For the online food delivery sector, which is trying to make inroads into deeper parts of the country, a significant opportunity comes from riding on India’s most popular sporting event — the Indian Premier League (IPL).
According to data sourced from Redseer Consulting, a Bengaluru-based consultancy firm, daily average order volumes on platforms such as Zomato, Swiggy, Foodpanda and UberEats, Faasos, Curefit, etc has surged 20 per cent during the ongoing IPL season, compared with the pre-tournament duration.
Experts believe that the 50-day long tournament brings food delivery platforms an important marketing opportunity to help sustain their customer acquisition drive in their newer and smaller markets across India. For this, the platforms are trying to lure in customers through the tried and tested promotion tool for online B2C sector — discounts.
No signs of profit, yet firms spend more on advertising
Given that food-tech continues to expand across India, advertising and marketing spending remains the top expense for India’s top two online food platforms Swiggy and Zomato, even as they continue to bleed money and are yet to make net profits. In 2017-18, Swiggy’s advertising promotional expense rose almost three times to Rs 154 crore, compared to the previous 12-month period. It made a net loss of Rs 397 crore in FY18 over a topline of Rs 442 crore. Similarly, Zomato’s advertising and sales promotion expense stood at Rs 81.47 crore for FY18, as against Rs 23.36 crore a year ago. The company made a net loss of Rs 78.49 crore on revenues of Rs 388.45 crore during the year.
“Our research shows that IPL increasingly features hefty discounts from online delivery players. These discounts could go up as high as 60 per cent this year. As online food delivery platforms have been spreading their footprints in 100+ cities (more so since December 2018), Redseer believes the IPL season is the opportune time to stoke the latent demand and acquire new customers in these new cities (and also drive wallet share increases for existing customers),” the firm pointed out.
While Swiggy has put out promo codes offering 60 per cent discount when a six is scored during a match, Zomato offers 40 per cent discounts and a match prediction game in its app that allows users to get 30 per cent cashback.
“Given the above discounting, we estimate the food-tech industry to reach 2.6 million daily industry average order volumes during the IPL season. This is ably helped by 50,000+ restaurant partners who have curated their menu for India’s biggest cricket league,” Redseer stated.
In addition to the discounts, the online platforms have also engaged in marketing campaigns and partnerships. Zomato has partnered with most IPL teams and its top ordering from its top restaurant partners has been made available at Bengaluru’s Chinnaswamy Stadium. Swiggy, on the other hand, is one of the official sponsors of IPL and has also partnered with IPL’s official online broadcaster Hotstar to allow orders through the streaming app.
Notwithstanding the push by online food platforms, the consumer internet space too has been leveraging IPL as a marketing opportunity for a while. As per information by Broadcast Audience Research Council India (BARC India), internet and online shopping segment has been among the top three advertised categories in terms of durations of advertisements for at least three years in a row till 2018 — for which the latest data is available. Other categories include smartphones and mobile service providers.
All in all, the total number of brands being advertised during the IPL have increased to 247 in 2018 from 138 in 2016.
However, IPL is not the only platform for food apps to cash-in on. Even as the tournament closes on May 12, Redseer said that going ahead the momentum will continue given that ICC Cricket World Cup will commence later this month. “We expect the trend to intensify in coming weeks as IPL enters final stages. Further, the momentum is likely to continue post IPL with the start of the ICC Cricket World Cup on May 30. With matches happening in the UK, there should be enough consumption occasions being created post 7 pm IST,” it noted.