Rapido plans to enter food delivery, challenging Swiggy and Zomato's dominance

Ride-sharing app Rapido is reportedly planning to introduce a food delivery service on its platform, as per a report by The Economic Times. The company is currently in discussions with restaurateurs to explore business opportunities in this space.

According to the report, Rapido executives have been meeting with restaurant owners to develop a business model that could potentially challenge the commission structures of existing food delivery giants, Swiggy and Zomato. This move marks a significant step in Rapido’s strategy to diversify its operations beyond ride-sharing.

Rapido’s Growth Journey and Market Position

Rapido was launched in 2015 as a bike-taxi platform and has rapidly expanded its services over the years. Within less than a decade, the company has secured the second position in India’s ride-sharing market.

The company’s latest growth strategy comes on the heels of surpassing $1 billion in annualized gross merchandise value (GMV). The decision to explore food delivery aligns with its ambition to scale operations and establish itself as a major player in India’s mobility and logistics industry.

Early Discussions and Strategic Considerations

As per sources cited in the report, discussions are still in the early stages, and plans have yet to be finalized. One of the key considerations for Rapido is whether it can effectively compete with the dominant market players, Swiggy and Zomato, who currently control a significant share of India’s online food delivery market.

Interestingly, Rapido already facilitates food delivery services for individual restaurants using its existing two-wheeler fleet. Additionally, Swiggy is an investor in Rapido, but their partnership does not include an exclusivity clause, leaving room for Rapido to expand into independent food delivery services.

Rapido’s Nationwide Presence and Expansion Plans

Rapido currently operates in 100 cities across India and has ambitious plans to expand to 500 cities by 2025. The company recently secured $30 million in funding from Prosus, a Dutch investment firm. This follows a $200 million funding round in 2023 led by WestBridge Capital, which propelled Rapido’s valuation to $1.1 billion.

Over the past few months, Rapido has witnessed a significant increase in daily ride bookings. In November, the company recorded 2.6 million daily rides, which has now increased to 3.2–3.5 million rides per day. While the majority of rides still come from bike taxis, the company is also experiencing growing demand for auto-rickshaws and four-wheeler cabs.

Subscription-Based Model for Gig Workers

One of Rapido’s innovative approaches to driver partnerships involves a subscription-based model. Instead of charging commissions on every ride, gig workers and drivers pay a daily or weekly fee to access the platform and its customer base. This model is gaining traction and has contributed to the company’s expansion into new transportation segments.

Challenges and Opportunities in Food Delivery

Rapido’s move into food delivery comes at a time when the industry is experiencing a slowdown in growth. Many restaurant owners and aggregators have raised concerns over high commission rates imposed by existing food delivery platforms. This ongoing debate provides an opportunity for Rapido to offer a more cost-effective alternative for restaurant partners.

Zomato’s founder, Deepinder Goyal, has also acknowledged systemic challenges in the food delivery segment, which further highlights the need for innovation and potential disruption in the industry. Rapido’s entry could introduce competitive pricing and enhanced service options for both restaurants and consumers.

Conclusion

Rapido’s potential expansion into food delivery marks a bold step in its growth trajectory. By leveraging its existing logistics infrastructure and extensive user base, the company has the potential to carve out a niche in the competitive food delivery market. However, its success will depend on how effectively it can differentiate itself from established players and address challenges related to restaurant partnerships and service efficiency.

As Rapido continues to explore this new avenue, the food delivery landscape in India could witness significant changes, making it an exciting space to watch.