Flipkart Set to Launch Food Delivery Service by October 2023
Walmart-owned Flipkart is gearing up to enter India's competitive food delivery market, challenging Zomato and Swiggy.
Flipkart is currently testing its food delivery service with over 8,000 employees.
The company aims to launch publicly by the end of October 2023, expanding to multiple cities.
Restaurants may benefit from lower commission rates compared to existing platforms.
Flipkart, the Indian e-commerce giant owned by Walmart, is preparing to enter the food delivery sector, aiming to disrupt the current duopoly held by Zomato and Swiggy. The Bengaluru-based company is conducting internal trials of its food delivery service, which has expanded from a few hundred employees to over 8,000. This initiative includes a dedicated fleet of riders managed through its logistics arm, Ekart, separate from those handling quick-commerce deliveries, as it gears up for a public launch.
The food delivery service is integrated into Flipkart's main shopping app, appearing alongside its quick-commerce offerings. It utilizes a network of restaurants connected through ONDC, a government-backed initiative, as well as those directly partnered with Flipkart. Riders, identifiable by their “Eat-in by Minutes” jerseys, have already begun fulfilling orders in Bengaluru, where Flipkart is headquartered.
The food delivery market in India is estimated to grow at an annual rate of 18% to 20%, according to brokerage firm Bernstein. Despite this growth, online delivery currently represents just over 15% of the overall food services market. Zomato and Swiggy collectively serve approximately 85 to 95 million paying customers annually, highlighting the significant market potential for new entrants like Flipkart.
Other companies are also attempting to challenge the established players in this space. For instance, ride-hailing service Rapido has launched its own food delivery service, Ownly, which charges no commission to restaurants. Meanwhile, Swiggy has introduced Toing, an app targeting customers seeking budget-friendly meals. These developments indicate a shift in the industry as pressure mounts on existing pricing models and commission structures.
Flipkart's approach differs from previous attempts by companies like Amazon and Google, which struggled to gain traction in the food delivery market. By leveraging its established e-commerce platform and quick-commerce capabilities, Flipkart aims to create a more efficient food delivery service. The company has proposed a base commission of around 10% for restaurants, significantly lower than the 20% to 25% typically charged by Zomato and Swiggy. However, the challenge remains in attracting customers away from these incumbents, as they may offer deeper discounts to retain their user base. Flipkart plans to expand its food delivery service to five or six cities by the end of 2023, while its long-anticipated IPO remains uncertain amidst increasing competition in the e-commerce sector.
