International Research Journal of Management Science & Technology ISSN (0nline) (Print) A REFEREED JOURNAL OF

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1 International Research Journal of Management Science & Technology ISSN (0nline) (Print) A REFEREED JOURNAL OF Shri Param Hans Education & Research Foundation Trust Published by isara

2 Innovative strategies of startup firms in India - A study on online food delivery companies in India. Dr.Vijaya lakshmi Kanteti, Director, Andhra Mahila Sabha School of Informatics, OU Road, Hyderabad-07 vijayalakshmi.amssoi@gmail.com Abstract: The present study is a conceptual study made to understand the innovative strategies followed by online food delivery startup companies in India. These startup companies led by young Indians have been inspired to take up various challenges to address the concern areas of Indian consumers and extend them with various products and services at reasonable prices. Indian food delivery market is valued at 15 billion dollars and set for an exponential growth. Food delivery has become a very competitive market in India. The growth of online food ordering delivery platforms by mobile apps has made business men awake and take notice. The type of online delivery service models of four different companies like swiggy, zomato, food panda and Fassos are analysed and it is understood through the study that the future seems brighter for the online food industry, as India catches up with developed markets in terms of changing life styles. Keywords: start ups, Food Delivery, Innovative strategies, online services Introduction: Startups in India have become the new trend setters and talk-of the-town in the global business economy since the past few years. These companies led by young Indians have been inspired to take up various challenges to address the concern areas of Indian consumers and extend them with various products and services at reasonable prices. The tech savvy youth are geared up with a variety of ideations for their startups to capture the mindshare of people with differentiated technology, innovative products and pioneering services. The current generation is high on confidence, prefers to lead their life much more comfortably and therefore have brought in valuable solutions to improve the life of others around them. The Indian startups are finding that their secret ingredient for success in life is indeed, Food. There are too many players today fighting to win the consumers hearts literally through their bellies. Food technology is the flavor of the season for Indian startups. But contrary to popular opinion, it is not about IT but innovation in the food experience provided to the consumer using real food technology. It is not about fancy smart phone technology and apps but about breakthrough food technological Page 17

3 process used to create innovative food products and experiences to the consumer. After grocery, food delivery is emerging as the next big frontier for India s largest e commerce companies. Indian food delivery market is valued at 15 billion dollars and set for an exponential growth. Food delivery has become a very competitive market in India. The growth of online food ordering a delivery platform by mobile apps has made business men awake and take notice. The. Some popular food hubs like swiggy,food panda, grubhub and hungry house are feeding the world online and making profits. The piping hot Indian Food tech industry is slated to reach $78 billion by 2018 growing at 16% YoY. How ever the picture is not rosy as it appears. Despite the vast potential of this sector, many players that jumped into the food tech fray either downsized like zomato or completely shut down. Currently out of 105 Food tech startups in India, only 58 are currently operational. Initially the food tech industry in India began with companies like zomato trying to solve the problem of finding a good restaurant via a simple user friendly platform. The next stage saw companies like foodpanda trying to address the issue of ordering booking on these restaurants by working as an aggregator. The next stage had players like swiggy tackling the issue of delivery in the value chain. Essentially these sums up the evolution of the Indian food tech market till date. The irony is that none of the players have touched upon the top portion of the value chain which is FOOd itself. Also the fundamental reason behind the shutdown of so many Food Tech startups all the players are mere clones of one another completely lacking in any differentiation and innovation. Growth of online food delivery startups: Indian Tier-1 cities such as New Delhi, Mumbai and Kolkata have been witnessing traffic jams caused by an increase of late in the number of vehicles on roads and a heavy density of population. This has amplified the time to travel within a city, and created a paucity of time for working Indians in these metropolitan towns. As a result, more and more Indians have started ordering from online food delivery services, rather than cooking at home. The number of households eating at home every day witnessed a visible decline. This decline resulted in a large proportion of the household/consumer base ordering food in, thereby helping to drive the growth of 100% home delivery. More than 80% of orders are now coming from the top five cities in India, out of more than 20 cities where online food delivery is active in this country. Due to this concentration of orders, food delivery players in India have limited their expansion to newer towns and are now are focusing on achieving operational efficiencies and profitability in Tier 1 cities only. To garner a bulk of the share in this nascent market, which has witnessed the entrance of new players from stables of global behemoths such as Google and Uber, Indian startups such as Swiggy and Zomato have taken steps including fundraising or making acquisitions in order to protect and gain their market share. Page 18

