WageIndicator - David against Goliath: Can the Regional Indian Platforms Break the Monopolies of Bigger Giants?
This report has been written by one of the students who joined the WageIndicator Gig team during their Internship Program. The internship also allows the interns to contribute to the news collection and create visuals to give an overview of different platform economy topics.
The Indian food delivery industry: David against Goliath
Zomato and Swiggy, the top two giants in the Indian food delivery industry, may get some challenges from outsiders. According to an HSBC report, Zomato’s share was 54%, and Swiggy’s share stood at 46% in October-December, 2022 quarter. They do not mention the other platforms operating in small numbers.
However, Zomato and Swiggy are criticized from time to time for treating their ‘Partners’ in not an excellent way. Additionally, these platforms often turn out to be cheaper than the giants. These issues can open a window for those small platform companies who can leverage their regional establishments to a new level.
Payout structure: these are bad times for riders
Starting from the riders’ position, good payouts on platforms like Swiggy or Zomato are only for a higher volume of deliveries. However, the companies require the riders to achieve these targets in shorter and shorter shifts.
The real issue arises when the big companies change the pay structure without notice and lower riders’ earnings.
For example, in April 2023, Zomato-owned Blinkit faced strikes from its delivery partners because it introduced a new pay structure. The new pay structure slashed the minimum payout per delivery to ₹15 from ₹25. As a result, the delivery rider who was able to earn ₹1200 per day on average is now making only ₹600-700 a day. It equals almost a 50% reduction in earnings.
In June 2023, several delivery partners of the grocery delivery platform Zepto alleged that the new payout structure of the company is forcing them to drive rashly to get incentives.
For years, however, riders have shown a preference for smaller companies that offer better working conditions: unable to make ends meet, many of them switched to better paying delivery gigs.
Commissions: these are bad times for restaurants
Even restaurants try new models as alternatives to Swiggy and Zomato. The reason is the high commissions.
The platform menu price is generally higher than the offline menu price. Rahul Kabra, a LinkedIn user, shared a picture on the platform featuring a Zomato order bill and a physical bill of the same order from the same restaurant, The Momo Factory, in Mumbai. The discrepancy in the amounts on the two bills was immediately apparent. In his caption, Kabra stated that he was conducting a direct comparison between ordering online and ordering in person. He observed the following: the cost of the offline order was INR 512, while the Zomato order amounted to INR 690 (after applying a discount of INR 75). It resulted in a cost increase of 34.76% per order, equivalent to INR 178 [(690-512)/512].
There is a dire need for alternatives
More sustainable alternatives to Zomato and Swiggy have popped up over the years, attracting both riders and restaurants.
Waayu
'Waayu,' a food delivery application, offers budget-friendly and prompt food delivery services from various hotels and restaurants in Mumbai without applying any commissions. The app asserts that it is 15% to 20% more economical than platforms such as Swiggy or Zomato. It also addresses prevalent issues associated with existing online food delivery services, including exorbitant commissions, biased rankings, and negative reviews.
Namma Yatri
Auto Rickshaw Driver Union (ARDU) launched the ‘Namma Yatri’ app built on the government-backed Open Network for Digital Commerce protocol. It does not take any commission from drivers and is a Direct-to-Driver app. It started operating in Bengaluru and Mysuru.
Others
Other platform companies are not very famous but may prove to be great alternatives to the giants: some of them are Tokree, Thrive, Dotpe, and the already-mentioned Open Network for Digital Commerce (ONDC).
As per a report, the grocery delivery app Tokree pays more per delivery than the giants and operates in Mumbai. “For every Tokree delivery, I get paid Rs 35. But with Swiggy, I only get a minimum of Rs 20 per trip,” a rider says.
Tokree offers not only better pay, but incentives on bringing new customers on board.
Another emerging digital solution is Thrive, which offers a comprehensive package to assist restaurants in reducing their reliance on aggregators by enabling them to establish their own infrastructure. This encompasses various aspects such as digital menus, payment systems, fleet management, and customer data analysis.
The Google-backed technology platform DotPe eradicates the necessity of app downloads by allowing customers to place orders through QR code scanning or via WhatsApp swiftly. DotPe provides small and medium enterprises with a full-stack solution to set up an online payments and delivery system. It also provides store management and marketing management tools to these businesses. More than 1,000 restaurants, including prominent chains such as McDonald's, Starbucks, and Haldiram's, have embraced this platform.
Assam State Transport Corporation (ASTC) is preparing to introduce its first-ever app-based cabservice, which will soon be available to the people of Guwahati.
Lastly, government-backed ONDC is an open-source system requiring zero commission, where the customers can get cheaper products, food, etc, without even applying discounts on them.
Conclusion: who is winning, David or Goliath?
These alternatives are not free of defects: for example, many users have complained about the snags in the system of ONDC, and this may be the reason for the other alternatives, too, not attracting expansion.
Zomato and Swiggy can count on consolidated systems and on workers’ needs to make ends meet.
The commission issue is familiar to taxi drivers too. In October 2022, app-based cab and bike aggregators such as Uber, Ola, and Rapido were declared ‘illegal’ by the Karnataka government after several commuters complained transport department about the minimum fare being ₹100 for a mere 2 km.
Martijn Arets, platform expert from the WageIndicator gig economy team: "Because of the local nature of delivery platforms, there is always room for local initiatives. The challenge of these local initiatives is that they respond well to the wishes of delivery drivers and restaurants but struggle to offer something unique for the end customer. The big platforms can spread investment in tech over many more transactions and use their marketing more efficiently. In addition, they can often afford to offer below-cost services in markets to gain market share. Nevertheless, opportunities do exist for local initiatives the moment workers and restaurants work well together. Even a large commercial platform is worthless without delivery workers and restaurants.
A good example is the originally French platform cooperative Coop Cycle, which makes its technology available to local cooperatives of delivery workers. Besides setting up local initiatives, it is also essential to protect the interests of workers and restaurants in other ways. For example, the city of New York introduced a maximum commission during the Corona pandemic, and hundreds of organizations worldwide are fighting for better rights for workers."
Nonetheless, it is not enough to forgive the treatment reserved for riders and the precariousness they have to suffer. The same is for the high costs the restaurants have to face. Perhaps David is not yet ready to win against Goliath, but the trends can change anytime, and the giants need to understand that their spot can well be replaced.