After e-commerce players, online food aggregators are now likely to face heat for their alleged practice of deep discounting and predatory pricing. According to reports, Department for Promotion of Industry and Internal Trade (DPIIT) has summoned Swiggy, Zomato, Foodpanda and Uber Eats for a meeting to resolve the contagious issue of deep discounting. The meeting is scheduled today, i.e. 4th July.
The latest development comes after nearly 500 restaurateurs reached out to Competition Commission of India (CCI) earlier this year, complaining that Swiggy & Zomato’s predatory pricing practices are badly hurting their trade.
Restaurateur owners have also alleged that private labels operated by the online food aggregators are causing immense loss for their business.
However, online food delivery players are trying to play down the 4th July meeting by claiming that the meeting won’t be solely focused on the ‘deep discounting’ issue. Top executives of the two prominent foodtech companies claimed that the meeting will introspect on wide-range of issues including food safety & generating more employment.
Industry experts claim that the discounts will continue on Zomato and Swiggy apps for now but their days are certainly numbered. This obviously doesn’t entail good news for customers who until now got to enjoy mouthwatering dishes at highly discounted prices.
It is not that restaurants are not trying to profit from the rapidly increasing business of online food delivery companies. They do charge healthy commission on every order but the ongoing face-off suggests that their overall business is getting badly hit.
If the Indian government does crackdown on online food aggregators’ deep discounting strategy then this may serve a big blow to the foodtech sector. The sector as such is going through a consolidation phase with FoodPanda and UberEats cutting down heavily on their investment. Zomato and Swiggy may also have to rethink on their strategies if the government decides to issue new guidelines for deep discounting.
Zomato and Swiggy’s future fundraising prospects may also suffer in the wake of these new guidelines especially if the latter takes a toll on their monthly orders.