2020 was an interesting year for food delivery, both for aggregators (Zomato/Swiggy) and standalone brands (Pizza Hut/Dominos). Even as peak lockdowns shut restaurants, the dependence of many consumers on delivered food possibly increased. However, the larger theme has been that of a slowdown; the end-March to end-April lockdowns were the strictest, and its impact can be seen in plummeting reach of the two largest players.
Open rates and monthly active users show recovery towards pre-lockdown levels, but…users who open apps don’t count; paying customers do.
On this count, demand has not recovered much from April. Monthly Active Customers are the unique number of monthly customers transacting on a particular platform. To that extent the performance of Domino’s has been most consistent (more on that later).
This begs the question(s):
- Have a lot of people made a permanent adjustment to home-cooked food?
- Or is it an ongoing concern for safety?
- Or is a lower transacting population representative of lowered spending power/ disposable income?
All of the above perhaps…
For the sticky users who continue to transact, there hasn’t been much change in how often or how much they order; the lockdown period saw frequency and value hold steady thanks in part to the outlets that remained open for takeaway:
The pandemic is a hiccup, not a show-stopper.
Platform Extensions / What Else can My Riders Deliver?
Cross-selling products and improving network utilization makes inherent sense. Two questions businesses ask themselves:
- Why can’t we keep our riders busy through the day and not just at meal times?
- What else can we ‘credibly’ sell to our customers?
Being category agnostic clearly helps utilize scale. Uber did this with Uber Eats in 2015 and more recently bought out alcohol marketplace Drizly for $1.1bn to sweat its network more.
Speed is a drug – even next day delivery is too late and in the post-pandemic world, hyperlocal offers more opportunities than just food & grocery. As with jokes, hyperlocal success is all in the ‘delivery’! This is a space the delivery giants are stepping into (Swiggy Stores hosts products from small stores), while holding onto the food delivery business, which is somewhat less competitive now thanks to the ‘exit’ of players like FoodPanda and UberEats.
Building war chests
Aggregators are clearly building their war chests for this expansion (Source: Press reports):
Diversification away from food delivery was always on the anvil and perhaps a long time coming; the pandemic precipitated it.