Rapido App Soon to Launch in Food Delivery Services

According to sources, the Rapido app is in advanced talks with NRAI to soon enter food delivery services. This bold move will make it the third player after the Swiggy-Zomato duo and compete with them in food services.

Summary:

1. Rapido, a ride-hailing company, is in advanced talks with the National Restaurant Association of India (NRAI) to enter the food delivery services market.

2. The move comes as ONDC’s food and beverage sector is losing popularity, with orders down by 10% month on month to 14 lakhs in February.

3. NRAI has criticized Swiggy and Zomato for launching q-commerce in meal delivery through their cloud kitchen brands, Snacc and Bistro, claiming conflicts of interest in data use.

Based on the startup news, it has proposed reduced commission and subscription-based models to restaurants utilizing its existing growth and experience in logistics.

Rapido App To Disrupt Food Delivery Services

Rapido app, a ride-hailing company, is in advanced talks with the National Restaurant Association of India (NRAI) about onboarding facilities for its entrance into food delivery. NRAI, which represents over 500,000 eateries across the country, has been working for a competitive “third player” in the industry now dominated by Swiggy and Zomato, which together account for 95%.

In January, NRAI actively explored enrolling member restaurants on ONDC, a government-backed project designed to split digital commerce. While these attempts remain the same, an efficient economic model has yet to be established.

“In the meantime, conversations with the Rapido app have been ongoing for quite some time. Two ideas have been presented, one aimed at decreasing the current commission load from 35-45% to significantly lower levels, and the other a subscription-based approach that eliminates commissions,” he noted.

The zero-commission SaaS approach is similar to Rapido’s successful move to a subscription model in its autorickshaw and cab divisions last year, which helped the firm reach $1 billion in gross merchandise value. Rapido, on the other hand, continues to charge commissions for its main business, bike taxis. “Larger restaurant chains may choose a subscription model, as they do not have a fundamental requirement to promote discovery.

Smaller restaurants of food delivery services can still benefit from lower commissions, but they must also optimise their advertising costs. “Both approaches have advantages,” Rungta remarked. Rapido has prior experience in food delivery. Its bike-taxi drivers use their downtime to transport food orders for Swiggy, which also invests in the company. It has a similar relationship with ONDC.

According to insiders, Swiggy’s agreement with Rapido does not include a restriction that hinders it from entering the food delivery business. However, it does include a condition stating that it cannot provide fleet services to Zomato. Rapido has also recently increased its fleet connection with q-commerce platforms Zepto and Swiggy Instamart.

The move comes at a time when ONDC’s food and beverage (F&B) sector is losing popularity, with orders down by 10% month on month to 14 lakhs in February. NRAI has also criticized Swiggy and Zomato for launching q-commerce in meal delivery through their cloud kitchen brands, Snacc and Bistro, respectively, claiming that this creates conflicts of interest in data use.

Many outside experts believe that alternative food aggregators can act as a catalyst for change in the existing monopoly of the food distribution business. “They can act as a control checkpoint for platform providers from dominating the market concerning high commissions and limited bargaining power for restaurant owners,” said Arun Moral, MD of Primus Partners India.

He went on to say that boosting hyperlocal and niche discoverability will help smaller or regional F&B firms compete on a level playing field. Alternatives can function as pseudo-regulators and marketing-correcting agents, ensuring balance among restaurant owners, industry groups, consumers, and regulators. This transition may end in a more expanded food delivery space, restoring power to restaurants and consumers while maintaining a fair economy,” Moral said.