Why delivery applications depend on rapid innovation | So Good News


Last month, Zomato took another leap by announcing long-distance food delivery: get a biryani in Hyderabad from the comfort of your Delhi apartment. This comes months after the short-lived “10-minute grocery delivery” frenzy. In a country where life-saving ambulances take long to arrive, new-age startups are doing their best to stay on top with innovative and exciting models—the latest iPhone 14 delivered in 10 minutes.

Thanks to pandemic-induced lifestyle changes, the goal of disrupting the challenge seems more attainable for supply-tech companies than ever. The fast-paced retail space has become highly competitive, and the race to gain market share, even at a cost, could spark unprecedented ideas, analysts said.

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“With new users not growing as fast as expected, players are looking to drive this rapid innovation and unlock greater market share from existing users,” said Abhishek Gupta, engagement manager at RedSeer Consulting. The pressure to succeed may increase. and will even expand to other categories in the future. The day when robots and drones deliver paracetamol and cosmetics in less than 30 minutes may not be far off. “Investment in advanced inventory and supply chain management technologies, as well as strategic dark store locations, can be critical (for more innovation),” said Harsha Razdan, partner, KPMG India. must invest and develop systems that ensure efficiency, safety and sustainability in the long term.”

The delivery landscape

Innovations in the Q-commerce (QC) space have been funded by high investments. According to consulting firm RedSeer, the sector is expected to grow 10-15 times by 2025 to become a $5.5 billion industry. The four largest hyperlocal delivery companies — Zomato (including Grofers), Dunzo, Zepto and Swiggy — have seen a total investment of more than $6 billion in the last five years, according to a Mint funding analysis.

However, most of these companies are still making losses. Zomato, the largest player in the space, said it hopes to beat Ebitda by this financial end. “The overall profitability (of the fast food business) will also be a function of how aggressively we expand and open new dark stores,” Zomato said in a recent investor call. With a strong focus on the bottom line, QC companies can move forward. Funding is more selective in scaling innovations, given the need for winter and capital savings, experts say.


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10 minute pass?

In addition, innovations must stand the test of time. The bold launch was followed by rumblings of roughly 10-minute deliveries, as companies had to contend with backlash over rider safety, as well as difficulties in fulfilling orders on time and insufficient expansion of dark stores for lack of capital.

“Ten-minute delivery has been a great way to engage customers, but most companies seem to deliver on average in 15-30 minutes or more,” said Anand Ramanathan, partner, Deloitte India.

So what happened? Simply put, the model quickly unraveled in line with the realities of the unit economy: Companies scrambled to cut costs and squeeze cash to preserve investor capital during this year’s funding winter. The model also created logistical challenges during rush hour, and companies struggled with a shortage of delivery personnel. Failure should be a lesson for companies to continuously innovate.

Gig protest

The sector is incomplete without workers, and the gap between startups and gig workers is widening. Profit-enhancing measures have often frustrated suppliers, who are facing reduced incentives, steep targets and a lack of social security.

“Hyperlocal startups don’t talk to suppliers or take their concerns into account before developing innovations,” said Shaikh Salauddin, general secretary of the Indian Federation of Applied Transport Workers (IFAT), an industry body.

Dunzo’s efforts to group orders to improve profitability have been met with protests by workers who work hard for little pay. Swiggy, Zomato and Fraazo tackle the protests and represent a global trend. As gig workers make up a larger share of the service workforce, innovation for profitability must account for them. Zomato’s repeated insistence that they don’t force employees to deliver within 10 minutes is a testament to that.

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