Getting Sellers Addicted to Digital Platforms
Online marketplace platforms, whether Flipkart, Amazon or food delivery platforms like Foodpanda, get their sellers/etailers addicted by subsidizing them initially and offering good incentives to join their platforms. Once hooked, these platforms then try to maximise their use of these sellers/etailers.
Times of India reports that after heavily subsidizing restaurants for most of last year to win their loyalty, food delivery startups Swiggy, TinyOwl and Foodpanda have steeply raised their commissions. It's either that or scramble for funds. The startups can afford to do that now, having got a large number of restaurants addicted to selling to a huge base of consumers through them. Swiggy and TinyOwl are in the market to raise funds and need to convince investors that they have changed tack and are focused on building sustainable businesses.
The startups also have mostly stopped offering discounts to consumers — implementing corrective measures more aggressively than ecommerce giants that are still heavily reliant on deep price cuts to retain customers. Investors have lost patience with food-tech companies faster, leaving several small ones in the lurch. With no clear winner among the food-delivery startups, investors say infusion of funds into them will be contingent on cost economics and business fundamentals rather than their pace of consumer acquisition. The big test will be if restaurants are "willing to pay for food deliveries, and if yes, how much, and will this cover business costs," said a hedge fund investor on condition of anonymity.