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Pinnium Journal

Restaurants, Packaging, Delivery, Food, Cuisines, Conversations

The economics of hyperlocal delivery business – Part 1

Hyperlocal – relating to or focusing on matters concerning a small community or geographical area – Web Definition. And by this definition, a hyperlocal company which does point to point deliveries beyond a small area of say, a radius of 3 to 5 km, is not a hyperlocal delivery business, but a courier business. The economics of courier business is vastly different from that of a hyperlocal business. The most important difference is that hyperlocal businesses have to cater to “now”, while courier companies cater to the need of “later”.

Hyperlocal delivery can vary from food, groceries, goods, medicines, and so on, that are generally required instantly but cannot be consumed in a digital form.

This article will focus on the different types of companies in the food delivery space. There are generally three types of players operating and owning different parts of the food delivery stack.

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1 – Food: The most basic part of the stack and generally the restaurants own them.

2 – App: The customer facing part of the stack and generally the food delivery companies are built around it.

3 – Logistics: The final part of the stack, of delivery food from the source to the customers.

We can classify the business in to three categories:

1 – Food Business: All restaurants are under this category and cloud-only kitchens like Freshmenu, Holachef, Petoo, etc also fall under this business.

2 – App – This can be further classified in to marketplaces model such as Swiggy, Foodpanda, Faasos which aggregate all the food restaurants and food suppliers and inventory model such as Freshmenu, Brekkie, Ammis, Dominos and so on which serves only their food and generally only through their app.

3 – Delivery – Companies like Bikeninja, Runnr (business) who do only delivery and do not have an app.

So a full stack company is the one, which owns the food (product), the app (customers) and the delivery (experience). Very rarely do such pure play operator exist. For this to work out, you need to have great food, huge customer base and a solid logistics operation. Dominos is one such company. They do not outsource their deliveries yet, have massive national presence and rock solid delivery operations. Freshmenu is by and large a full stack company since they own all three parts of the stack, but outsource some part of the logistics to third party delivery service companies.

 

Short stack companies are the ones, which own at least one part of stack such as companies like Swiggy, which owns the app and the logistics, but depends on the restaurants for the products (food). Then there are companies like Foodpanda and Zomato, which own only the app (customers) and depend on restaurants for food and logistics service providers for delivery. Then comes the restaurants, who own the products (food) and sometimes the experience (delivery) also but depend on aggregators like Swiggy, Zomato and Foodpanda, etc to get the customers.

In the next article, I will explore the economics of food delivery from the perspective of the food delivery companies.

Nawaz Gaffoor

Founder and CEO, pinnium.com

 

Hello World!

restaurant-delivery-packaging

We introduce pinnium.com, a B2B marketplace for Restaurants, Packaging, and Delivery Industries.

Why did we specifically choose to focus on these three industries?  The short answer is there are no organised suppliers for these industries. Pinnium is organising the suppliers of various items for these industries under one platform, easing the procurement process for the purchase managers and business owners and enabling the suppliers to access to large base of customers in a single place  and bring efficiencies in reaching right audience and thereby reducing the cost to customers.

We are building a next generation ecommerce platform that will make buying online as easy as or easier than buying from your trusted suppliers offline. We are building technology tools to address the hassles of business procurement and bring the convenience of buying on a single platform from the comfort of your office.

We strive to bring the best products, brands, manufacturers, and suppliers for the restaurants, delivery, and packaging industry. Having catered to more than 1000 restaurants and some of the largest food companies in India in the last two years, we exactly know the demands of the industry and hence we take a holistic approach of connecting best brands, manufacturers and suppliers in a seamless way through technology. But above that, we take pride in our customer focus, industry solutions, delivery and service.

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