4 Objective of the study: Present study focuses on studying innovative strategies of some of the promising as well as successful Indian food tech companies like Swiggy, Zomato and foodpanda, which are not just playing the business game but winning it as well. Swiggy: Swiggy is food ordering and delivering company, founded by techpreneurs Nandan Reddy, Sriharsha Majety, and Rahul Jaimini in August It provides a single window for ordering from a wide range of restaurants and have their own exclusive fleet of delivery personnel pick up orders from restaurants and deliver it to customers. It is a complete food ordering and delivery solution that connects neighborhood restaurants with urban foodies. Swiggy began its Journey from Bengaluru with six delivery executives and 25 restaurants on its platform. The platform, which manages customer orders and delivers the food using its own fleet, has close to 12,000 partner restaurants in eight cities. On average Swiggy fulfills 100,000 orders every day and plans to utilize this capital for hiring engineering talent and developing technology for better demand prediction, consumer preferences and delivery efficiencies. A part of the raised capital will also be leveraged to increase the service offerings of Swiggy to restaurant partners. Earlier this year Swiggy had also started cloud kitchens, which are kitchen-only operations with no dine-in facility,as part of its offerings to restaurant partners looking to serve in areas where they do not have a physical presence. Swiggy Business model & Innovative Strategies Swiggy s marketing strategy consists of both online and offline marketing campaigns.it promotes its campaigns via Facebook, Twitter, Youtube, Pinterest, and Instagram. Some of its campaigns include Second tomom,#diwalighayaayi, #SingwithSwiggy and Know your food series of pictures and food walks in a local area. The company has successfully built its brand awareness and connects with its audience through these channels. Their facebook page is quite active with regular updates, averaging to one post a day. Swiggy uses its Social media not only for campaigning but to engage with its customers from solving the greviences to taking the feedback. it s ideal target audience will be people between the age of These people could be students, entrepreneurs or professionals working in MNC s who are also financially stable and live in posh localities. But what sets Swiggy apart from Zomato & FoodPanda is their remarkable social media campaign strategies. Every campaign of theirs is extremely engaging, easy to consume and have an interactive quotient in them. The posts are highly appealing, humour based and of good quality. Influencer marketing is another one great strategy that Swiggy can look up to.influencers & Influencer marketing is the newest trend these days. Brands have started approaching influencers to market their product because of their power to create an impact in the minds of people. Swiggy has two major revenue streams. The major part of Swiggy s revenue from commission it collects from restaurants for lead generation and for serving as a delivery partner. Swiggy also Page 19

5 charges a nominal delivery fee from customers on orders below a threshold value which is 200 rupees for most cities. Zomato Zomato initially named as Foodiebay was started in 2008 by Mr. Deepinder Goyal. It is a restaurant searching platform providing in-depth details with autonomous reviews and ratings. Foodiebay, the initial name was changed to Zomato in November 2010 to increase their reach among people. To differentiate themselves from their competitors, Zomato concentrated on adding approx. 18,000 new places to eat from. Along with they also decorated many special features, such as pointed to particular dishes or opening times. To be the largest resource in food supply market, Zomato bought urbanspoon, a leading restaurant service providing portal for $52 million to enter US, Canada and Australia to leverage local insights and experience and to expand their business in overseas seeing the future goal and objective. Zomato Business model & Innovative strategies: Zomato uses different platforms to engage their customers with them. Facebook There is a huge engagement of ustomers on Facebook. Zomato has more than 600k strong Facebook community. Twitter Twitter is a place where Zomato is sparkling. It has more than 114 k followers there. Used as a conversation platform with the customers, Zomato is doing a great job in engaging their customers on their page. They answers all the queries raised over the platform by the customers. Blog Sharing and updating with all the latest updates is a key point for any organization. Zomato uses their blog as their mouthpiece to share all the latest updates. Pinterest The platform shares the food experience with great content to attract their customers. The company needs to do a lot of job to make its followers on this platform which will certainly work in their promotion. Their strategy is to be content driven with very low market or customer acquisition costs and a bulk of their revenues come from advertising. Some of the strategies of Zomato are as follows: Zomato s advertising is very specific, when people search for specific keywords, ads of restaurants are shown for that specific keyword. This makes it highly targeted. This is also hyper local. Zomato sits on a pile of data and information. They have an in-built analytics platform that run a lot of queries and get valuable information out. Say if a person wants to open a new restaurant, they can connect with Zomato and find out the success rate of opening a restaurant in a particular location. Restaurant owners can also find out what is the most popular type of food in the area, understand the needs of the users and provide a complimenting service that will help build their business. Page 20

