Can the Rise Of Direct Ordering Break the Duopoly Of Swiggy And Zomato? Restaurants are collaborating with 360-degree technology platforms that not only offer SaaS tools for direct ordering but digitize their operations

India's food delivery market has largely been a two-horse race between Zomato and Swiggy in recent years. While Zomato made its initial public offering (IPO) debut recently, Swiggy is reportedly in talks to close a new round of $500-600 million that could take its valuation to over $10 billion.

Accomplishments aside, aggregator platforms have also been at the receiving end of criticism from the National Restaurant Association for anti-competitive practices.

This has compelled many restaurants and food chains to look at alternative ways to directly reach customers rather than depending on aggregator platforms. While these restaurants have not moved completely away from these platforms, around 10-15 per cent of orders today come from direct ordering for many restaurants Entrepreneur India spoke with.

"Restaurants especially in the premium segment are partnering up with hyperlocal delivery platforms to deliver to customers and cut commission costs. The fact that QSR giants like KFC and McDonalds are already using Whatsapp ordering features gives credibility to this method of reaching out to customers," said Ankur Bansal, co-founder and director, BlackSoil.

While Whatsapp ordering is seeing traction from restaurants that have created a loyal base of customers with good repeat purchases, others are using the tools offered by many SaaS-based chat-commerce and conversational AI startups that have come up in the last few years such as DotPe, Easy Eat, RadYes, Lime Tray and few others.

According to YouGov's survey taken in December 2020, when it comes to food delivery from QSR chains; three in five urban Indians (60 per cent) prefer ordering food through apps such as Zomato and Swiggy. And, even though a majority prefer to order through a third-party app, many people (35 per cent) choose to place their order directly through a restaurant's mobile app or online through its website (26 per cent). A few (18 per cent) prefer ordering through both, food aggregators as well as restaurant apps.

Reasons Behind the Shift

The shutting down of dine-ins and dependency on deliveries to keep businesses afloat is one of the key reasons that forced restaurants to double down their efforts on direct delivery through better tech solutions. For instance, Chennai-based Dindigul Thalappakatti has been delivering directly to customers for more than two years now, even before the pandemic. But in the last six years, it has been focusing heavily on establishing direct connections with its customers.

"We wanted direct connect with customers rather than depending on the third party and not having customer data. Also, we are able to provide better pricing – our pricing on third-party aggregators is higher than our own platform to take care of delivery commissions," said Ashutosh Bihani, CEO, Dindigul Thalappakati.

Also, Bihani believes that direct ordering allows the team to provide personalized service to customers. The restaurant's direct delivery is available through order on phone, Dindigul Thalappakatti app, website and WhatsApp solution. It is currently in the process of strengthening the direct delivery operations which contribute to 15 per cent of Thalappakatti's overall delivery volumes.

More restaurants that we speak to want to own the customer relationship and they don't like to be at the mercy of third-party aggregators, said Rhythm Gupta, co-founder and CPO, Easy Eat, a Singapore-based SaaS startup that enables restaurants to digitize their operations.

"As aggregators, Zomato and Swiggy provide their customers with an umbrella offering, which contains menu digitization, seamless payments, delivery tracking and great customer support if things go south. But we're already seeing more entrepreneurs have started unbundling these offerings with unique value propositions. This enables restaurants to own the relationship with their customers and build a complete digital strategy," Gupta added.

For Bengaluru-based Chai Point, the idea behind launching direct ordering was to understand its customers and their preferences better. The company started its direct delivery to customers in May 2020 with an aim to build an omnichannel brand. "D2C is an important element in this journey. By building a D2C and a direct delivery service to the customer, we get a chance to understand their food and beverage preference more deeply and use the direct feedback coming from them to roll out new food and drinks products," said Amuleek Singh Bijral, co-founder CEO, Chai Point.

Chai Point allows customers to directly order via its app or its pan-India WhatsApp Channel. According to the startup, close to 10-12 per cent of total orders come via its direct ordering platform. "This is growing fast for us though," added Bijral.

For Karan Kabu, owner, Mumbai-based Light House Cafe, there are two reasons to launch direct ordering. "The first is to escape the enormous commissions charged by the aggregators. Second is the "discount traps" offered by these aggregators which leave negligible margins for restaurants," he said.

