The E-commerce conundrum in Food Delivery

I was present at the India Retail Forum in 2012 at Mumbai’s Renaissance Hotel. The annual event was a carnival of sorts for Retailers across the country. Images Retail, the magazine publisher’s flagship event attracted thousands of retail enthusiasts every year and the year 2012 was a landmark one. This was when there was a cooling down in the Indian Retail story which scaled peak heights at the time. An estimated 350+ Malls were operational all over India and another 300 were in the making. India was touted to have 1,000 operational Malls by the year 2020 (which didn’t happen, obviously). Each mall would have atleast 250+ vanilla stores, 5-6 Anchor tenants and High Street rents had doubled in less than a decade. 

During an interactive session, Mr. Kishore Biyani, Founder and CEO of the Future Group was asked what went wrong with the group – this was the period the Group saw one of its toughest times in their history ever since they started operations in 1987 with their first ever company Manz Wear Pvt. Ltd. which sold suiting and shirting in Calcutta by the name and style of “Pantaloons” which was a combo-word of Pants and Patloons. Kishore Ji quipped that “they wanted to be everything to everyone” and hence a few things collapsed while a few stood tall and successful. The group’s e-commerce outing FutureBazaar.com was a colossal failure and couldn’t compete with a start-up named “Flipkart” (in 2012-13). So ironic looking back now. Their attempts to go “phygital” just didn’t work. Grocery e-commerce was unheard off and hyperlocal as a strategy didn’t even exist or was scripted. 

From running neighbourhood grocery shops measuring 1,000 sft. to running the Central chain of Malls across India, a hypermarket which redefined grocery and household products shopping in India, food courts and home improvement stores, joint-ventures with F&B chains and even a chain of kiosks by the name “ChaMosa” , which as the name suggests sold Chai, Samosas and may things more, the group was in to every format of retail which was in the book and which wasn’t. But the smart and suave entrepreneur that he is, Kishore ji exited his first love – “Pantaloons” store chain for Rs. 1,600 Crores to Aditya Birla Retail and pared an equal amount of debt driving the company back to success, profits and growth, eventually. 

Same is the case right now with many restaurants who wish to manage door delivery of food to customers. Off late, there has been a growing disquiet between the F&B houses – chains as well as neighbourhood standalone ones with the Food Tech companies such as Zomato, Swiggy among others. And the main bone of contention is that the tech platforms are overcharging the businesses – ranging from 20-45% towards discovery, discounts and delivery of food items to customers. What the restaurants believe is that these companies are mere delivery platforms. What the Food Tech companies are – are much beyond that. 

In India, eating out is “entertainment”. People dress up, wear make-up, connect with family and friends to step out for a meal – whether it is to celebrate a birthday or anniversary, salary weekend or just a casual outing. The premium that bars, pubs and restaurants have been commanding for “dining in” in India is not just for the great food, but also for providing an enjoyable and safe setting for individuals and cohorts of people to spend their time. So, more the premium a location is, the more expensive is the food (a cup of Coffee or Dal-Roti at a local restaurant vs. a  premium restaurant in a Mall, or a Star hotel & so on!). 

Assuming that patrons would keep paying more for the “setting” coupled with decent food, many restaurants across India have been charging a premium which has only been on the rise over the years. Even in a fiercely competitive category like pizzas – where Dominos specialises in take-aways vs. PH offering world-class dining options, prices of pizzas have remained more or less the same though Dominos saves immensely serving pizzas even to in-house guests in corrugated boxes with plastic chairs and tables. The likes of McD or BK have not been able to churn out profits like elsewhere in the world due to this continued focus on the restaurant format, the ambience and expected service standards. For Ex., India is probably the only country where we consumers expect someone to clear the paper packaging on which Burgers and Colas are served. So, the “cost of housekeeping” increases the business cost.

Now that consumers have been used to door delivery of F&B, mostly during the last 12 months and even before the pandemic began, the footfalls at restaurants for dining has dwindled. Sadly, most restaurant chains have not kept up with times and have followed their traditional ways of operating the business with the same kind of dine-in behaviour which today, unfortunately is becoming an expensive affair. With a total lockdown announced across some of the major towns in the country, restaurants are unable to operate the dining facility though the Government has allowed multiple delivery options. 

