Despite low investor sentiment and online food players scaling down operations or shutting shops, India’s online food delivery market — comprising aggregators and internet kitchens — grew by 150 per cent in 2016 with an estimated GMV $300 million, research firm RedSeer recorded, according to a PTI report.
“The Indian online food delivery industry experienced many roadblocks in its growth story in 2016 with multiple players scaling down their operations or shutting shop. This was also visible in low investor sentiment wherein the industry saw a total funding of less than $80 million in 2016 against $500 million same period year before,” RedSeer said in a report, as per PTI.
Despite this, the industry grew at 150 per cent year-on-year last year with an estimated GMV $300 million in 2016, it added.
For restaurants, the online platforms have helped increase their reach and this additional business source has improved their resource utilization, it said.
Besides, customers have also started to opt for multiple choices offered by online platforms in place of ordering food by calling individual restaurants.
“Share of online food delivery for partner restaurants (restaurants associated with online delivery platforms) covered in study has reached 30-35 per cent of their total business and these numbers seem to be growing rapidly by the day,” it added.
With over 80 per cent of orders coming in from top five cities (out of more than 20 cities where online food delivery is active), the established players are now focusing on achieving operational efficiencies and profitability in these cities and have limited their expansion to newer markets.
“With customers and restaurants both embracing these online food delivery services, the order volumes have shown a healthy growth but the fundamental issue of unit profitability and operational efficiencies need to be addressed to build a sustainable business in this sector,” Founder and CEO RedSeer Consulting, Anil Kumar said.