Paytm partners with Zomato to foray into food delivery business

If there is one segment that everyone wants to get a pie of and has been getting hotter with each passing day- it’s foodtech.

It has emerged as next big frontier for several consumer Internet companies, who are in one way or another exploring investments, acquisitions or expansions into the food-delivery business.

Since food is an essential purchase for household or individual, the frequency of transactions is high in comparison to other e-commerce categories.

This makes the segment an attractive prospect for ambitious Internet firms.

For Alibaba-backed Paytm, whose ambition is to be one stop shop for everything, it’s no different. The payment major has kicked off food delivery services through its app in partnership with Zomato.

Currently, the service is live in the Delhi-NCR region with no minimum order. The partnership seems obvious as Alibaba is a common investor in both firms.

Online food ordering has turned out to be an intense two way battle for Swiggy and Zomato while Uber Eats and Foodpanda are also in the fray. Together the duo are burning about $80 million every month. If we include foodpanda and UberEats, the burn rate of four players goes up to $100 million.

Swiggy had recently scooped up $1 billion round led by Naspers. Meanwhile, Zomato is also negotiating to raise the next big round with Alibaba.

Of late, Zomato has also been on expanding spree. It has spread its footprint in around 100 cities. In December last year, Zomato claimed 28 million monthly order run rate.

With Zomato's reach, Paytm targets customers across tier II and tier III cities where an average person would like to spend between Rs 40-200 for their average meal.

Will Paytm be able to crack it?  Maybe we need to wait for some time to be able to assess the Vijay Shekhar Sharma led company's performance.

Meanwhile, Kishore Biyani-led Future Bazaar recently announced that it would serve food at Rs 40 across India through a network of cloud kitchen. The offering will be hard to match if he starts this on the ground.