April 2, 2020
Online food delivery was pegged to grow 9.5% between 2020 and 2024. However, the numbers may be revised as consumers remain cautious and refrain from ordering food online
The immediate impact of the Covid-19 scare is likely to occur in the gig economy with people remaining apprehensive of any physical contact and thus refraining from availing most online food services. For online delivery firms, a major constraint has been the curbs imposed on movement of their workers.
The chaos caused by the outbreak of Covid-19 has started to show effect to derail India’s projected economy, which was planned to achieve a market size of $455 billion by 2023 by industry group Assocham.
Led by online food delivery firms Zomato and Swiggy; ride-hailing companies Uber and Ola; online homestay brand AirBnB; hospitality chain Oyo and a host of other shared economy companies, the sector is bracing itself for unanticipated challenges as routine lives are unlikely to return to normalcy even after the completion of the 21-day lockdown, which could also be extended as per the situation.
From what can be seen from today’s position, for short term the companies are likely to suffer from weak consumer demand, supply-chain disruptions and shortage of food and manpower, leading to poor growth rates in months to come.
The immediate impact of the Covid-19 scare is likely to happen in the projected economy with people remaining apprehensive of any physical contact and thus refraining from availing most such services such as ordering cabs and food to grooming services at home and staying in shared spaces.
According to a data portal- Statista, revenue in the ride-hailing segment in India was expected to post a compounded annual growth rate of 13.5% from 2020 till 2023, achieving a market volume of $54.09 billion by 2023. With the stagnant mobility, industry has come to a grinding halt due to the pandemic. It will definitely be a tall task to achieve those target figures.
Both Ola and Uber have suspended operations in most large cities to comply with government restrictions during the lockdown. Japan’s SoftBank-backed Ola, however, said that it may start limited services to support essential services in some cities as part of the national effort to curb the contagion.
“Their business must be down by almost 80%-90% although there are no numbers officially available,” said an analyst at a management consultant.
Online food delivery was pegged to grow 9.5% between 2020 and 2024, according to Statista, resulting in a market volume of $13.2 billion. However, the numbers may be revised as consumers remain cautious and refrain from ordering food online.
Besides, restaurants and pubs in most large cities have been ordered to shut by the government. Although they are allowed to operate only as delivery and takeaway joints, yet orders for Zomato and Swiggy have been hit. “It’s difficult to put a number to it but the food ordering business is down significantly. However, some quick-service restaurants continue to deliver,” said Rajat Wahi, partner at Deloitte.
For online delivery firms, a major constraint has been the curbs imposed on the movement of their workers and harassment from police. While several cities have stepped up efforts to ease their movement, large food platforms have been working at a delivery staff strength of between 20 to 30 per cent.
As of now, the biggest challenge that the economy companies are facing is of a sharp reduction in manpower and labour. Since India announced a strict lockdown, thousands of migrant workers were seen returning home to their native villages due to the uncertainty of future employment opportunities and shortage of basic essentials.