A dictionary defines Convenience as- a quality or situation that makes something easy or useful for someone by reducing the amount of work or time required to do something. That sounds like defining value addition to me. This thought & conclusion that Convenience as a theme will create some big profit pools going ahead is an outcome of certain experiences, observations and reflections that I have had in the recent times.
I like the way you changed your thought on Zomato. I had the same idea that it would be hard for them to be profitable. But I still have doubt over 10 minute deliveries.
That's the point I was making that we think consumers don't need this; but we are underestimating the possibility that once the consumer gets a taste of this new found convenience, then one never knows it might become a thing.
I got your message but there are few things that differ radically from Zomato and those 10 minute delivery start-ups
1) Zomato service is not a daily need (baring exceptions); one might not mind paying a minimal service charge
2) It operates in a duopoly market so consumer have no choice. But in grocery delivery, few companies in selected location, do offer same day delivery. So convenience offered, getting restaurant food at home for a minimal charge vs getting delivery in 10 minutes delivery for a minimal charge against same day delivery for free is much different.
3) Moreover, the transaction volume and margins must be much smaller on 10 minutes delivery. And with the current funding winter we might get to know if they are in deep trouble, usually happens when cash runs out (like Byju, Pharmeasy).
If Zomato as a service is not one daily needs and is still able to generate 65 crores orders an year then what is stopping any kind of other occasional service to get that kind of throughput and charge a service charge for that?
On your 2nd point, in food delivery you want to have food now and don't want to take the effort to go out and get it. Same is the value proposition of 10 mins delivery, you want it now & not by end of day.
Like how food delivery has not taken away eating out, similarly 10mins delivery will not take away from own shopping or day end delivery; it is a different value proposition that will create its own set of pull overtime.
In terms of margins, its very early days. Few years back most thought there is no margin in food delivery. Now they have shown atleast a single digit margin; so lets see how things evolve here.
I like the way you changed your thought on Zomato. I had the same idea that it would be hard for them to be profitable. But I still have doubt over 10 minute deliveries.
That's the point I was making that we think consumers don't need this; but we are underestimating the possibility that once the consumer gets a taste of this new found convenience, then one never knows it might become a thing.
I got your message but there are few things that differ radically from Zomato and those 10 minute delivery start-ups
1) Zomato service is not a daily need (baring exceptions); one might not mind paying a minimal service charge
2) It operates in a duopoly market so consumer have no choice. But in grocery delivery, few companies in selected location, do offer same day delivery. So convenience offered, getting restaurant food at home for a minimal charge vs getting delivery in 10 minutes delivery for a minimal charge against same day delivery for free is much different.
3) Moreover, the transaction volume and margins must be much smaller on 10 minutes delivery. And with the current funding winter we might get to know if they are in deep trouble, usually happens when cash runs out (like Byju, Pharmeasy).
You have answered it yourself.
If Zomato as a service is not one daily needs and is still able to generate 65 crores orders an year then what is stopping any kind of other occasional service to get that kind of throughput and charge a service charge for that?
On your 2nd point, in food delivery you want to have food now and don't want to take the effort to go out and get it. Same is the value proposition of 10 mins delivery, you want it now & not by end of day.
Like how food delivery has not taken away eating out, similarly 10mins delivery will not take away from own shopping or day end delivery; it is a different value proposition that will create its own set of pull overtime.
In terms of margins, its very early days. Few years back most thought there is no margin in food delivery. Now they have shown atleast a single digit margin; so lets see how things evolve here.