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Business News » Small Business News

Now online food delivery start-ups see fall in orders

A RedSeer Consulting report said the number of orders per customer has been declining for two consecutive quarters since Q4 2016.

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Now online food delivery start-ups see fall in orders
An illustration of a food delivery boy on a scooter. Photo: Pixabay
Written By: ZeeBiz WebTeam
Updated: Mon, Oct 09, 2017
01:45 pm
Mumbai, ZeeBiz WebDesk
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Key highlights:
  • The increase in adoption of food-tech brings down the order per customer in Q2 2017
  • The number of orders per customer has been declining for two consecutive quarters since Q4
  • Even in Q1 2017 it had declined to around 6 orders per customer from around 7

The online food delivery business may have seen many start-ups chasing your money but the growth seems to be slowing down now. 

A RedSeer Consulting report said the number of orders per customer has been declining for two consecutive quarters since Q4 2016.

While the number of orders per customer in Q4 2016 was approximately 7, in Q2 2017 it has declined to 5 orders per customer.

Source: RedSeer Consulting

“With expansion in order volumes being driven by the addition of new customers, the no. of orders per customer has declined,” said the report.

Even in Q1 2017 it had declined to around 6 orders per customer from around 7 per customer in Q4 2016.

The Indian online food delivery industry has seen a 15% growth in second quarter of 2017. The April-May-June quarter saw a large growth of 15% from Q1 2017 due to the increase in volume from underpenetrated cities.

The daily order volume saw a huge surge in Q2 2017 as it increased to 3.49 lakh from 3.04 lakh in Q1 2017, a growth of 15%, according to a RedSeer Consulting report.

Even the quarterly gross merchandising value (GMV) registered a growth of approximately 17%. This is as the GMV in Q2 2017 stood at $173 million from $148 million in Q1 2017.

The report said that with the growth being limited in the penetrated cities, many of the players in the Indian online food delivery business were pushing for growth in volumes in under-penetrated cities.

This came after home deliveries made by restaurants dropped to 30% between April to June 2017 as start-ups like Swiggy, Bikeninja and Grab capture the market.

With newer start-ups coming up with better on-time delivery rates the deliveries via restaurants dipped in the second quarter of 2017, a report by RedSeer Consulting said on July 31.

“In OND'16, the share of orders fulfilled by the restaurants was about 40% which has reduced to about 30% in AMJ'17 (April, May, June),” Foodtech expert of RedSeer Consulting, Rohan Agarwal said.

The online food delivery business in India grew by 150% year-on-year (YoY) in terms of order volumes in 2016 with an estimated gross merchandising value (GMV) of $300 million.

However, while the online food delivery business seems to making a slight recovery, it had faced a lot of issues in the previous year which let to lot of them shutting down or merging.

For instance, TinyOwl merged with Roadrunnr in 2016 to become Runnr. Runnr in September this year was further acquired by Zomato for around $40 million.

FoodPanda was acquired by Delivery Hero, while other food delivery start-ups just ended up closing include Zupermeal, iTiffin, EazyMeals, Zeppery and BiteClub.

Even Zomato had faced numerous problems in 2015 and 2016 as it laid off around 10% of its employess. The same was done so with other players in this business.

The players in the space also face competition from new entrant Uber with the launch of its UberEATS online food delivery service this year.

ALSO READ:
  • Restaurant owners breathe easy as food delivery start-ups grow in size
  • Grocery delivery start-ups get ahead of food delivery start-ups in funding
  • India witnesses high level of merger and acquisition in online food delivery start-up space

 

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TAGS:
Online food deliveryonline food delivery start-upsQ2 2017orders per customersfood-techRedSeer ConsultingStartups
RELATED NEWS
India witnesses high level of merger and acquisition in online food delivery start-up space India witnesses high level of merger and acquisition in online food delivery start-up space
Indian online food delivery orders grow by 15% in Q2 with focus on under-penetrated cities Indian online food delivery orders grow by 15% in Q2 with focus on under-penetrated cities
Indian online food delivery grows by 150% in volumes in 2016 Indian online food delivery grows by 150% in volumes in 2016
Restaurant owners breathe easy as food delivery start-ups grow in size Restaurant owners breathe easy as food delivery start-ups grow in size
More and more restaurants are turning to food delivery start-ups More and more restaurants are turning to food delivery start-ups

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