Mad Over Donuts too increased its focus on direct ordering as customer touchpoints reduced and online was the best way to ensure connectivity and engagement with the customer. "As a brand, we focussed on direct ordering even in the pre-pandemic phase. There are several benefits that come with direct ordering, like knowing the geographic presence of customers, their interest in a specific product and its acceptance and the cost implications for the customer as well as for us. It helps us understand our consumers better," said Tarak Bhattacharya, executive director, Mad Over Donuts.

SaaS To The Rescue

Many restaurants and food chains are integrating with a 360-degree technology platform that not only offer SaaS tools for direct ordering but digitize the entire operations.

These platforms offer an operating system with integrated QR-based table ordering, loyalty programs, payment solutions, social media integration, inventory and integrated delivery services. According to Easy Eat's Gupta, WhatsApp-based ordering and the availability of platforms like theirs have made the life of restaurant owners significantly easier and the trend is being seen across Asia and the globe.

"Easy Eat works closely with restaurants to digitize their entire operations from ordering to payment and delivery. Customers can order and pay using the phone, sitting on the table while the technology automates the workflow to capture all sorts of information and remove inefficiencies," he said.

Social media platforms, especially Instagram, have become effective channels for restaurants to boost their direct ordering through paid promotions. In the process the discounts and cashbacks through direct ordering are not only hard to ignore for customers but work well financially for restaurants as well, said Karan Kabu, owner, Light House Cafe

Mumbai's Light House Cafe has tied up with DotPe to promote direct ordering wherein customers can access through our weblink (available on Google and Insta) or through QR code. DotPe offers a SaaS and has tied up with Dunzo, Wefast and Shadowfax hence making the delivery part convenient and effective.

"With platforms like DotPe and Thrive gaining more and more popularity and also offering a user-friendly interface, switching to direct delivery has become a very convenient option," said Light House Cafe's Kabu.

Launched in 2020, DotPe offers digital solutions to restaurant businesses and allows users to order by scanning a QR code or remotely via WhatsApp. The platform's client list includes McDonald's, Starbucks, Haldiram's, Social, among others.

"Most organic channels, which means non-aggregator platforms, other than say ordering through a phone call, are expensive. This is where we enter. We build a strong organic channel for our customers at an affordable price, which ensures data security. We also work with them to get orders through effective marketing," said Mani Prakash, CEO, RadYes. Launched in 2020, RadYes offers a fully integrated tool with third-party partnerships for delivery, SMS, payment gateways, logistics and last-mile providers, point-of-sale systems, among others.

Using the tool offered by RadYes, brands enable direct ordering through many social media platforms including Facebook, Instagram, Snapchat and instant messaging platforms including WhatsApp, Messenger, among others. Additionally, they offer marketing support, analytics among others and cater to KSA, Egypt, Jordan, Kuwait, Oman, Qatar, Bahrain markets as well.

End Of Duopoly?

"It is only a matter of "months" before Zomato and Swiggy realize their business model has become obsolete. Restaurants are getting smarter and so is the public," said Karan Kabu, owner, Light House Cafe, while talking about how the food delivery and discovery space will shape up.

However, most experts believe that both aggregator platforms and direct ordering will coexist. "A new balance on self versus platform delivery is likely, especially with the rise of hyperlocal delivery service providers," said Chai Point's Bijral.

Swiggy and Zomato still are the primary ways many consumers discover restaurants and will remain the same for the coming years, added BlackSoil's Bansal. "Restaurants with a large customer base are looking at platforms that help them directly reach their customers to cut commission costs, but this still forms a small percentage of the market. Over the years, these platforms will find a way to co-exist where Swiggy and Zomato will remain the primary source of discovery and delivery infrastructure for upcoming restaurants," he said.

Customers looking for variety and varied taste options may also continue to be hooked to these apps. "Food aggregators provide a differentiated offering, as a platform rather than a single brand. However, high value-conscious and loyal customers will continue rooting for their favorite restaurant by placing direct orders," said Dindigul Thalappakati's Bihani.

Overall, till another path-breaking innovation happens in the foodtech space, food chains are expected to continue to deliver through Swiggy, Zomato and other newer entrants in the aggregator space while simultaneously reaching out to customers through direct ordering to get instant feedback and a better hold on customer data.