Online food discovery, ordering and supply apps Foodpanda and Uber Eats, owned by cab aggregating giants Ola and Uber, respectively, spent nearly $400 million in 2018 on speedy growth in addition to discounting to achieve new prospects, it’s learnt.
According to sources, the 2 companies are planning to make comparable investments this yr as they plan to diversify into grocery delivery services and at last arrange concierge service by finish of the yr.
The struggle for quantity three
The duo have been preventing for the third spot within the food delivery ladder, with Uber Eats edging Foodpanda by 2 million orders. Together, they ship 15 million orders a month. Market leaders Swiggy and Zomato ship between 20 million and 30 million orders a month.
While buying Foodpanda in December 2017 for round $50 million, Ola had introduced it will make investments $200 million within the agency. It has caught to that promise. To take on Swiggy and Zomato, it has been burning money to low cost food and provides greater margins to restaurant house owners.
A supply within the firm mentioned Ola was following the identical playbook with Foodpanda because it did in its early days as a cab aggregator — deep reductions. “The company’s goal, at present, is to get as many users and orders as possible. It has to take on Swiggy and Zomato,” mentioned a former Ola worker. Foodpanda has been on a speedy growth drive as nicely. With its growth to 50 cities, Foodpanda’s supply community is now the biggest within the nation, with greater than 125,000 supply companions hooked up to the platform. All of this comes at a value.
Where precisely are they spending
The two foodtech unicorns burn rather more than their mobility counterparts. But they’ve extra depth of their food delivery arms and higher constructed out inner options. “Rapid expansion as well as discounting cost money. Foodpanda is offering as much as 70 per cent discounts at times. They are paying the balance amounts to restaurants via which they are giving the offers. All this requires a lot of cash,” mentioned a senior govt in Foodpanda’s advertising technique group. UberEats has additionally turned up the low cost quantity in key cities.
Foodpanda can also be working on increasing its community of cloud kitchens, which is a capital intensive programme. It began this after it acquired Holachef final yr.
“Setting up central kitchens is always a capital intensive measure. The kitchens have to be equipped, chefs and support staff need to be hired and delivery logistics need to be installed around the kitchens. All this has been a major expenditure for Foodpanda,” mentioned the supply.
Along with this, Foodpanda additionally made massive hires and stepped up restructuring in its current workforce. All in all, it meant spending a lot to make the corporate aggressive within the present panorama.
On the opposite hand, UberEats, which was launched in Mumbai in May 2017, has been spending on including cities and creating the community for its grocery supply initiative, which it plans to start out this yr.
Now current throughout 37 cities, it’s also spending a honest quantity on advertising to amass prospects both by way of reductions or out of doors advertisements.
This yr, the corporate may also develop its community of digital eating places in partnership with Café Coffee Day.
Last yr the 2 corporations partnered to launch ‘delivery-only’ restaurant manufacturers solely on the Uber Eats app. The firm has been operating a pilot since November final yr and can develop on the programme.