It is a move that shows platforms will not stop at mediating transactions of producers and consumers. Their best shot at being profitable is by gaining control and power over the production processes in the local economy. The issue at hand is not only the algorithmically determined working conditions for delivery workers or distribution of goods, but also a platform’s ability to have proprietary knowledge and control over the means of production.
Zomato’s bid to control its supply chain is a response to fierce competition with food delivery and grocery services like Swiggy and JioExpress. Self-cannibalizing platforms to keep ahead of their competition is not new. But when it’s done piggybacking on small restaurants, eateries, delivery workers and users, does it mean we look at the company’s power differently?
Food delivery platforms list restaurants, facilitate delivery of restaurant food and make their own food. While we are more familiar with the restaurant / menu listing and delivery services, these three services have different corporate strategies and consequences for the local economy and consumers. Both Zomato and Swiggy have invested in cloud kitchens to build power over the value chains they are part of. Swiggy has its own kitchen brands, Bowl Company and Homely, for urban, working professionals wanting single-serving, home food to replace cooks. It has increased its investments into cloud kitchens since 2020 to allow third parties to use their cloud kitchen infrastructure.
Zomato has taken a different approach by creating Zomato Infrastructure Services to facilitate small businesses to operate through cloud kitchen. In addition, Zomato has made acquisitions into agricultural products and services, such as Hyperpure that procures fresh produce from farmer producer organizations (FPOs).
Are You Being Served?
We have seen many platforms graduate from selling things that other people make to making their own things. In ecommerce, there has been a pushback against Cloudtail, the seller in which Amazon holds a stake. The Confederation of All India Traders (CAIT) moved courts to stop Cloudtail’s’ preferential ‘treatment’ and ‘adverse effect on the market’. Cloudtail is to Amazon what a platform-supported cloud kitchen is to food delivery.
Platforms do not only use market research to be competitive like businesses of the past. Their DNA is to be data-centric and algorithmically driven. If they were factories, every wall and surface of the factory would be able to imbibe the flows and movements of material, labor and value. This means that Zomato’s 1.35 billion orders will lead to their own menus built on ‘on-demand predictability and hyperlocal demand’, according to Zomato CEO Deepinder Goyal. This allows cloud kitchens to be set up in hotspots like outside colleges and offices to give consumers exactly what they have been ordering over the last few years, replacing the suppliers that they used to rely on earlier.
The fierce competition between platforms has had deleterious effects on the delivery workforce – nosediving wages, unattainable targets making their reputation reliant on consumers instead of reflecting labor and effort, and lack of physical protection. Food delivery companies have not built their scale or competitiveness on being responsible towards participants of the local economy. Zomato Instant will only add more pressure on the delivery fleet without reward. But what of the restaurants it lists?
The premise is this production is based on the promise of the tech industry: to serve and cater to the ‘real’ needs of the market through data-driven intelligence, unlike the producers of the past who muddled their way through with assumptions of demand. Small eateries, restaurants and kiranas are now in competition with each other and IT giants. In July 2021, the National Restaurant Association of India (NRAI) stated that delivery platforms mask consumer data, actively decreasing restaurant competitiveness in favor of increasing platform intelligence. Platforms are notorious for using their listing space to promote their own products or paid ads, rather than having a fair and equitable way of showing customers all the options available from their local suppliers.
Are these companies going to create favorable conditions for their own products vs. that of third-party restaurants? Are they going to drive consumption of these products so high that the larger restaurant ecosystem is going to bend towards these products just to stay afloat?
The nature of production is based on giving us more of what we want, assuming that what we have bought before is what we want. It’s a cyclical process where demand-driven production is fine-tuned to the utmost levels. We have seen and felt what it’s like to only see what platforms we think we want to consume. We call it an echo chamber.
Some of us rest comfortably in these echo chambers – we enjoy seeing our opinions being said by others. Some of us fight the chambers by actively involving ourselves in the curation of news, media and content delivered to us on various platforms. What does a false consensus imply for food, nutrition and our eating habits?