Flipkart is stepping into India's food delivery market, expanding trials and preparing for a public launch to rival existing giants Zomato and Swiggy.
Flipkart, the e-commerce giant owned by Walmart, is gearing up to enter India’s competitive food delivery sector, aiming to shake up the existing duopoly held by Zomato and Swiggy. The Bengaluru-based company has quietly begun testing its food delivery service, expanding its reach from a handful of espionage-for-planting-recording-device-at-openai/">employees to over 8,000, setting the stage for a public launch.
In its initial phase, Flipkart’s food delivery service appears as a separate tab within its well-established e-commerce app. Alongside its quick-commerce offering labeled "Minutes" and flight bookings, the food delivery trial taps into a government-backed network called ONDC, which helps connect local restaurants with online consumers. This allows Flipkart to incorporate both partner restaurants and those enlisted through direct contracts.
As part of its preparations, Flipkart has deployed a dedicated fleet of riders under its logistics division, Ekart. Unlike the riders servicing its quick-commerce segment, these riders are exclusively handling food delivery, donning the logos of "Eat-in by Minutes" as they navigate the streets of Bengaluru.
Flipkart enters a booming market, with the brokerage firm Bernstein estimating annual growth between 18% and 20% for the online food delivery sector. However, online orders still constitute just over 15% of the broader food services market in India. This presents a dual opportunity and challenge as Zomato and Swiggy dominate with an estimated 85 million to 95 million customers per year.
Forging a path in this competitive landscape, Flipkart is not alone. The ride-hailing company Rapido has launched its food delivery service, Ownly, offering restaurants a zero-commission model as a strategy to attract business away from the incumbents. Swiggy also aims to capture the budget-conscious segment with a newly launched app named Toing. This intensifying rivalry reflects the industry’s struggle against the traditional pricing models that have long favored established players.
Sagar Daryani, president of the National Restaurant Association of India, has voiced strong opinions on the need for alternatives in this sector. Representing over 500,000 restaurants nationwide, he pointedly stated, "Monopoly is bad, but duopoly is more pathetic." He emphasizes that the overwhelming dominance of Zomato and Swiggy has stifled competition and hurt restaurant profitability.
The major differentiator for Flipkart lies in its approach. While Zomato and Swiggy expanded into quick commerce after establishing their food delivery services, Flipkart is turning the model on its head. By leveraging its existing e-commerce logistics and quick commerce expertise, Flipkart aims to create a more efficient food delivery infrastructure that could prove leaner and more competitive.
Restaurants are hopeful for a shift in dynamics. Daryani highlighted that Flipkart plans to implement a base commission of around 10%, substantially lower than the 20% to 25% typically demanded by the current leaders. Including various promotional and advertising expenses, this change could lower overall costs for restaurants from 40% to 50% down to a more manageable 15% to 16%, which could enhance their margins significantly.
Attracting restaurants to join the platform is one hurdle, but winning over customers poses another significant challenge. Bernstein estimates that new entrants could potentially save customers approximately ₹20 to ₹30 (about 20 to 30 cents) per order, but whether this amount is enough to entice consumers away from Zomato and Swiggy remains uncertain. The incumbents can likely match new competitors' offers with deeper discounts and promotions, thus complicating Flipkart's entry into this thriving market.
Flipkart, however, has ambitious expansion plans. Insiders indicate that the company expects to publicly launch its food delivery service by the end of October and aims to expand its reach to five or six cities by year’s end. This rapid growth aligns with the competitive nature of India’s e-commerce sphere, where quick-commerce platforms are diversifying their offerings beyond groceries to include electronics, directly challenging established players like Flipkart and Amazon.
Despite this strategic push, Flipkart’s ongoing plans for an initial public offering (IPO) remain uncertain. Chief Executive Kalyan Krishnamurthy has declined to specify a timeline for public listing. Nevertheless, the company’s foray into multiple business sectors could help maintain customer engagement and frequency of app usage.
As local food delivery continues to flourish, Flipkart's entrance will be closely watched by industry insiders and consumers alike, eager to see if the company can carve out a niche in a market dominated by just a few players.
Flipkart did not respond to requests for comments regarding its food delivery service.
In recent news, the competition isn’t limited to food delivery. The landscape of e-commerce in India is evolving rapidly, with various players innovating operational frameworks and service offerings to retain and attract customers in an increasingly crowded space.
Jagmeet Singh covers developments in startups and technology policy across India. He has previously served as a principal correspondent at NDTV.
You can connect with Jagmeet via email at [email protected].