File image of a Swiggy delivery person in Mumbai (Image: JasonArora/Shutterstock.com)
Bowing to the constant demand of restaurants, online food-delivery service provider Swiggy has started piloting 'order direct' in partnership with select restaurants in Mumbai.
The company has been in talks with restaurants for over a month and has been experimenting with sharing customer data and rationalising commissions or the take rates it charges restaurants for delivering food and unbundling services it offers restaurants under order direct. The plan is to charge a base fee, besides a nominal delivery fee.
"We have been in talks on these for the last few weeks. While other details are not yet clear, this fundamentally looks like a step in the right direction," Anurag Katiyar, president of National Restaurants Association of India (NRAI), told Moneycontrol. Swiggy didn't comment.
Swiggy's foray into order direct was first reported by CapTable.
Restaurant body hails move
Interestingly, the development occurs even as NRAI has filed a complaint with the Competition Commission of India (CCI) against Swiggy and rival Zomato, alleging that the practices followed by the two firms have “appreciable adverse effect on competition”.
Issues such as bundling of services, data masking, deep discounting, lack of transparency and exorbitant commissions have been highlighted in the submission. Later, in an additional complaint, NRAI also claimed that the two aggregators forced restaurants to give discounts while charging them exorbitant commissions and delaying payments.
While Zomato didn't immediately respond to a query in an interaction with Moneycontrol a week ago, the company's management had said that if they started unbundling services, it would get costlier for restaurants.
“We provide customer, tech and logistics support, deliver orders within 30 minutes for most restaurants and also help acquire new customers much more than any other platform, and in a more cost-effective manner. Given all these things, most restaurant partners actually understand the value we add," Gaurav Gupta, co-founder, and Akshant Goyal, chief finance officer, Zomato, told Moneycontrol.
The company also stressed upon the importance of the privacy of customer data. “We have actually designed a system where maintaining the privacy of customer data is so paramount. We are able to enable restaurants to deliver the service they have and technology enables all of that. I do not think that is required today and we are actually trying to do the right thing here for customers and restaurants," they said.
Also read - Exclusive | Discounts core to our business, investors not in a hurry to see profits: Zomato
How Peppo, DotPe lead the way
Swiggy and Zomato comfortably held dominant positions in the food-delivery space till the time smaller firms such as Peppo and DotPe emerged, fuelling a direct ordering channel for restaurants earlier this year. Rival EazyDiner also spread its wings with the launch of multiple offerings to capture the market at this hour.
These companies tried to address a huge gap that remained as one of the biggest concerns among the restaurateurs -- direct engagement with customers in the erstwhile duopolistic market created by Swiggy and Zomato.
These platforms promise to share customer data with restaurant owners.
While Peppo offers restaurants a platform through which they can manage online ordering, DotPe enables merchants to digitise their business. It helps merchants create online websites, make digital payments, provide analytics of customers and aggregate deliveries.
Eazydiner, on the other hand, reduced its commissions to just 5 percent for tech discovery of the restaurants where a user wanted to order.
On an average, Zomato and Swiggy charge 28-30 percent commission from restaurants for facilitating an order.
Zomato launched its public issue on July 14. Its initial public offering got subscribed 1.05 times on the first day. The offer received bids for 75.60 crore equity shares against the IPO size of 71.92 crore equity shares.