Bike-taxi and logistics company Rapido has entered the food delivery space, which many thought could challenge the stronghold of Zomato and Swiggy, the two giants dominating this market.
But brokerage firm Bernstein believes that Rapido’s entry will not significantly impact their market position.
What Rapido Plans to Do
Rapido has raised $600 million in funding and plans to use its network of 3 million drivers to offer food delivery at lower commission rates—8–15%—compared to Zomato and Swiggy’s 18–20%.
Its new platform will be called ‘Ownly’, targeting meals priced under ₹150, with no packaging fees or platform charges.
The business model is zero-commission and will launch first in Bengaluru. Restaurants joining the pilot must list at least four affordable dishes.
Why Rapido May Struggle to Scale
Bernstein points out that major players like Amazon, Ola, and even ONDC have tried food delivery in India and failed. The key reasons:
Limited restaurant choices
Inconsistent customer experience
Supply chain disruptions
High operational costs
The average food order in India is ₹400–500, while delivery costs are ₹50–60. Rapido’s low-margin model makes it difficult to scale or reinvest in the business.
What This Means for Zomato and Swiggy
Zomato and Swiggy have invested $2–3 billion in building this sector. They have strong networks and customer loyalty.
In Q4 of FY 2024–25, Zomato had 3.14 lakh and Swiggy had 2.52 lakh monthly active restaurants.
Zomato currently holds 54% market share
Swiggy holds 46%
Rapido’s operations are limited to Bengaluru for now. Bernstein notes that while Rapido may attract new, low-cost restaurants (especially in tier-2 and tier-3 cities), it won’t shrink Zomato or Swiggy’s market share—instead, it might just expand the overall market.
Questions Around Profits and Long-Term Growth
Rapido’s zero-commission model could attract small restaurants, but it may need to raise fees later.
For now, Rapido will bear a ₹20–25 per order delivery cost, excluding GST, which will be charged to restaurants.
Rapido is currently not profitable. Interestingly, Swiggy owns a 12–13% stake in Rapido. In the future, Rapido may offer subscription plans, ads, and restaurant access to user data to make money.
