Food Delivery Market in India
Consumption in India has evolved over the years but it still has a long way to go. The consumer sector reflects the growth trajectories across regions as growth drivers have evolved differently in different states. Segregated by urban and rural areas and in terms of districts, the food delivery market is expanding in every sense. It is important to understand drivers that impact consumer choice, identifying markets with the biggest potential and spotting the geographies where the next big opportunity might emerge for the market. Growth indicators like a younger population, educated women, smaller families and accelerating urbanization provide an attractive opportunity for new product ideas and services.
India has a massive potential for the food delivery market in the long-term, considering the challenges to overcome and the market to capture. Especially with the rising digital transformation that the country is seeing and time constraints faced by smaller families in metros who demand convenience, the food delivery players seem to be in the right space.
Food delivery market in India is growing fast, with the likes of ‘Zomato’ and ‘Swiggy’ - delivery platforms coming into the picture and getting the lightning fast delivery process in place, the companies are providing an increased growth to the market. Almost, seventy percent of India’s GDP is led by the consumer sector and leaves a huge USD 1.2 trillion market opportunity for the sector to leverage on. This number is achieved by measuring the household characteristics like location, size, type, and food beverages etc.
As population plays a positive role in the Indian food delivery market, India is expected to be the third largest in Asia in the e-commerce market which presents the delivery giants with a humongous opportunity and an average annual growth rate of around 14 percent between 2018 and 2022.
However, the challenge remains on the supply side front with the poor infrastructure of E-commerce available in the country. A lot of consumers prefer cash over cards which pose another challenge for the food delivery e-commerce retailers. A delivery via an internal network of transport challenge was also overcome lately by the e-commerce players by using the neighborhood small shops or ‘Kirana stores’ as a channel for delivery. Also, the household disposable income continues to be low in India, which restricts the spending on online goods and products as only 8 percent of the total household population falls in the middle-income segment in 2018.
The international retailers acquiring a stake in domestic retailers like that of Wal-Mart in Flipkart, put them in a good position in terms of their competition with Amazon India. And even on the domestic front, the retailers like ‘Reliance Smart’, ‘Food Panda’, ‘Big Basket’ and ‘Grofers’ started online sales of food products. All in all the absolute size of the food delivery market completely overshadows the challenges that the food delivery market faces and it should see a significant rise in the coming years.