Now, what the Food-Tech companies have done, obviously is to charge consumers for deliveries and also charge a hefty commission from restaurants to catch-up on their hereditary losses – though am not sure if this model is sustainable. Even when the “Unlock” began around Aug. ‘20, many restaurants failed to convert their business model with a deeper focus on takeaways and deliveries, instead waited with bated breath for customers to keep pouring in. Until the second wave hit us and which has hit us very, very hard that there is no looking back now and consumers becoming weary to venture out, even after the so-called second wave slows down sometime in Jun. ‘21.

The ongoing tussle between the Restaurants and Food-Tech companies (I refuse to call them delivery partners because they are not just that) has reached a tipping point now that many restaurants are pulling off some of these platforms and are instead using pure-play delivery partners such as Dunzo, Shadowfax, Delhivery among others and / or are merely using their staff and waiters to deliver the food items. To opine the least, this is a disaster in the making.  The waiters and staff are not the “delivery person” material as their skill sets are quite different. But now, due to an imminent loss of livelihood, I believe they would double up their roles until they find their fitment elsewhere. 

To believe that each one is cut-out for the other’s business model is a myth. We saw how many so-called “Cloud kitchens” were created by the Food-Tech platforms which have not grown beyond a point. I am no one to judge but I guess, it’s best for the service providers to simply focus on their core skills so we consumers can keep at it without breaking this chain of discovery, ordering and reordering. Whether the players are listening to, is anyone’s guess.

Moving on... #Miles2Go

The past 12 months have been the most unfortunate and unhappy for millions of people worldwide. The Covid-19 pandemic was beyond comprehension in its new form since Mar. 2020 onwards and took epic proportions over the next few months. 

As they say, there is always calm before storm and in my case, it worked exactly this way on the professional front. Just that the lockdown period was the calm and what followed was storm, quite literally. I consider myself a lot luckier than the unlucky millions because I not only had a job to feed my family – my parents, wife and both kids tested Covid-19 positive (and I was the sole negative member in the home!) in May ’20 but each of them fought bravely and bounced back in full form in less than 45 days; I managed to ensure my team – starting from 100 around June ’20 growing all the way to 175+ around Mar. ’21 remained cautious of the dreaded infection and less than 10% of my workforce & their immediate family tested positive for the virus; increased point of sales presence for Levista Coffee across Tamil Nadu and Karnataka from 26,000+ in Mar. ’20 to over 79,000+ by Mar. ’21 – completely led by my brave boys in the field; which eventually led to a whopping 42% growth in the Brand’s top line over the past Financial Year; and finally – painstakingly have built a “solid team” of sorts which would work cohesively (and I sincerely hope) in my absence as I step down from Levista Coffee as Vice President - Sales & Marketing after joining in Jan. ‘20. 

It’s not been an easy decision for me to step down, honestly. It was unprecedented that I had to move on, even though things were looking bright for the Brand. Sometimes in life, we need to do what is right, rather than continuing to do what works well – for us and for others. More than this, I restrain from saying here or elsewhere the whys and whats of my decision – life moves on.

I wanted to summarise my learning through this tumultuous period even as thousands lost lives and livelihood, and here I was – making history by the day and night with unheard of and unseen types of marketing strategy coupled with fabulous execution by my team. By the way, these accolades have been showered by well-wishers around me – which I have openly declared as not mine and solely belong to my team, though there have been some black sheep around me. 

I credit the success of the Brand with the quote “Due to Corona or Despite Corona” but for the first time, I must confess that I kept moving on all these months “despite the black sheep or due to them”. At one point, you give in - for you need to do the "right thing". No blames, Peace. 

My single biggest learning during this period is to nurture people in the team and believe in them – as the adage goes, take care of your people and they would take care of the business. The moment it was formally informed of my leaving, many people within and outside my team reached out to me and expressed their disappointment over my decision. Goes to show that though I could have been harsh on them sometimes, they have perhaps realised and seen the  benefit for them – the larger view, perhaps. Another learning has been that I have maintained a healthy space between those around me and myself. This measured space ensured that we all had the much required time and thought process to ourselves. 