6 Zomato has forayed into the events space by partnering with restaurants and creating exclusive events. They make a sale through the price of the tickets. A lot of Zomato hosted new-year parties were held. Very late to the game, Zomato started their online delivery service. Different from other players like Swiggy, Zomato does not have their own delivery system, they let users place the order through the website or the app and the restaurant fulfill that order through by their own. Food Panda: It is one of the most leading food delivery in India. It was found in the year 2012 and its headquarters is in Germany and Berlin. Soon after that it was started in India. It has a tied up with many restaurants such as Haldiram, Dominos, Ammis Biriyani etc. And, it has been started in around 24 cities across India and is still growing. It has both vegetarian and non-vegetarian menu. One can order the items through app(android and IOS) or through the website. Payment can be done either by Cash On Delivery or Online through cards and wallets. Business model & Innovative strategies of Faasos: Foodpanda processes and sends orders directly to partner restaurants, which then deliver to their customers. The service is available via its websites and mobile applications.customers order food by entering their postcodes on the site and browsing for food from a list of restaurants. They can create meals by browsing restaurant menus and selecting items they want to order before entering an address and proceeding to the checkout. Restaurants receive these orders and then deliver to customers. Food panda sends out an SMS to confirm orders and their estimated delivery time. Foodpanda s business model may be disruptive in the short term but in the long term it will need to stick to its vision while responding to changes in the marketplace. Food panda is revisiting its strategy by outsourcing delivery and is also looking to start its own kitchen, a comparatively highermargin business, as it seeks to bolster its local business. Faasos Faasos, is an Indian "food on demand" company that was incorporated in Faasos operates in the 16 of the largest cities in India and takes customer orders via its mobile app and also the website. It is the only vertically integrated food business in India and operates all three stages of a "food on demand" business: ordering, distribution and order fulfillment. Faasos receives 10,000 orders a day across India and has recorded a growth rate of per cent month-on-month Business model & Innovative strategies of Faasos: Faasos runs on a cloud-kitchen model offering four in-house brands on its platform. These brands are Oven Story, Kettle & Eggs, and Behrouz. Faasos was running on multi-brand marketplace since 2015 but then added four in-house brands to its platform.the company relies on its own delivery personnel to fulfill orders generated through its own app. Page 21

7 Faasos is serving more than 30 thousand per day and served more than 40 lakh customers in 15 cities across India. Faasos recently completed tie-ups with 500 restaurants across metros and tier 1 cities to double up order volumes without investing big on new customer acquisition. It is currently following pizza chain, Domino s, model. It is in every neighborhood, ensuring a standardized product and guaranteeing delivery in 30 minutes. The company flipped its business model last year to expand food variety on its menu by tieing up homechefs -around 100 on its rolls now. Suggestions from the study: The online food delivery app start ups can concentrate on innovations in their customer management as well as the technology management like: 1. Full customer transparency: Food delivery companies will have to be able to match their level of service and transparency, via smartphone. The customer has to be able to play, see where their order is, contact their driver at any time and even tip & rate from their phone after their food has arrived. Technology companies like Bringg are leading this field providing a platform for restaurant chains, retailers or delivery businesses to give users the experience they want. In addition, they help businesses optimizing routes and managing their fleet in real time. 2. Drone delivery: Technology helps the food delivery companies by going innovative.might sound like something from a sci-fi movie but companies such as Domino s pizza are already pioting drone deliveries. The need to pay tips also can be avoided. Conclusion There are many popular business models in the food tech space such as on demand delivery, restaurant and food discovery, concierge, kitchen cloud, full stack, thin layer, market place and home cooked food models. The top most valued, unexplored and toughest model is the home cooked food model. This is truly where the greatest potential lies and innovation can spin off this industry in a wholly new direction. Technology and innovation is going to play a key role in the growth of the food sector. Technology provides significant cost and efficiency improvements for restaurant partners. To be able to be profitable, it is important to focus on building scalable revenue streams and capabilities with a long-term goal, and evolve extremely quickly on the technology side to leverage efficiencies internally. Companies that can possibly work on coming up with creating classic food in unexpected and non traditional ways are bound to score big. The Indian Food tech startup Industries are here to stay and to be in the race is to examine and stabilize operations and processes, and also picking up the right opportunities to grow and achieve profitability. It is now a wait and watch for all to see how, and how well, the industry shapes up. References: economictimes.indiatimes.com/articleshow/ cms?utm_source=contentofinterest&utm_med ium=text&utm_campaign=cppst economictimes.indiatimes.com/articleshow/ cms?utm_source=contentofinterest&utm_med ium=text&utm_campaign=cppst Page 22

8 economictimes.indiatimes.com/small-biz/startups/kitchen-in-the-cloud-food-tech-startups-see-arecipe-for-success/articleshow/ cms retrieved on 7 th feb Page 23

10 .. Shri Param Hans Education & Research Foundation Trust भ रत य भ ष, श, स हहत य एव ध ISSN INTERNATIONAL RESEARCH JOURNAL OF MANAGEMENT SCIENCE & TECHNOLOGY ISSN (0) (P) INTERNATIONAL RESEARCH JOURNAL OF COMMERCE, ARTS AND SCIENCE ISSN INTERNATIONAL RESEARCH JOURNAL OF MANAGEMENT SOCIOLOGY & HUMANITIES ISSN (0) (P) INTERNATIONAL RESEARCH JOURNAL OF SCIENCE ENGINEERING AND TECHNOLOGY ISSN (online) INTERNATIONAL RESEARCH JOURNAL OF MANAGEMENT SCIENCE AND INNOVATION

4 Steps to Survive the Fast Casual Digital Ordering & Delivery Revolution

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