Feasibility Study Report: Is it feasible for Indian food delivery startups to do food delivery with electric bikes?
With a population of over 1.2 billion, India is topping the chart of the biggest customer markets. India’s 563 million young people making India gold mine for food delivery startups. According to a very reliable source, revenue in the Indian online food delivery segment amounts to US$7,730M in 2019 which is expected to cross US$12,536M by 2023, at the annual growth rate of 12.8%.
Two major players of Indian food delivery market are Zomato and Swiggy. Both unicorn status earned companies process more than 13 million orders in the month. However, due to low-margin business, poor supply-demand ratio, over-reliance on gig workers and cutthroat competition, they both are losing a heap of money. Thus, they are trying many ways to cut the operation cost and to have enough drivers to satisfy the demand.
In the second month of this year, Zomato tied up with many e-bike manufacturers of India to convert 40% of the fleet to power-assisted bikes. At present, Zomato has a fleet of more than 5000 e-bikes and delivery partners are delivering food on e-bikes in over 12 cities of India. In his official statement, Zomato spokesperson said that e-bikes enable drivers to deliver the food on time and earn more.
Is it feasible for Indian food delivery startups to do food delivery with electric bikes?
So, if you are a food delivery startup from India and eager to know whether it is really feasible to introduce e-bikes for food delivery purpose, continue reading this feasible study report. In this FSR, we will discuss all factors affecting conventional food delivery method as well as food delivery with e-bikes method. Using the evaluation criteria such as cost, technology, distribution, legal, and operation, we will evaluate the possible use of e-bikes in food delivery segment and come to a conclusion which will surely change the way you are running food delivery startup.
Problems Indian food delivery startups are facing
Following are the top problems Indian food delivery startups are facing while delivering food using the conventional delivery method.
Delivery drivers are earning less amid rising fuel price
Though food delivery companies are offering very good employment opportunity to delivery executives, they are claiming that they cannot earn enough money to survive effortlessly. They have to spend a major percentage of their earning on the fuel and since they are independent contractors, food delivery companies cannot pay them the fuel price. This whole situation restricts more delivery executives from joining the company which eventually decreases the order fill rate (percentage of orders satisfied) and so does the user satisfaction rate.
➯ An inefficient driver tracking method
As of now, a user can track the delivery driver who is on his way to deliver the food, in the mobile app. But many users complain that they can’t track delivery drivers properly and it is true. Delivery drivers are tracked using their phone’s location. If they keep GPS on their phones off, there is no other way to track them.
➯ Congested cities causing a delay
Indian cities are among the most congested cities in the world and to deliver food in such cities, delivery drivers require 20-30% more time. Because of this undesirable delay, customers get the food late and delivery drivers earn below average. So, both customer satisfaction and driver satisfaction get affected, very badly.
➯ Possible solutions to problems food delivery startups are facing
After discussing the problems food delivery startups are facing, let’s discover some solutions to decode those problems.
➯ Don’t work with gig workers
The most proposed solution is hiring delivery executives rather than relying on gig workers. They claim that hired delivery drivers get all employee benefits and satisfactory wage which can double their satisfaction rate. Having full control on delivery drivers is another advantage they are quoting as the benefit of hiring delivery drivers. However, this is not a feasible solution at all. If you choose to hire delivery executives and not to rely on gig workers, your company’s internal cost will increase significantly which you really can’t afford.
➯ Filter delivery jobs based on distance and account type
Delivery job filtration based on distance and account type is another proposed solution. Here is how it works.
When a user registers himself to be a delivery driver for your food delivery startup, give him the choice to select an account type from available two options – motorbike account and car account. If he selects motorbike account, you should allocate him deliveries only within 2.5 kilometres and if he selects car account, allocate him deliveries beyond 2.5 kilometres. Car account holder delivery driver who has to drive more distance to deliver the food, gets more per kilometre rate after completing the first 2.5 kilometres which means he does not have the option to complain.
Same way, a motorbike account holder who receives delivery requests to deliver food within 2.5 kilometres does not have the option to complain as he does not need to work hard and spend more time and fuel to deliver food within 2.5 kilometres only!
However, this is just a hack, not an ethical solution (to let drivers earn based on account type).
» Distribute e-bikes to delivery partners
And the last solution is distributing e-bikes like you distribute delivery bags to delivery partners. In case you don’t know, all food delivery companies give delivery bags to the drivers as the welcome kit and deduct the money of the delivery bag from the first week earning of the drivers. And when the delivery driver returns the bag, companies deposit the deducted money back to the driver’s account. Same way, give e-bikes to some selected delivery drivers and deduct the 50% of the price of an e-bike from their earning. When they return it, check the condition of the e-bike and deposit the deducted money back to the drivers’ accounts. This is a very revolutionary, practical and ethical idea which alone can solve all problems of food delivery startups.
We will now evaluate this idea by taking a few important factors into account.
➯ Evaluation – why delivering food with e-bikes is the feasible solution?
We haven’t reached the ultimate solution yet. But after this evaluation process, we will firmly say that an e-bike is the guardian angel for food delivery startups!
To buy an e-bike, you have to spend somewhere between $300 to $500. However, as we have discussed, after giving it to a driver, deduct 50% of the price of an e-bike from his earnings and when he returns it to you, refund him the deducted amount (after checking the bike’s condition) and give that e-bike to some other driver and deduct the 50% of the price of an e-bike from that driver’s earnings. Keep doing this and you will never feel that you have purchased e-bikes by spending huge.
Generally, the latest generation of e-bikes is coming with inbuilt IoT features. One of the most prominent features is the tracking feature. A driver who delivers the food using e-bike is tracked via his e-bike and not via his phone. Meaning, users can track the location of the driver even when his phone or its GPS is off. But to actualize it, the connection between the mobile app of a driver, admin panel and IoT controller of the e-bike is the fundamental need.
You can distribute the e-bikes to those drivers who do not afford fuel and own motorbike to deliver the food. For that, you can allow them to ask for e-bike when they register themselves to be delivery executives.
In India, there is no strict rule regarding e-bike. In fact, the government is appreciating it as it is environment-friendly.
Once you give an e-bike to a delivery driver, you are not responsible for day-to-day operation (battery charging) of the e-bike. However, you can offer free maintenance service to those drivers whose rating is high.
Buying a fleet of e-bikes is undoubtedly the best investment you can make as the food delivery startup. It helps you to sustain a high user and delivery driver satisfaction rate while spending very less. However, to deliver food using e-bike you should integrate a different module into your food delivery app. This module establishes the connection between the driver app, admin panel and e-bike and enables admin to know the status of the e-bike.
We, being the top e-scooter app development company and on-demand food delivery company, accommodate clever designers and develops who can develop your food delivery app with all necessary features as well as features which need to be integrated if you wish to deliver food using e-bikes. We will not only develop your app, but we will become a business strategic partner to help you throughout the business journey.
With our rapid app development technique, we can develop a food delivery app under $10000 and within 45-55 days.
To know more about the food delivery app features and e-bike’s compatibility with food delivery business, feel free to contact us.