Why Food Delivery Companies are Offering so much Discount

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Zomato, FoodPanda, Swiggy and UberEats are the four leading companies in online food search and delivery business. Today, let’s understand how they can afford to give so much discount.

The concept of online restaurant search and discovery platform was introduced by Deepindar Goyal, the founder and CEO of Zomato.

The main target audience for all these companies was metro cities. Because people earn more money and also tend to spend more. Also, the distance between two places is long and a huge problem of traffic. That’s why all these companies became super successful in metro cities.

Nowadays, these companies are expanding their business to the small cities as well. However all companies know that there is less traffic and short distance but still they want to capture the market as quickly as possible.

Today, we all know that these companies are offering so much discount.

Here are the 4 Reasons why they can offer us so much discount. 

4 Reasons Why Food Delivery Companies are Giving so much Discount.

1. INVESTMENT:

Zomato is the most successful company in online food ordering. The company has declared 10 investment rounds till now according to CrunchBase. 

Alibaba’s subsidiary companies AliPay and Ant Financial have invested $200 million. Ant financial owns 10% ownership of Zomato. Zomato has got over $650 million of investment.

Same as, Swiggy has got over $450 million.

FoodPanda has got over $300 million. The Indian unit of FoodPanda is owned by Ola Cabs. 

UberEats is a part of Uber. So, the company does not need any extra money to grow the business.

Because of the huge investment amount, the companies are regularly spending more money on discounts and offers.

Also read: 7 Big Reasons Why OYO ROOMS is Growing Rapidly

2. LOSS LEADERSHIP:

Providing the high-quality service at a low price to compete with competitors is called as loss-leadership. That’s what these companies are doing. 

Hence, the companies are making no profit. Even, they are making big los. The main purpose is to grab the attention of the consumers.

Their main aim is making people comfortable for ordering from their platform. It means people should get used to ordering food online. 

In the end, there is profit to the consumer only. 

3. DATA ANALYSIS:

The more consumer they get, the more they analyse the data.

All these companies are technology driven. Once you order anything from the app, you start receiving notification of offers and discounts for the same or related items you have ordered. 

Also, they track our location to find out in which restaurants we are going. On the basis of previous orders, they will provide you more discount on the same/related items. If you have created an account with facebook then they get to know about your likes and dislikes about food. 

When we open an app, we get the list of items which we have previously searched. 

This is how technology working to understand consumer’s psychographic behaviour.  

4. LONG TERM APPROACH:

Zomato, FoodPanda, Swiggy and UberEats have never focused on profits. They are in big loss and still able to get a lot of investment. Why?

Because the brand value of all these companies is increasing rapidly. And hence that value is responsible for increasing the valuation of a company. 

COST OF RUNNING BUSINESS:

• Offers are provided by food delivery platforms, not by restaurants. That’s why companies have to pay 100% to the restaurants.
• The average cost of delivering one item is 30 Rs.
• Heavy marketing on social media.
• Protecting the data of users.
• If the consumer is dissatisfied with the service because of any reason, they give 100% cashback.

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