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Investors are pouring money into food delivery in India


OF THE thousands of young men trying to make their fortunes in Mumbai, India’s biggest city, Abdul Haq Ansari is doing better than most. Wearing a black and orange jacket and carrying a cooler bag, he climbs aboard his battered Royal Enfield motorbike and sets off towards a local restaurant. In the past month, he has started making deliveries for Swiggy, a fast-growing food-ordering app, around Bandra, a hip suburb popular with Bollywood stars and cricketers. Delivering meals is “very good for money”, he enthuses. Working for five or six hours an evening, Mr Ansari makes about 20,000 rupees a month ($270), enough to put him into the top 20% of Indian earners. And because this is his second job—Mr Ansari is also a personal trainer—he is in fact well into the top 10%.


India’s urban middle classes have long expected to be able to get anything delivered to their doors by a horde of underemployed为充分就业的 young men. Mumbai’s “dubbawallahs”, who deliver thousands of lunch boxes to offices each day, have been the subject of earnest studies by management consultants. But now techies hope they can beat them at the same game. Over the past six months, food delivery has taken off, thanks to huge investments in app-based logistics firms.


Swiggy has raised $465m in total, much of it from Naspers, a South African internet firm which also owns a large share of Tencent, one of China’s online titans. It now claims to “partner with” some 70,000 drivers and deliver 700,000 meals a day. Its main competitors include Zomato, which has raised $200m from Alibaba, another huge Chinese e-commerce firm, and FoodPanda, which is owned by Ola, an Indian ride-sharing app with many foreign investors. Dozens more are trying to get in, notably Uber, an American ride-hailing giant.


Investors are clearly licking their lips. The trouble is that for now they are mostly tasting losses. Take Mr Ansari: for each delivery, he makes between 40 and 120 rupees, depending on the time of day and distance. Yet most customers pay less than that; few meals, he says, cost more than 200 rupees. Restaurant prices are higher. The apps also offer a plethora of cheap “exclusive” specials with free delivery, desserts and drinks. The gap is made up by the firms. Indian newspapers estimate that Swiggy’s losses may be as high as $20m a month (the company publishes no such numbers). Zomato lost around 1bn rupees in the year to March.


Could food delivery pay off? India’s economy is growing at 7-8% a year, and with it the number of people able to afford takeaways. The number with smartphones and access to the internet is growing even faster. So profits may yet come—but probably not fast enough for every investor. For one thing the middle class is still relatively small, as well as rather stingy. If Swiggy and others stop subsidising their customers, they may stop buying. And if profits do arrive there is nothing to stop firms such as Amazon, which already has a huge distribution network, jumping in too.


India has been here before. In 2016 Zomato stopped serving several cities after making big losses. The same year Ola closed its “Ola Cafe” service. This wave of investment is more ambitious. The risk, jokes one investor, is that it may prove to be little more than a free gift “from pensioners in California to the Indian middle class”. And, for now at least, to the drivers.

印度以前也遇到过这样的情况。2016年,Zomato因亏损严重而停止对几座城市的服务。同年,Ola关闭了“Ola Cafe”服务。新一轮的投资显得更有野心。一位投资者开玩笑说,风险在于这轮投资不过是加州领取养老金者送给印度中产阶级的免费礼物。至少目前为止对于司机来说,是这样的。