Swiggy, Zomato to benefit from BNPL: GlobalData

Indian consumers were still opting for convenience and ordering food online.

Entering the buy now, pay later (BNPL) space will be beneficial for India’s food delivery firms Swiggy and Zomato as consumers continue to order food online, according to GlobalData.

In a statement, GlobalData stated that the growing BNPL market in India is more prominent in travel and accommodation, electronics, and clothing and footwear sectors.

The launch of BNPL services can help Swiggy and Zomato to further penetrate the market “by offering flexible payment mode[s] to their customers.”

“Online food delivery market is in [a] growth phase in India with consumers, largely young and working population, opting for convenience of ordering food online. The COVID-19 pandemic changed the buying behavior of consumers with larger customer segments now switching from offline to online channel[s] to avoid exposure,” GlobalData Senior Payments Analyst Kartik Challa said.

According to GlobalData’s 2021 Financial Services Consumer Survey conducted in the first and second quarters of 2021, 55% of the respondents in India said that they used BNPL service for online payments in the past six months.

Zomato stated in its financial results for the third quarter financial year 2022 which ends on 31 March that it is in the process of setting up its own non-banking financial company that will allow short term credit for their delivery partners, customers and restaurant partners.

Swiggy’s announcement followed a few days after Zomato’s, according to GlobalData.

It said that Swiggy has a network of around 128,000 restaurants in India with around 20 million monthly active users, whilst Zomato has a network of 390,000 restaurants and 32 million monthly active users.

“Although Zomato and Swiggy each have strengths and weaknesses that make them stand out from each other, it remains to be seen whose BNPL service proposition becomes a more successful payment solution in the food delivery space,” Challa said.

“BNPL presents [a] huge business opportunity and has the potential to disrupt the consumer payments space in India, and both companies can immensely benefit from this by playing to their strengths and increase transaction value,” the analyst added.