Rapido eyeing food delivery ops pilot in Bengaluru by next week
Rapido is set to roll out a pilot of its food delivery service, Ownly, in Bengaluru over the next 8-10 days starting with Koramangala, HSR, and Sarjapur localities. The company plans to scale the offering to ten cities over the next year, people directly aware of the developments said.
“The goal is not to rush the expansion…the initial plan was to do a larger launch in August but now a smaller pilot will be rolled out in July, which will give a lot of learnings,” one of the persons said. “The focus for the first two to three months will be Bengaluru followed by two to three more cities in September or October and get to 10 cities by next July.”
ET was the first to report about Rapido’s entry into food delivery on March 12. The company is looking to take on incumbents Zomato and Swiggy by aiming to replicate its success from the ride-hailing sector, where it has dented the Uber-Ola duopoly. The company, backed by the likes of Prosus, Nexus Venture Partners and WestBridge Capital, is expected to charge commissions in the range of 8-15% from restaurants, compared to 16-30% levied by Zomato and Swiggy.
Rapido is also in the process of formalising a memorandum of understanding (MoU) with restaurant associations, outlining mutual expectations ahead of the launch, these people said.
Restaurants are pushing for access to customer data, an industry-wide demand they have unsuccessfully raised with Zomato and Swiggy. In return, Rapido is asking eateries to have the lowest cart-level pricing on Ownly across various platforms while avoiding steep packaging charges.
“With Zomato and Swiggy, there were certain terms that were not agreed upon in the beginning and things evolved in a certain manner. With Rapido, the aim is that restaurants are considered to be key stakeholders right from day one,” a restaurateur, who spoke to ET on the condition of anonymity, said. “A framework is being prepared to ensure a few things…Rapido doesn’t plan to charge a platform fee but if it does, it shouldn’t exceed a certain amount. Customer data is something they’ve said they’re working on to share,” he said.
On its part, Rapido has also asked restaurants to ensure 4-5 menu items are priced below Rs 150 – as it plans to run a sub-Rs 150 offering on the food delivery app that is expected to be launched soon.
Notably, Swiggy – an investor in Rapido – also recently rolled out a Rs 99 store on its food delivery platform.
ET’s queries to Rapido did not receive a response till the time of publishing.
Industry reaction
A June 19 research note by BNP Paribas said that Rapido’s planned charges on restaurants are “below the variable cost per delivery, and we believe this could be unsustainable in the medium term.”
The launch comes at a time when the food delivery industry is witnessing a slowdown in growth.
“It seems unlikely that a new entrant can have any cost advantage versus Swiggy or (Zomato parent) Eternal. Also, we see issues on whether the existing riders of Rapido can serve a dual purpose of delivering food and driving taxis as food delivery riders carry food delivery bags and typically operate within specific areas,” the brokerage firm said.
Swiggy group CEO Sriharsha Majety, while speaking in London at an investor meet organised by Prosus, said that while each company will chart its own course, past experience showed that surviving and scaling in the category was far from easy.
Prosus is a common investor in Rapido and Swiggy.
“There were a dozen players in food delivery in 2015. In 2017, Uber and Ola threw their hat into the ring. Then, in 2019, Amazon threw its hat into the ring. In 2021, there was the entry of ONDC,” Majety had said, adding, “Credit to us and Zomato for having seen these and I think we do a pretty good job of serving the consumer. It is not easy to get an opening that you can take a home run with.”
“I think it will be interesting to see if there is an alternate take to food delivery that can grow the category because we are waiting for some more growth as well,” he said. “We are definitely super agile and paranoid. If we see a new opening, we are going to be all over it.”
“The goal is not to rush the expansion…the initial plan was to do a larger launch in August but now a smaller pilot will be rolled out in July, which will give a lot of learnings,” one of the persons said. “The focus for the first two to three months will be Bengaluru followed by two to three more cities in September or October and get to 10 cities by next July.”
ET was the first to report about Rapido’s entry into food delivery on March 12. The company is looking to take on incumbents Zomato and Swiggy by aiming to replicate its success from the ride-hailing sector, where it has dented the Uber-Ola duopoly. The company, backed by the likes of Prosus, Nexus Venture Partners and WestBridge Capital, is expected to charge commissions in the range of 8-15% from restaurants, compared to 16-30% levied by Zomato and Swiggy.
Rapido is also in the process of formalising a memorandum of understanding (MoU) with restaurant associations, outlining mutual expectations ahead of the launch, these people said.
Restaurants are pushing for access to customer data, an industry-wide demand they have unsuccessfully raised with Zomato and Swiggy. In return, Rapido is asking eateries to have the lowest cart-level pricing on Ownly across various platforms while avoiding steep packaging charges.
“With Zomato and Swiggy, there were certain terms that were not agreed upon in the beginning and things evolved in a certain manner. With Rapido, the aim is that restaurants are considered to be key stakeholders right from day one,” a restaurateur, who spoke to ET on the condition of anonymity, said. “A framework is being prepared to ensure a few things…Rapido doesn’t plan to charge a platform fee but if it does, it shouldn’t exceed a certain amount. Customer data is something they’ve said they’re working on to share,” he said.
On its part, Rapido has also asked restaurants to ensure 4-5 menu items are priced below Rs 150 – as it plans to run a sub-Rs 150 offering on the food delivery app that is expected to be launched soon.
Notably, Swiggy – an investor in Rapido – also recently rolled out a Rs 99 store on its food delivery platform.
ET’s queries to Rapido did not receive a response till the time of publishing.
Industry reaction
A June 19 research note by BNP Paribas said that Rapido’s planned charges on restaurants are “below the variable cost per delivery, and we believe this could be unsustainable in the medium term.”
The launch comes at a time when the food delivery industry is witnessing a slowdown in growth.
“It seems unlikely that a new entrant can have any cost advantage versus Swiggy or (Zomato parent) Eternal. Also, we see issues on whether the existing riders of Rapido can serve a dual purpose of delivering food and driving taxis as food delivery riders carry food delivery bags and typically operate within specific areas,” the brokerage firm said.
Swiggy group CEO Sriharsha Majety, while speaking in London at an investor meet organised by Prosus, said that while each company will chart its own course, past experience showed that surviving and scaling in the category was far from easy.
Prosus is a common investor in Rapido and Swiggy.
“There were a dozen players in food delivery in 2015. In 2017, Uber and Ola threw their hat into the ring. Then, in 2019, Amazon threw its hat into the ring. In 2021, there was the entry of ONDC,” Majety had said, adding, “Credit to us and Zomato for having seen these and I think we do a pretty good job of serving the consumer. It is not easy to get an opening that you can take a home run with.”
“I think it will be interesting to see if there is an alternate take to food delivery that can grow the category because we are waiting for some more growth as well,” he said. “We are definitely super agile and paranoid. If we see a new opening, we are going to be all over it.”
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