3 Tailwinds That Will Make India Online Food Delivery Market to Generate Over USD 9 Bn by 2025. Will India be able to achieve That Mark?

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3 Tailwinds That Will Make India Online Food Delivery Market to Generate Over USD 9 Bn by 2025. Will India be able to achieve That Mark?

India Online Food Delivery Market is expected to grow at 32.3% during 2021-2025, owing to the rising annual spending by middle class household, as per the findings by Ken Research

1. Annual Spending by Middle Class Household in Tier II and Tier III cities has increased from ₹ 2,500 to ₹ 52,000, 108% increase on Fast Food Restaurants.

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Focus has shifted towards Tier III and Tier IV cities; Small Restaurants dominate the market. Moreover, Average Order value is 20% lower, but is compensated by lesser economics of scale in Tier II and Tier III cities. In the future, 50% of the orders is set to come from Tier II, Tier III and Tier IV cities. In addition to this, annual spending by middle class household in Tier II and Tier III cities has increased from ₹ 2,500 to ₹ 52,000, 108% increase on Fast Food Restaurants. Furthermore, Home Made Food among Tier III and Tier IV cities expected to drive the market.

2. Rise in Migrant Working Population (20%) reason for increased demand.

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The average age of the Indian population is 29 years, indicating that there is higher concentration of the target consumers in the market. There has been rising number of migrant workers in the capital cities in India (approximately 20%); ultimately, giving a boost to the demand of food delivery. The average cab cost for traveling 5 kms in India is ₹120. Cab cost added to the food bill (~₹300 for one person) while dining out is higher than the average order value of food ordered online (₹250). Hence, people prefer ordering food over themselves going out for dinner.

3. Adoption is increasing in Tier II, Tier III & Tier IV cities significantly with nearly 73 Mn users at present (2019).

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The urban population and tier2-3 cities in the north-west belt of India holds opportunity for the growth of the market. India’s rising urban population along with people of the age in range between 15-59 total of nearly 200 Mn smartphone users, presenting an opportunity to cater around 120 mn of market potential.

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