Rapido plans to challenge Swiggy, Zomato in food delivery

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Rapido, India’s leading ride-hailing platform, is planning to challenge the food delivery market currently dominated by Swiggy and Zomato. The company is in advanced talks with restaurant owners and industry associations in key metro cities, strategizing a business model that challenges the existing commission-heavy structures. Unlike Swiggy and Zomato, which charge restaurants high commission rates, Rapido is exploring a subscription-based or lower-commission model to attract restaurant partners. This strategic move follows Rapido’s remarkable growth in ride-sharing, having surpassed $1 billion in annualized GMV and expanding to over 100 cities. With recent funding of $30 million from Prosus and $200 million from WestBridge Capital, Rapido is poised for aggressive expansion. Leveraging its two-wheeler delivery fleet, which already provides logistics for Swiggy and ONDC, Rapido is set to create a cost-effective alternative for both restaurants and consumers.

1. Rapido’s Business Model and Services

1.1 How Rapido Works

Rapido, founded in 2015, started as a bike-taxi service and quickly became India’s second-largest ride-hailing company. It allows users to book bike taxis, auto-rickshaws, and cabs via its app, offering an affordable and convenient alternative to traditional taxis.

1.2 Rapido’s Revenue Model

Rapido operates on a hybrid revenue model. It earns through commission-based rides, driver subscriptions, and logistics services. Recently, it adopted a subscription-based model for driver partners, allowing them to pay a fixed fee instead of commission per ride, enhancing earnings for gig workers.

1.3 Expansion into Food Delivery

With strong logistics expertise, Rapido already delivers for Swiggy and ONDC. Now, it aims to enter the consumer food delivery space independently, challenging the duopoly of Swiggy and Zomato.

2. Rapido’s Funding and Growth

2.1 Financial Backing

Rapido has raised over $230 million, with its latest $30 million funding round led by Dutch investor Prosus. Previously, WestBridge Capital invested $200 million, valuing Rapido at $1.1 billion.

2.2 Market Expansion Plans

Currently operating in 100 cities, Rapido plans to expand to 500 cities by 2025, leveraging its logistics and mobility dominance.

3. The Rapido Food Delivery Challenge

3.1 Competing with Swiggy and Zomato

Rapido aims to disrupt Swiggy and Zomato’s 95% market dominance by offering lower commissions or a subscription-based model, reducing costs for restaurants.

3.2 Potential Business Models

• Lower Commission Model: Rapido plans to charge significantly less than the 25-35% commissions levied by competitors.
• Subscription-Based SaaS Model: Restaurants pay a fixed fee instead of commissions, ensuring predictable costs.

3.3 Logistics Advantage

With an existing two-wheeler delivery network, Rapido has a cost advantage. Its partnerships with ONDC and Swiggy have already refined its logistics operations.

4. Challenges in Entering the Food Delivery Market

4.1 Customer Acquisition

Swiggy and Zomato enjoy strong brand loyalty. Rapido must invest heavily in marketing and promotions to attract customers.

4.2 Restaurant Partnerships

While restaurants seek lower commission models, many remain tied to existing platforms. Rapido must offer compelling incentives.

4.3 Operational Scalability

Ensuring timely deliveries at scale is crucial. Rapido needs a robust technology backbone and delivery fleet expansion.

5. Market Trends and Insights

5.1 Food Delivery Growth in India

India’s food delivery market is expected to reach $30 billion by 2027, driven by urbanization and increased online ordering habits.

5.2 Shift Towards Subscription Models

Globally, platforms like Deliveroo and Uber Eats are testing subscription-based models, signaling a potential industry shift.

5.3 ONDC’s Impact on Food Delivery

Government-backed ONDC aims to decentralize e-commerce, potentially reducing platform dominance. Rapido’s early ONDC integration could give it a competitive edge.

6. Learning for Startups and Entrepreneurs

6.1 Identifying Market Gaps

Rapido’s food delivery challenge highlights the importance of addressing industry pain points. Entrepreneurs must identify and exploit gaps in existing business models.

6.2 Leveraging Core Strengths

Rapido’s logistics expertise gives it a competitive edge in food delivery. Startups should leverage their existing strengths when expanding into new verticals.

6.3 Flexibility in Business Models

Testing different pricing and service models is essential. Rapido’s dual approach of low commissions and subscriptions shows the power of adaptive strategies.

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