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Rapido, a well-known ride-hailing app in India, is preparing to enter the highly competitive food delivery sector, challenging the dominance of Zomato and Swiggy. The company is in discussions with restaurant owners to introduce food delivery services on its platform. With this move, Rapido aims to reshape the existing commission model that has sparked tension between restaurants and the current market leaders.
While still in the early stages, this strategic expansion could position Rapido as a formidable third player in the food delivery market, potentially offering more favorable terms for restaurants and customers alike. Given Rapido’s strong presence in ride-hailing and logistics, the company’s entry into food delivery could significantly alter market dynamics.
Rapido’s Entry into Food Delivery
Early Discussions and Business Model Development
Rapido has begun engaging with restaurant owners to explore a sustainable business model that can rival Zomato and Swiggy. Though these discussions are preliminary, the company is reportedly keen on addressing industry concerns, particularly around high commission fees that have long been a point of contention for restaurants.
Rapido’s Existing Delivery Capabilities
Rapido is not entirely new to food delivery. The company already provides delivery services for independent restaurants through its two-wheeler fleet. Additionally, it has been handling deliveries for Swiggy, which is an investor in Rapido. Notably, Swiggy’s investment does not include an exclusivity clause, allowing Rapido to expand its services beyond the partnership.
Rapido’s Growth Trajectory
Since its inception in 2015 as a bike-taxi platform, Rapido has grown to become India’s second-largest ride-hailing service. With operations in over 100 cities and a goal to expand to 500 cities this year, the company has established itself as a major player in the transportation sector. Recently, Rapido secured a $30 million investment from Dutch firm Prosus, following a $200 million funding round led by WestBridge Capital in 2023.
Competitive Market Conditions
Rapido’s potential entry comes at a time when food delivery giants are facing industry challenges. Zomato CEO Deepinder Goyal recently acknowledged systemic issues within the sector, leading to slowed growth. Despite this, Zomato and Swiggy continue to dominate, with Zomato holding a 57.1% market share, according to brokerage firm Bernstein.
The food delivery space has also seen the rise of ultra-fast 10-minute delivery services, spearheaded by companies like Zepto, Blinkit (Zomato-owned), and Swish. However, this model has faced pushback from restaurateurs, particularly those represented by the National Restaurants Association of India (NRAI), who are calling for a third competitor to challenge the Zomato-Swiggy duopoly.
What Undercode Say:
Rapido’s move into food delivery could be a game-changer, but it won’t be an easy ride. Here are some key insights into what this means for the market:
1. Breaking the Duopoly: A Welcome Disruption?
The Indian food delivery industry has long been controlled by Zomato and Swiggy, leading to growing dissatisfaction among restaurant owners over high commissions. If Rapido can offer a more restaurant-friendly model with lower fees, it could gain rapid adoption among businesses looking for alternatives.
2. Leveraging Its Two-Wheeler Fleet
Rapido already has an extensive network of bike riders who could seamlessly transition into food delivery. This allows the company to enter the market with a ready-made logistics network, reducing costs and setup time compared to a new entrant starting from scratch.
3. Challenges of Customer Acquisition
While Rapido has a strong foothold in ride-hailing, converting its existing user base into food delivery customers will be a significant challenge. Zomato and Swiggy have deeply entrenched customer loyalty, backed by aggressive discounts and subscription programs like Zomato Gold and Swiggy One. Rapido will need strong incentives to draw users away.
4. Investor Backing and Financial Strength
Rapido’s recent funding rounds indicate strong investor confidence, which will be crucial as it expands into the capital-intensive food delivery space. However, the company must balance growth with financial sustainability, avoiding heavy discounting strategies that have historically strained food delivery startups.
5. Regulatory and Market Risks
With the NRAI pushing for fairer commission models and better terms for restaurants, Rapido might find itself aligning with the interests of restaurant owners. However, regulatory hurdles and competition laws could pose challenges if established players push back against Rapido’s market entry.
6. Hyperlocal and Quick Commerce Synergies
Rapido’s expertise in hyperlocal logistics could give it an edge in the emerging quick commerce sector. If it integrates food delivery with broader hyperlocal services—such as grocery and pharmacy deliveries—it could create a diversified revenue stream that extends beyond just restaurant orders.
7. Potential Partnerships and Alliances
To compete effectively, Rapido might explore partnerships with restaurant chains, cloud kitchens, or even retail brands looking to tap into last-mile delivery. Collaborations with payment platforms and fintech companies could also help drive adoption through cashback offers and loyalty rewards.
8. Consumer Experience and Trust Building
Food delivery is not just about speed—it’s about reliability, packaging quality, and overall customer experience. Rapido will need to invest in training its delivery partners
References:
Reported By: https://timesofindia.indiatimes.com/technology/tech-news/after-uber-rapido-set-to-take-on-zomato-and-swiggy/articleshow/118924501.cms
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