The fact that I have never called or summoned anyone on weekends or after office hours – not once in the past 12 months – is a simple edifice that appreciating everyone’s time works well. Keeping the interest of the staff and their families in each act and activity of the Organisation and staying on it genuinely works in the larger interest thereby delivering positive results. 

And lastly, never to antagonise those who are closer to the people who matter and speak behind you – it probably gives them more ammunition to pull us down. I had a choice – not to antagonise people and keep moving for the sake of money and a steady career; or to do the "right thing". I chose the latter. 

Obviously. When you are brought up with the right kind of “values” from childhood, that’s what you do. Works best for all of us, isn’t it. Adios, Amigos. Moving on and moving ahead in life. 

I have miles to go, after all. 

Buying Cars Online is Passe

After coming back home from the Voting Booth, I was sipping my 3^rd cup of coffee watching breakfast news on Tv. I showed my kids and wife, meanwhile two AVs of Tata Safari, the one which was produced in the late 1990s and the one produced this year. They were pretty impressed than I thought, honesty. Then I showed a Youtube Review of the vehicle. Though the reviewer spoke in Hindi, which kids do not understand exactly, he showed the features of the vehicle one after the other and having spent all their life in a single 4-W model, that is our beloved XUV500, they were mighty impressed with the newness that the Safari bought to experience. And mind you, all this even as we were watching a review of the model on a SmartTv. 

One day in 2012, my wife and I went around looking for an upgrade to our Hyundai Verna. Having shifted to Chennai from Bangalore and with both our parents around here, we thought a slightly larger vehicle (read: 7 seater) would be useful for long drives. We saw a few models but took test drive of just one, which was for a distance of 4 kms. After we got back in to our Verna, my wife quipped – either we buy the XUV500 or just continue with the Verna. Nothing else. My second daughter was 9 months old then. A week later, we were on our maiden trip to our Family Temple in a brand new XUV. After 66 months, sold the manual model and bought an automatic – everything else inside the cabin remaining the same but for the gear shift. 

During the lockdown period in 2020, I felt it made no sense to own the “White Elephant” anymore – a Ship is not built to be docked, after all. Thanks to a few good friends and fellow auto- enthusiasts, I refrained. Boy, I ain’t complaining. Have driven almost 18,000 kms in my XUV since Aug. 2020 when I kicked off my road trips, especially on the work front to meet my Colleagues, Distributors (of Levista Coffee) and to see first-hand the Retail Experience. Now that I am driving so much, I have a deep urge to move to another model, what with the same cabin, interiors and features in both models of XUV500 since 2012. 

I never imagined that a YouTube video would impress the secondary decision makers, rather – the Influencers – in the household while making a beloved purchase such as owning an automobile. Test Drives are an important touch-point in selling 4-W. In fact, one of the biggest reasons for success of Royal Enfield, where I worked from 2012 onwards and set-up 160 Dealerships pan-India was that the company allowed patrons and prospective customers to take the vehicle for a test ride. And alongside, offered experiential rides over weekends, special commemorative days, etc. This, worked well for the brand. When a user uses a product first hand – something that Apple first debuted in the Electronics space 2 decades back – the experience cannot be replaced by older means such as reading reviews or word of mouth from other users. 

Over the past few years, online shopping of Automobiles made some noise. In fact, I bought, rather booked my XUV500 in 2018 online for a token sum of Rs. 5,000 for which the Parent company gave me accessories worth the same value as a token of shopping online. Today, things have changed. It’s all about the experience. While family members may not give much heed to what’s beneath the hood, what matters most are the features, comfort and safety. My elder kid exclaimed when she noticed there were 6 USB ports in the new Tata Safari – something that’s perennially important for the Millennial Kids, perhaps. Wife was all excited about the Captain seats in the second row too, which gives great comfort, The very fact that a review (which is not at a showroom but in the living room) can entice potential customers, is in my humble opinion, a tip of the iceberg. The new “influencers” of buying behaviour want everything in their palmtops. Are companies listening? What’s the next big thing that could happen in this space? Virtual Reality, perhaps? Like driving inside the cockpit… Well, the day is not too far, I reckon. And of course, the charm of trials – can never be taken off ever.