Chennai-based GoGrab.in merges with AnyCommerce [Consolidation in the online food delivery space?]

Chennai-based online restaurant aggregator goGrab.in, that aggregates information about restaurants and provides service of these restaurants online, has announced that it has merged with AnyCommerce Chennai Pvt Ltd. GoGrab.in was started by Ganesh Raj Mohan Parimelazhagan and Siva Prakash in June 2012. Using the platform, customers can access their favorite restaurants menu card, order food for door delivery and take away online.

"When working on our growth path to take GoGrab.in to the next level, we met Senthil, the founder of AnyCommerce. What Senthil wanted to do for AnyCommerce was very much in-line with our roadmap for GoGrab.in", Ganesh said.

Senthil Nayagam is a successful entrepreneur who founded Sedin Technologies, a software services company in Chennai, 8 years ago. Sedin Technologies now has offices in Chennai, Bangalore, Sunnyvale (US) and Zurich (Switzerland). AnyCommerce is Senthil’s second venture, which he started after he stepped down from his role as CEO at RailsFactory on August 01, 2014. AnyCommerce's focus is also B2C and he wanted to start with restaurant and food industry.

"Having knowing Senthil for few years now, we both felt that we could multiply our success if we join hands and operate as a single team rather than two different companies and brands. Hence we decided to merge," Ganesh added.

In developed nations, takeaway and home delivery contributes to about 35% of the food business and home deliveries happen via cars. In India only about 10% of the orders are for takeaway and home delivery. Furthermore, 80% of the orders are made through phone calls. Also, delivery in India is done by bicycles and motor cycles. Senthil believes that India is at the cusp of a major change with the millennials taking charge of family decisions.

"We have identified online food business, online grocery, ticket booking and home services as areas which will grow exponentially," Senthil said.

"We both are foodies and our vision for the Indian market is very similar. We felt that instead of competing in the same space we can merge and use our resources and synergies to capture a bigger market share," he added.

The merged entity will operate under AnyCommerce Chennai Pvt Ltd. goGrab.in has stated that they will continue to function as before and that there 'would be no changes to our day to day operations and it is business as usual.'

The merged entity is now in discussions with companies, restaurants and individuals in areas like Middle East, South East Asia, Europe & North America all of which has a significant Indian population.

"Each geography has its unique opportunities and challenges. We will be launching it in phases with local partners," said Senthil about their expansion plans.

Senthil went on to note that this could be the clarion call for startups in the food delivery space to start consolidation.

"Consolidation phase has started in the online food ordering segment. Startups without deep pockets or sound business model will shut shop or get acquired."

He went on to explain the reasoning behind it. "Many online ordering companies in India and abroad are using VC money to subsidize restaurant orders by giving discounts and spending too much on online advertisements. This is not a sustainable business in the long term. These loss leaders will cease to exist when they fail to raise their next round of funding. Having been in this industry, we have inside information about our competitors, and the numbers are not rosy. We see this trend globally as well."

What do you think? Is consolidation on the cards for players in this space?