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Evolving Business Models of Online Food Delivery Industry in Indian Context

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 1

EVOLVING BUSINESS MODELS OF ONLINE FOOD DELIVERY

INDUSTRY IN INDIAN CONTEXT

Dr. S. Mohanavel Dr. S. Gomathi @ Rohini

Professor, Dept. of Management Studies
Dr. N.G.P. Institute of Technology
Coimbatore 641 048
mohanavels@gmail.com, 9842250048
Associate Professor, Dept. of Computer
Applications
Sri Ramakrishna College of Arts & Science,
Coimbatore 641 006
rohinismohan@gmail.com, 9942070038

ABSTRACT

Gone are the days, when people used to go to hotels for eating. Online food delivery

business is taking shapes in the market and changing the life style of people. India is witnessing

increasing number of food delivery start ups, catering to the modern urban Indians. There are

many international, national and local players in the market. Foodpanda, Swiggy, UberEats,

Zomato, Domino’s, Pizza Hut and Mc Donald’s are a few major players.

Customers can order food online, browsing menu of lot of restaurants and foods and get

delivered to them at their door step. Ordering, cooking and delivering are the basic components

of online food delivery business models. They evolve with innovative concepts to meet the

changing customer expectations. This business works with the motivation and dynamics of

customers, merchants, aggregators and deliverymen.

To ensure that the business is successful, they need to have certain features and take care

of various technical and marketing aspects. There are various challenges and opportunities on the

road ahead. The benefits offered to customers and restaurants ensure the sustainability of online

food delivery business and grab the attention of investors and venture capitalists.
1. INTRODUCTION

Online business ideas are penetrating in various verticals at all levels from small shops to

large corporate. Changing lifestyle has brought ready to cook, ready to eat and heat & eat foods

in provision stores and smart kitchen concepts. Gone are the days, when people used to go to

hotels for eating. The flaws like delayed delivery, high order limits, in-house business, cost of

delivery etc. by the restaurants made the food delivery business come into picture (5).

Influence of information and communication technology, e-commerce, digital marketing

and smart phony has made food delivery business online, bringing restaurants and customers on

a single platform (8) and interesting for consumers, employees, entrepreneurs & investors (3).

Customers can order food online, browsing menu of lot of restaurants and foods and track their

order with customer support service (5).

Though offline food ordering is still dominating in the sector, online food ordering has

high growth rate in India (8). India is witnessing increasing number of food delivery start ups,

catering to the modern urban Indians. They work for tastier food with additional benefits like

convenience, health, service delivery and cost economics.

2. ONLINE FOOD DELIVERY BUSINESS MODELS

Entrepreneurs are trying different models to establish good business in online food

delivery industry (7). Key partners, key activities, key resources, value proposition, customer

relationship, delivery channel, customer segments, cost structure and revenue streams are the

important elements of any strong business model (5).

Order, Cook and Deliver are the three components of any food delivery business model

(7). Using these components the following basic models are developed.
 1. Order-Cook-Deliver Model

Figure 1. Order-Cook-Deliver Model

2. Order-Deliver Model

Figure 2. Order-Deliver Model

3. Order Model

Figure 3. Order Model

All these models have their own advantages and disadvantages. Many other models

can be developed with other components like logistics etc. as and when technology,

consumers and other factors influence the business. Online & offline advertisements,

strategic partnership and commission percentage are the business thoughts for revenue

generation (6).

Decision convenience, access convenience, transaction convenience, benefit

convenience and post-benefit convenience are expected by the consumers from the food delivery

companies (2). This business can be made more efficient and profitable through reasonable

commission from merchants, smart queuing, surge and delivery executive payout (8).
3. ONLINE FOOD DELIVERY MARKET

The economy of online food delivery industry has disrupted many traditional markets (7).

