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Adding yet another layer of home delivery to foodservice, Amazon began testing Daily Dish, a lunch delivery service for work places, in July 2016. The service is only initially available to some office parks in the Seattle area, and is exclusive to Amazon Prime members. Daily Dish works directly with the Prime Now app, meaning it would tap into a vast network of users in the US, and allows consumers to order good-quality takeout for lunch during the work day. Members receive a text message with a limited menu of rotating meal options from local restaurants at 09.30 each morning, they then make their choice on the Prime Now app by 11.00, and lunch arrives between 12.00-12.30 at their office reception area.
Interestingly, this business model isn’t exactly new. The dabba walas (translated: “one who delivers boxed lunches”) of Mumbai have been delivering lunch to thousands of office workers each day for over a century, and have so refined the complex mechanics of the process, without technology, that even Amazon would find it difficult to compete. Of course, Amazon has not attempted to bring Daily Dish to India yet, but the retail giant has entered other channels in India by infusing traditional processes with technology in order to make them faster and more convenient – with somewhat limited success.
Kirana Now, the grocery delivery service, for example, has been slow to gain traction with consumers because the service is only slightly more convenient than the traditional grocery services already available. Kirana Now is an unfamiliar, unnecessarily tech-heavy leap of faith for local consumers who have close, often personal, connections with their local grocer. Amazon’s experience speaks to the level of difficulty global players have had reaching consumers in the Indian market. Tech-driven services that work seamlessly in developed markets are not necessarily a perfect fit for the more traditional characteristics of emerging markets. At the same time, there are also highly interesting, and very solid, service models unique to India that can be repurposed elsewhere – not least, in the case of Daily Dish, in the US. India is essentially a microcosm of good global business practice, evidence that technology can only improve services in so much as they don’t sacrifice the personal experience that still matters to consumers, true for both emerging and developed markets alike.
There are probably few better cases that exemplify the challenges that global operators have had breaking into the highly attractive Indian market than the challenges faced by grocery delivery start-ups, such as Amazon’s Kirana Now service, which locals have been slow to adopt. Kirana Now is an app that lists groceries and products from local kiranas, which are traditional, independent, neighbourhood-orientated grocery retailers. With the app, consumers can order goods, make a payment, and have them delivered to their door within a matter of hours. While Amazon has the financial backing and global reputation to continue to fund the service and remain in the market, similar services such as LocalBanya, PepperTap and AAGAAR.com have already folded, offering the non-viability of this business model as the primary reason for failure, according to The Financial Express citing data from Tracxn Technologies.
The problem with this type of service is that it’s not really that much more convenient for local consumers. Kiranas are typically small and independently owned, and the kirana walas (“one who operates a kirana”) often know their customers by name because they are located deep in the hearts of India’s dense neighbourhoods. The personal connections that kirana walas make with regular customers allow them to offer a sort of credit-based system in which customers can make note of what they pick up, and then pay at the end of the week or whenever is most convenient. Furthermore, labour costs in India are very low, low enough that kirana walas can easily absorb the cost of taking on delivery runners, and so they typically offer complimentary delivery services. Customers can simply phone in on their way home from work, even late into the evening, and have their order waiting for them when they get home.
Obviously, it is difficult to beat this level of personal service and convenience, and the slow adoption of services like Kirana Now is evidence of the market’s challenges for new players.
These are the kinds of challenges facing global service-related operators wanting to break into a market that, given India’s early stages of economic maturity and huge pool of potential consumers, could be highly lucrative. These challenges apply to global foodservice players as well. The market has undergone a boom in food delivery start-ups, for example, many of which have come and gone, as many services that have found success in other markets around the world have failed to adapt to India’s unique market conditions. One food delivery service that has not failed, however, is Mumbai’s dabba walas, an institution that has been delivering lunchtime meals in iconic steel boxes (dabbas) to office workers since the 1890s.
Much like the relationships built between kirana walas and local customers, so too have these personal connections elevated the level of trust between dabba walas and office workers who subscribe to the service. Payment is therefore largely informal, which allows customers to circumvent irritating, and often confusing, taxes that plague more official services, such as the service charges, VAT and other confounding fees tacked on to each order from Swiggy, one of India’s most successful food delivery apps. The informal payments made to dabba walas make transactions simpler and, most importantly, cheaper. The cheap prices and convenient, personal and highly reliable service of the dabba walas have helped them carve out a network of valued connections that will be difficult to disrupt by an outsider with an app, especially when India’s reasonably unreliable 3G networks go dark, from time to time.
Some global foodservice players, on the other hand, have managed to tap into highly local models that do reach consumers. Both KFC and Domino’s Pizza have expanded their reach by partnering with the IRCTC, a subsidiary of Indian Railways that handles catering, tourism and ticketing, for example. In order to combat a low but steady decline in train travel, as the price of domestic flying has become more reasonable, the IRCTC has tried to incentivise consumers by improving its services, including its famously poor foodservice options. This partnership has helped KFC and Domino’s Pizza widen their consumer base, offering train passengers higher-quality food that they actually want and can get conveniently. From July 2016 onwards, train passengers have been able to place an order with an app or by mobile phone en route. They then receive a special code that they use to validate and redeem their meal, which is delivered to their seat when the train pulls into the next available station.
Developing models that work with India’s more traditional cultural distinctions, rather than those that attempt to reform them, seem to better resonate with consumers. The difficulties experienced thus far by some of the world’s largest companies, difficulties not experienced elsewhere, should provide insights for future attempts by other players. And while Amazon’s new Daily Dish service may or may not have been directly inspired by Mumbai’s dabba walas, it is clear that traditional service models in India, through foodservice and retail alike, have a lot to offer global operators that can learn from their experiences in the market for both potential growth in India and elsewhere.