The year 2016 was a challenging time for both Ola Cabs, one of the largest taxi-hailing companies in India, and the Indian arm of the food delivery firm, Foodpanda.
Nowadays, food delivery platforms need a strong backing of logistics. Thus, we have witnessed many handshakes happening between the players of both the sectors in the past two years. Mergers and acquisitions between the food-tech and delivery firms are the best solutions today to sustain in the food delivery market.
This business strategy was first adopted by Ola in 2015. Ola ventured into the food delivery space when it launched ‘Ola Café’ in March 2015. The service was launched in Mumbai and had expansion plans in other metropolitan cities too. But the project was unsuccessful and had to close its operation in 2016.
The bad time for Foodpanda India also started in 2016, after its German parent company, Delivery Hero decided to sell the Indian arm of Foodpanda. They were in talks with food aggregator companies like Zomato and Faasos, who have a well-established market in India. But many news media reported that Foodpanda had huge overhead cost burden which made the deal unappealing.
In the quest to save its business with the help of a new business partner, Foodpanda reduced its losses in the year 2017 by 70 per cent. The profit and loss statement accounted loss at INR 143 crore in the financial year of 2015-2016, which was reduced to INR 45 crore in the financial year 2016-17.
Ola immediately took the hammer and hit the iron while it was hot and bought Foodpanda for INR 28 crore in December 2017. This helped the cab aggregator firm to venture back into the food tech sector and also saved Foodpanda from losing its game in the Indian market.
Working in harmony and filling the gap
Ola had also announced its plan to invest $200 million in Foodpanda at the time of acquisition, which is much more than the $20- $30 million it had invested in Ola Café.
Foodpanda and Ola have taken their first step together and launched a film campaign – “The Crave Party”.
The idea behind this party is to bind its products and services with their customer, and a common bond between human beings is food, as mentioned by Ola cofounder, Bhavish Aggarwal in a recent blog post. The mission of Ola family, which includes Foodpanda now, is to strengthen the experience with their customers, not just through delivery services but also by providing a good food experience.
Along with the announcement of their new project, the Ola founder also invited people to celebrate their love of food. He mentioned in the blog that the new offers by Foodpanda will also be accessible from the mobile app of Ola cab service for iOS software users and would soon be introduced on android. The snack button in the app will take the customers to Foodpanda’s app or the website if the users don’t have its app in their mobile.
The press release of Foodpanda states that the campaign is all about celebrating the passion for food and the inevitable craving which can occur anytime. Under this ad film project, there are three videos which will do rounds on the digital and social media platform. The three advertisements run for 25-30 seconds and ask the question “What Do You Feel?” to the foodies to which they reply with their favourite food item. The video then concludes with the company’s latest offer in which desserts will be available for INR 9, snacks starting at INR 19 and biryani for INR 79. There are other offers for different brands which will vary from city to city.
The objective of this film campaign is to bring people together through their love for food. This objective is not innovative or something new in the market. Many food delivery firms have attracted people by offering heavy discounts and offers. To bind people with food is a tried and tested trick and it always hits the bull’s eye. If there is something new in these films, it is the strategy behind these ad films as it tries to use an emotional connection with people. The food is connected with feelings in the video. The question “What Do You Feel?” is associated with feeling food, as the foodies in the film reply with answers like “I feel like a Samosa with meethi chutney.”
There are chances that this party may attract more crowd and bring more orders than its daily average of 30,000 orders a day from 150 cities.
Where the Panda stands today?
It would be a difficult task to stand in the foodservice market for Foodpanda since Zomato and Swiggy have already created a competitive field. But Ola can easily beat Uber Eats with the help of Foodpanda.
Uber Eats is quite a new entity since it was incorporated in May 2017. Whereas the Gurugram based company, Foodpanda India was established in 2012, and it has its market across 150 cities and deals with around 1.2 million orders per month. Uber Eats was first launched in Mumbai and in the span of one year, has covered 13 cities in India till now. They are adding at least 40 new restaurants daily on their platform and already catering to around 1 million orders on a monthly basis. The aggressive growth plans of Uber Eats will help them increase their market share. But now that Foodpanda too has the backing of the logistic segment under Ola, they might have a favourable opportunity to gain more space in the food content and delivery sector.
As for the incumbent pioneers of food aggregating service providers, Zomato and Swiggy are also running after the logistics companies and trying to increase their mobility. Both the firms have increased their delivery fleet. They had third-party logistics providers dealing with the delivery system. But as competition is increasing with time, both companies have started taking things in their own hands.
Zomato had acquired Runnr last year. It is a Bangalore-based delivery firm which now handles 60 per cent of Zomato’s deliveries. Swiggy has also increased its fleet to 55,000 from 45,000 on June 2018. In comparison, Zomato has 50,000 delivery people from just 1800 in January.
Zomato has now reached the mark of 5.5 million monthly food orders, as stated by Deepinder Goyal, Zomato’s cofounder in a blog post on March 2018. It crossed the 4 million monthly order mark that Swiggy had garnered till now.
With the support of new logistics plans, these companies are expected to increase their reach soon. Whereas, for Foodpanda, the struggle is to earn the profit and then plan expansion. If such food campaign can help the Ola backed company to expand its customer base and earn profit too, then we should wait and feel the food with Foodpanda.