The Indian food market size was around Rs. 23 trillion in 2014. It is expected to reach Rs. 42

trillion by 2020 reports Boston Consulting Group (1). There are many international, national and

local players in the market. They receive orders through online, phone or mobile app.; deliver

food in 15 - 45 minutes or in 1 - 3 days against advance booking; receive payment by online,

cheque, cash or wallet. Other features are like daily, weekly & monthly packages, bulk, party or

corporate orders and customised menu (1).

Foodpanda, Swiggy, UberEats and Zomato are a few major players in food delivery.

Competitors of UberEats – Deliveroo and Amazon are producing food themselves (7). In

Foodpanda, one can view ratings and reviews before ordering food from restaurants. It weeds out

restaurants that do not deliver on time (4). Uber extends its mobile app. to help its customers

book taxies to the restaurant they wish to go. JustDial is in online food ordering service. Ola

Cabs has entered this segment with its food delivery service (1). Delivery Hero and Ola join

forces in India. Domino’s, Pizza Hut and Mc Donald’s prepare and deliver food on order. They

get 50% - 60% e-commerce sales (1). There is a tough competition in the market to catch the

food points.

4. BENEFITS

1. Increases job opportunities and derived services like mobile app. development, web site

design & maintenance, delivery, packing and logistics.

2. Packing and logistics industries boom.

3. Reduces restaurant space.

 4. Digital marketing & social media link.

5. Saves time and effort of consumers for take-away, ordering and eating food.

6. Saves time and effort of consumers going to restaurants.

7. Delivers convenience and delight to the customers.

8. Fast and easy payment process.

9. Eases reorder process.

10. Reduces search cost and strain.

11. Varieties of foods and offers.

5. CHALLENGES (1)

1. Retaining variety of customers.

2. Food standardization, quality and taste.

3. Getting chef onboard.

4. Logistics.

5. No minimum order requirements.

6. No delivery cost.

7. Packing.

8. Waste management.

9. Technology.

10. Unorganized / Unbranded players.

11. Stock out.

12. Delayed delivery.

6. FUTURE (1)

1. Online food delivery enterprises can tie up with hospitals to feed the patients with

specific diseases like diabetes etc.

2. The companies can offer various schemes with attractive offers and discounts.

3. The industry can expand its business to far away and remote locations.

4. It can think of delivering organic foods, home-made foods, snacks etc.

5. Microwave safe, hygienic and environment friendly Packing.

6. Value added services like nutrition advice, health tips, calorie calculator etc.

7. Seasonal, weekend, festive, introductory offers.

8. Part time drivers and personal vehicles can be used.

9. Pooling of orders.

10. End-to-end logistics.

7. CONCLUSION

Online food delivery business is taking shapes in the market and changing the life style of

people. The online food delivery companies evolve with innovative concepts to meet the

changing customer expectations. The benefits offered to customers and restaurants ensure the

sustainability of online food delivery business and grab the attention of investors and

entrepreneurs. They need to have certain features baked right and take care of various technical

and marketing aspects to ensure that the business is successful (4). This business can work if

consumer, merchant, aggregator and delivery crew have enough motivation and dynamics to be

on the platform.
 REFERENCES

1. http://www.iamwire com/2015/03/rise-online-food-ordering-startups-india-opportunities-

challenges-innovations/113052.

2. https://jungleworks.com/food-on-demand-business-models-of-meal-delivery-startups/

3. https://www.business.com/articles/why-is-online-food-ordering-and-delivery-business/

4. https://www.businesstoday.in/magazine/cover-story/zomato-vs-foodpanda-ecommerce-

online-food-delivery-space/story/218865.html

5. https://www.enukesoftware.com/blog/business-model-of-online-food-delivery-startups/

6. https://www.fatbit.com/fab/brilliant-startup-idea-online-office-food-ordering-delivery-

business/

7. https://www.spaceotechnologies.com/uber-for-food-delivery/

8. https://yourstory.com/2016/07/food-delivery-sustainable-business/

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