Competition commission of India (CCI) has released a Market Study on e-commerce in India and its strategy shifts.
The research depicts a changing competition landscape in India in e-commerce for better understanding of business practices of online platforms and other market participants. Existing competition legislation has problems handling with anticompetitive practices posed by internet platforms in food markets. Market study can give the CCI some instruments to upgrade Indian competition law to tackle the challengesof technological and innovation development in digital era. The focus areas of the research include the emerging trends in business models and distribution mechanisms, market structure and business practices including contractual provisions and vertical restraints.
According to the Research we could define some trends on the Indian Food market:
• Online ordering and delivery marketplaces are the fulcrum;
• 78% respondents have online presence; 69% went online between 2016 and 2018; listed on 3 platforms (on an average);
• For respondent restaurants, around 28% revenue through online platforms;
• Cloud kitchens: delivery only, multiple online channel presence;
• Platforms expanding into related B2B domains – e.g. food ingredient supply;
• Platforms providing kitchen infrastructure; platforms’ own cloud kitchens.
A workshop held by the CCI within the framework of the Market Study concluded with a discussion on the symbiotic relationship between policy and regulation and its bearing on the competitive landscape. There are some main outputs:
• Online food delivery has been the harbinger of change for overall food industry. The sector has risen from almost nothing to being the fifth in the organized food services market in India;
• Data is not a new for restaurants as it came before technology platforms came in. It is digitized and can compound volumes of customer information. Restaurants try to create a customer profile and try to see what profile of the customer actually fits in the restaurant or in a delivery kitchen context;
• The Indian retailer can scale up digitally. India has been a great IT resource country. There is huge capacity in India, per-capita income is growing up, aspirations are growing, people want to consume so there is an opportunity. There are a lot of unserved and underserved areas in the country which can be benefited by e-commerce;
• There are many things to look at in e-commerce: whether the deep-discounting model is being accompanied by data collection and profiling of consumers and then whether that data is subsequently sold. If so, then antitrust authorities should take action.
• When looking at deep-discounting in food market, we need to look at 4 things from antitrust perspective: (i) Is it below cost? (ii) Scale of discounting, (iii) time period of discounting, and (iv) and how is the market share changing?
A quite similar but significantly wider study was conducted by the BRICS Competition Centre, the results of which are indicated in the Global Food Value Chains and Competition Law BRICS Report. Among the main conclusions about food market it’s important to highlight that there are many new intermediaries such as online grocery delivery services, concierge shopping and subscription prepared meals start-ups offering services that really are differentiated from traditional supermarket shopping and do not necessarily require home delivery of food items but enable also offer “click and collect” services. Organic food constitutes one of the most fast-growing areas of e-commerce in both developed and developing economies. The Indian food industry is also significant from a global perspective. India’s food and grocery market is the world’s sixth largest, with retail contributing 70 per cent of the sales. Although the online food ordering business in India is in its nascent stage, it has witnessed exponential growth in recent years.
It's worth mentioning the e-commerce food market segment in India contains of following delivery service models: restaurant-to-consumer and platform-to-consumer delivery. There are some highlights of online food delivery in India:
• Revenue in the Online Food Delivery segment amounts to US$7,730m in 2019.
• Revenue is expected to show an annual growth rate (CAGR 2019-2023) of 12.8%, resulting in a market volume of US$12,536m by 2023.
• The market's largest segment is Restaurant-to-Consumer Delivery with a market volume of US$4,334m in 2019.
• In global comparison, most revenue is generated in China (US$40,239m in 2019).
CCI Workshop on E-commerce: https://www.cci.gov.in/sites/default/files/whats_newdocument/proceedings.pdf