Rapido, famous for its bike taxi service, has now entered the field of food delivery. The company has started this service at a very low cost (almost zero additional cost) by activating its 40 lakh rider network. This has rung the alarm bells for big players like zomato (now Eternal) and Swiggy.
Impact on zomato and Swiggy's earnings
According to the report of Elara Securities, if Rapido implements its plan correctly and on a large scale, then it can harm the stable revenue model and profitability of zomato and Swiggy. zomato and swiggy have been doing food delivery for the last decade and now they have set a target of 5 percent adjusted EBITDA. But Rapido's fast entry can shake this stability.
Direct competition with cheap commission structure
Rapido's commission structure can create a stir in the market. While zomato and swiggy charge 21-22 percent commission from restaurant partners, Rapido will charge only 8-15 percent. Not only this, there will be a delivery fee of Rs 25 for orders less than Rs 400 and Rs 50 for orders more than Rs 400. This service will start as a pilot project from Bengaluru.
Strong hold in rider network
Rapido has 40 lakh riders with 30–35 lakh daily rides. In comparison, Eternal (Zomato) has 4.4 lakh and swiggy has 5.3 lakh riders. That is, Rapido is already in a very strong position in last-mile delivery.
One app, three tasks
Rapido's plan is not just food delivery. Ride, parcel and food delivery will be merged through a single app. This will not only increase the earnings of the riders, but will also reduce logistics costs. The algorithm will decide which rider should deliver what, when and where so that more money can be earned in the shortest distance.
What could be the challenges?
The Elara report also states that Rapido does not have a dedicated fleet for food delivery, which may affect the quality of orders that require short delivery time (less than 30 minutes). This is the reason why new players like ONDC and ola have not been able to move much ahead till now.
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