Although the food tech sector is grappling with slowing sales and high attrition, hyperlocal AskMe Grocery is looking to scale up. Ankit Jain, founder, AskMe said that the firm proposes to expand operations from 35 cities to 70 cities by March, 2016.

“Expanding the business in tier II and tier III cities is easier than in the metros. We only have to select a suitable hub in a particular area and then get manpower. Also, real estate is available easily and at a lower cost,” Jain said.

AskMe Grocery had acquired Delhi-based grocery market place BestAtLowest.com in May 2015. The company declined to share any further details but the deal size is estimated to have been around $10 million.

With 7,500 orders daily and an average ticket size of Rs. 2,500, AskMe Grocery seeks to compete with the likes of Grofers and PepperTap. PepperTap services 25,000 order daily with an average ticket size of Rs 600.

The company which operates in 18 cities, had planned to grow to 75 cities but recently announced that it will go slow on expansion due to lack of interest from tier II and tier III cities.

Grofers shut delivery services in 9 cities – Bhopal, Bhubaneshwar, Coimbatore, Kochi, Ludhiana, Mysore, Nashik, Rajkot and Visakhapatnam. The company has managed to raise a total of $165 million in funding till date. In its most recent round of funding in November, the hyperlocal platform mopped $120 million led by SoftBank and Yuri Milner.

Moreover, players in the food ordering space have slowed down either by letting go of people or shutting operations in some tier II and tier III cities. TinyOwl was compelled to shut shop since it was unable to fund the business.

Earlier this month Zomato scaled down operations in tier II and tier III cities blaming operational inefficiencies. It suspended food ordering operations in Lucknow, Kochi, Indore, and Coimbatore leaving only 10 cities to serve. In October, Zomato had laid off 300 employee largely from its content team and two months later Foodpanda had laid of more than 10% of its entire workforce citing technical automation reducing the need for manpower.

Swiggy the country’s second largest food delivery platform, however, appears to be doing well. The company handles 20,000 orders daily with an average order value of Rs 300 is tipped to be growing 25% per month. It has presence in top 8 metros with its own fleet of 3,000 delivery boys and more than 4,000 restaurants listed on its platform. Swiggy, which is backed by investors such as Norwest, Accel, Norwest Ventures and SAIF partners, recently received Series C funding of $35 million from two new investors named Harmony Partners and RB Investments.

The online food delivery market constitutes 17% of the overall other online services pie, according to a study of Internet and Mobile Association of India. The food industry in India is expected to rise from Rs 23 lakh crore in 2014 to Rs 42 lakh crore in 2020, said a research by BCG.

Source: The Financial Express