Ride-hailing service provider Rapido’s planned entry into food delivery has caught the attention of online food delivery player Swiggy, with CEO Sriharsha Majety, while speaking to investors in London, stating that the company is watching the foray and will plan its moves accordingly.
Swiggy, and its Gurugram-based rival Eternal (formerly Zomato), have been the two dominant players in the food delivery space with a total market share of 95 percent. Both companies collect a commission of 20-30 percent from restaurant partners, which restaurant owners have recently objected to, saying the commission model disincentivises sales growth.
Rapido, originally a ride-hailing startup, has seen an opportunity in the and has come up with a different proposal, instead proposing to collect a flat fee, irrespective of order size and volume, similar to a subscription model instead of a varying commission model.
Rapido’s approach of charging a flat fee that leaves more money at the hands of restaurant owners incentivises them to increase sales on the platform. This has prompted some industry stakeholders to project that Rapido can potentially break the long-standing duopoly of Swiggy-Zomato.
“It'll be interesting to see if there's an alternate take to food delivery that can grow the category some more, because we're waiting for some more growth as well,” Majety told investors in London at a capital markets event hosted by Prosus, one of the investors in Swiggy and Rapido.
“We're definitely super agile and paranoid. And these are reactions that we're going to make. If we see a new opening that's going to be exciting, then we're going to be all over it,” Majety added.
Swiggy also holds around 11-12 percent stake in Rapido, which translates to $120-130 million at the current valuation of $1.1 billion.
Majety, however, cautioned that Rapido’s entry won’t be all smooth sailing. There were around 20 food delivery players around 2015-17 when Swiggy was starting out, and since then several players such as Foodpanda, Uber Eats, Amazon Foods have all folded up.
“It is not easy to just get an opening that you can go take a home run with,” Majety said when asked about his take on Rapido’s food delivery foray. These comments come at a time when both Swiggy and Zomato have seen their food delivery businesses growing at a more benign pace.
Majety said Swiggy will seize a business opportunity when it arises. “We're not going to wait and watch,” he added.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
