The food delivery market in India has been gaining prominence in the last few years, especially after Covid-19 which forced people to stay home. According to data by Statista, the online food delivery market in India is projected to reach a revenue of $43.78 billion in 2024, meanwhile, in US, the market is projected to reach $353.30 billion this year.
However, you will be surprised to know that Indian food delivery Zomato performed better than US-based food delivery platform DoorDash.
According to brokerage firm Elara Securities, DoorDash reported 27% year-on-year (YoY) revenue growth to $2.3bn in Q4CY23 whereas Zomato food delivery adjusted revenue grew 29.4% YoY to ₹20.3 billion in Q4CY23, higher than Dash
Dash also reported lower gross order value (GOV) YoY growth at 22% vs Zomato’s 27%. Dash’s GOV and revenue growth is attributed to a 23% YoY increase in total orders, growing the number of users grew to 37 million, higher average order frequency, and better advertisement revenue.
The report further said that the San Francisco based food delivery aggregator is set to invest aggressively in CY24, especially in new verticals, such as grocery, and global markets.
Aim for same
The brokerage firm further pointed out that both the companies are strategically aiming towards same goal i.e. to build a loyal customer base and foster sustainable growth.
“Both Dash and Zomato are strategically emphasizing acquisition of repeat customers through their respective subscription programs, DashPass and Zomato GOLD, to potentially reduce customer acquisition cost while concurrently enhancing margin and overall profitability,” the report said.
Additionally, both platforms are focused on increasing monthly active users, bolstering order frequency, and elevating average order value (AOV).
Dash profitability has been improving across business verticals, with revenue up 31.2 percent YoY in CY23 while adjusted EBITDA as a percentage of GOV grew 115bp YoY to 1.8%, whereas, Zomato contribution margin rose 200 bp YoY to 7.1 percent in Q4FY24.
Grocery delivery business
The grocery delivery vertical of DASH saw huge growth in CY23 with higher user retention and better unit economics. Dash has signed 0.1mn grocery stores in North America in the past three years.
Similarly, GOV growth for Zomato’s delivery service Blinkit surged to 103% YoY in Q3FY24, helped by increased transacting customers, up 74.1% YoY in Q3FY24, and higher AOV, up 14.8% YoY in Q3FY24.
In terms of growth outlook, DoorDash expects GOV to reach $76 billion (growth of 13.8% YoY) with adjusted EBITDA margin expected to grow 150 bps YoY to 2.2% in CY24. Zomato, on the other hand, expects its topline to grow by 50% over the next couple of years with adjusted EBITDA margin of the food delivery business to reach 5% over the same period, according to the Elara report.
DoorDash, which is a listed entity on NASDAQ, has a market capitalisation of $46.20 billion, whereas, the market value of Zomato is $16.84 billion, as per companies market cap.
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Published: 20 Feb 2024, 07:22 PM IST