. The two major players—Swiggy and Zomato—saw average order values (AOVs) and order numbers peaking to record levels. However, despite the apparent boom, it became obvious that there were enough challenges for food delivery, and smart margins were hard to achieve. This is because India’s food delivery market is bogged down by low AOVs, high delivery costs and deep discounts, making it difficult for players to achieve margin growth beyond a point. Adjacencies had to be the way out, and that’s exactly what Swiggy and Zomato have set out to do.

As our cover story by Binu Paul says, the stiff competition between the two players also makes it even more difficult to incentivise all three segments of the food delivery ecosystem—customers, riders and restaurants. Hence, moving outside pure-play food delivery had to be the answer for both. In doing so, Swiggy and Zomato find themselves facing off on more than just food delivery—grocery delivery and restaurant discovery are the areas where the two are now clashing with each other as they both embark on the quest for new growth drivers. While Zomato, whose stronghold is the restaurants ecosystem, is now venturing once again (after failed attempts earlier) into grocery delivery by picking up Blinkit (formerly known as Grofers) and thereby competing with Swiggy’s Instamart grocery service, Swiggy, on the other hand, is getting into restaurant bookings by way of its stake in table booking app Dineout. The two are also planning pay-later services, which would allow customers to clear bills at the end of the month. As the listed Zomato (whose stock has taken a pummelling on the bourses after a strong showing immediately post listing) and the unlisted Swiggy battle it out, the coming days will see the fight intensifying in a tussle reminiscent of the cola wars. Customers, however, are likely to be spoilt for choice.

If Swiggy and Zomato are clashing, elsewhere in the corporate sector it’s a time of coming together and of consolidation. Deal Street has been buzzing over the past few weeks. First there was the sale of Citi India’s retail banking business to the private sector Axis Bank, then the surprise merger proposal between multiplex giants PVR and INOX, and finally the biggest one of them all, the long-rumoured merger of mortgage giant HDFC with its banking arm HDFC Bank. These three deals, however, stem from different compulsions—Citi’s sale is a part of a global restructuring, PVR-INOX a result of the pandemic ravaging the theatrical business, and HDFC-HDFC Bank a fallout of the current regulatory and financial environment and the need to have a stronger balance sheet. Anand Adhikari takes you through the details of the banking deals while Krishna Gopalan and Vidya S. bring you the inside story of why the two multiplex majors had to come together, and what’s next. It’s action all around in the Indian corporate sector, and dealmakers are laughing all the way to the bank.

Published on: Apr 18, 2022, 11:27 AM IST
Posted by: Arnav Das Sharma, Apr 18, 2022, 11:11 AM IST