Food Delivery Volumes Spike In Small Cities Due To Reverse Migration

Metro dwellers shifting back to their hometowns has boosted food delivery volumes in smaller cities, with food tech firms witnessing order value close to doubling in Tier 2 locations.

Bengaluru-based food delivery firm Swiggy, due to reverse migration, has seen volumes and gross merchandise value (GMV) for cities such as Kolkata, Kochi, Lucknow, Visakhapatnam, Guwahati, Mysore double, with some cities even performing at 150% of pre-covid levels.

Metros have seen an impact on value due to this exodus with Bengaluru and Chennai reaching only 80% of pre-covid GMV levels, Swiggy said.

Rival Zomato has witnessed a similar trend, with 1 in every 5 customers in metros (pre-covid) opening their app from a smaller town recently.

Of this relocated population, one third has resumed ordering food from their new locations, Zomato had said in a recent blog post. For the Gurugram-based firm, cities such as Patna, Jamshedpur, Ranchi, and Siliguri have recovered completely, exceeding pre-covid levels.

Both Zomato and Swiggy have been hinging their recovery on the ongoing festive and Indian Premier League (IPL) season and are running aggressive match-discount offers to lure customers into making high ticket value orders.

“Starting with the ‘unlock’ phases slowly and steadily more and more restaurants opened their kitchens to satisfy the needs of crores of consumers who were placing orders online. This was further fueled by the ongoing cricketing season which has caused a surge in orders that are gradually touching pre-covid values," Swiggy said on Thursday.

Swiggy said that during the ongoing cricketing season, Tier 2, 3 cities have performed exceptionally well recording a double-digit growth with Ahmedabad, Jaipur and Lucknow being the most active tier 2 cities for the firm.

"Order volume on our platform has been significantly powered by the current cricket and festive season. Metros and tier I cities are now growing at a much higher rate considering their resonance with IPL teams. Dinner mealtime has been witnessing 1.5X growth in terms of orders as compared to other mealtimes," said Rakesh Ranjan, chief sales officer at Zomato.

Ranjan added that while Zomato saw good traction in the first two weeks of IPL, the volumes have tempered a bit now for the food aggregator.

Earlier this month, Zomato founder Deepinder Goyal tweeted that food delivery volumes have reached pre-covid peaks. Swiggy said its pan-India food delivery volumes have recovered by almost 85%, as it delivered over 100 million orders since the lockdown and is onboarding 7000 new restaurants on a monthly basis.

Zomato has delivered close to 92 million orders since lockdown and expects the food-delivery sector to grow at 15% month-on-month, moving forward.

With limited customers left in metros, their biggest market - food delivery firms are adding new constructs and offers to their apps to boost order volumes. Additionally, through these new offerings they are also trying to fill the gap left in volumes, with offices remaining largely shut.

Swiggy has taken the hyperlocal route and launched Instamart, a 45-minute grocery delivery service in Bengaluru and Gurugram; started delivery of alcohol in non-metros; tied up with bookstores to provide academic books to students in Kerala and West Bengal; and launched online stores focusing on pet food, gourmet groceries, wellness essentials, meat deliveries among other things.

While Zomato has scaled down its grocery service to focus strongly on the recovery of its food delivery business; it has introduced constructs like ‘Zomato Pandal’ in Delhi NCR regions to push customers to order from midsize restaurants serving street food this Dusshera.

Swiggy currently has close to 100,000 restaurants operating on its platform, versus 150,000 before the covid-outbreak in the country, it said.

Sandip Ginodia , CEO

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