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Supply Chain Analysis of India's Food Delivery Segment

Updated: Feb 20

The supply chain of the food industry has been changing since time immemorial. Indian food and beverage industry is poised to touch $46 Billion by the end of 2020, providing employment to 9 million people.


We brought down the entire supply chain into 6 distinct segments, diving deeper into each one them. Follow the pointers below to see it for yourself:


Cultivation of Fruits, Vegies, Spices, and Rearing of Animals

Startups in this sector:

  • Fasal

  • Freshokartz

  • Gramophone

Swiggy and Zomato, have not yet entered this segment.


Agri-Logistics

Startups in this sector:

  • Farmlink

  • MeraKisan

  • FarmersFZ

Swiggy and Zomato, have not yet entered this segment.


Food Processing

Startups in this sector:

  • Intello Labs

  • WayCool Foods & Products

Swiggy and Zomato, have not yet entered this segment.


Distribution to HORECA (Hotel, Restaurant, Cafe)

Zomato: already has this service offering in the form of Zomato’s Hyperpure (an end-to-end technology driven solution):

  • Currently serves 7,500 restaurants across Delhi and Bengaluru.

  • Already has 30,000 sq ft warehouse.

  • Directly connects with farmers, mills, producers and processors to source the raw material.

  • Recently opened a 10,000 sq ft warehouse in Mumbai.

Swiggy:

  • Although Swiggy entered into the Food delivery space much before Zomato, Zomato has the first mover’s advantage in this segment.

  • Swiggy has entered this segment very recently (May 2020), by the name of Swiggy Staples Plus.

  • It delivers grocery, meat, veg and other supplies along with packaging material to restaurants.

  • These are provided on credit basis.

Other players in this segment - Ninja Cart & WayCool



Cooking

Swiggy: Cloud Kitchen

  • Model - Swiggy sets-up a kitchen, investing in state-of-the-art kitchen equipment and real estate, taking ownership of the setup. This setup does not have any front-end. All orders are received over Swiggy’s app and delivered at customer’s doorstep. Swiggy functions by the name of Swiggy Access and Swiggy Pods in this segment.

  • Nature - This kitchen becomes a direct competitor of all restaurants listed on Swiggy. Data of all restaurants listed with Swiggy can be used to come up with the best fit solution.

  • Scale - Total investment - ₹175 Cr. Over 1 Million sq. ft. to enable over 1,000 Access kitchens across the country.

  • Investment in Kitchen Equipment (as per financials) - ₹17Cr.

Zomato: Shadow Kitchen

  • Model - Zomato develops a kitchen, investing in state-of-the-art equipment and real estate, much like Swiggy. However, this kitchen is then leased out to HORECA brands like Haldiram, Keventers and Freshmenu, to name a few (Much like WeWork of Kitchen). Management of the kitchen is done by the HORECA brand, while order processing and last mile deliveries are handled by Zomato.

  • Nature - Zomato clarified that it will never compete with its restaurant partners and the company will only help in building kitchens, which will be operated by restaurant brands.

  • Scale - In total, there are 663 kitchen units and kiosks in India, developed by Zomato.

  • Investment in Kitchen Equipment (as per financials) - ₹5.5Cr.



Last Mile Delivery

Food Delivery Segment Numbers:

Fresh Ideas Delivered:

  • Drone Delivery:

    • Sitting today, we may believe that the modern ways of food delivery have indeed been revolutionized by Swiggy & Zomato. But even this concept may become redundant in a few years with advancement in drone tech and related policies.

    • Some perspective: Ele.me, a Chinese food delivery platform uses drones for 70% of its deliveries in China.

    • So are Indian startups sitting ducks? Not really! Zomato acquired TechEagle Innovations in 2018, which is into Drone tech (refer coverage on acquisitions).


  • Hyperlocal Delivery:

    • Hyperlocal delivery comprises of B2C and C2C deliveries within a city.

    • Some key players - Dunzo (pioneer, backed by Google); Swiggy Genie (launched during 2020 lockdown); Uber Connect (launched during 2020 lockdown)


  • Grocery Delivery, Milk Delivery, Tiffin Delivery and other niche areas:

    • Key players include - Groffers; Big Basket; SuprDaily; Zomato (launched and closed down during 2020 lockdown)


SO Who's Better? Swiggy or Zomato?

Go through all our analysis to frame up your mind (tap on the picture):


The Big Fat Advertisement cost of Swiggy and Zomato




Can Swiggy & Zomato Break-Even?




Socially Responsible - Swiggy or Zomato?

 

This article is a part of the July'20 edition of our Startup Newsletter. Here's the complete publication:


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