The online food delivery market is filled with failed players, and only a few have managed to endure.
According to statistics, over 85% of the market is dominated by a single player, with others competing for the remaining market share. However, with the launch of ‘Ofood’ in Mashhad and its subsequent integration into the ‘Tapsi’ super app, rebranded as ‘Tapsi Food,’ a new competitor has entered the costly online food delivery arena. Supported by the Golrang Industrial Group, Tapsi Food is determined to secure its share of this market. In an interview with Amin Salami, CEO of Tapsi Food, we explore the opportunities and challenges facing this new platform. It remains to be seen whether Tapsi Food can capture a portion of the market in major cities.
How Big is the Online Food Delivery Market Relative to the Total Food Market?
The total food market is valued at $3.5 billion, translating to over 177 trillion IRR given the current exchange rates. Online food delivery accounts for 22% of this market, estimated at over 40 trillion IRR. Of this 22%, local platforms and chain stores hold a 15% share, while 85% of the online market is dominated by a single major player.
Why Did You Choose Mashhad as the First City for Tapsi Food’s Launch?
We based our decision on collected data and market research on online food delivery volumes across various cities and provinces. In Tehran, the situation is clear, with an estimated 40-45% of online food orders occurring there. Following Tehran, major cities like Mashhad, Isfahan, and Shiraz collectively hold about 22% of the market share.
Why Not Start in Tehran?
We believe Tehran is a challenging market with high expectations due to the long-standing presence of various players. We needed an opportunity to test our system in a more manageable environment, like Mashhad, to refine our business policies and operational strategies before a potential launch in Tehran.
Is the Market in Tehran More Complex?
Yes, Tehran presents unique challenges due to the extensive and complex landscape of online food ordering and the high expectations of its users. The city’s vast size and diverse neighborhoods add logistical challenges, increasing the risk of entry. Therefore, we chose a city like Mashhad, which is somewhat comparable to Tehran but less complex, to test and optimize our system.
Have You Met Your Initial Goals Since Launching in Mashhad in December 2023?
Yes, since starting in Mashhad in December, we have met our initial goals. We have established a robust network across all 15 operational areas in the city, achieving the scale and quality of service we anticipated. We have resolved various issues as they arose, and 90% of our orders are delivered within 40 minutes, with less than 1% delayed by over an hour.
How is Tapsi Food’s Logistics Managed?
We use “Zap” as a broker between us and our partners, handling orders for “Okala” and “Tapsi Food.” In Mashhad, logistics are managed by “Zap” through “Alopeyk” and “Zap Express.” In Tehran, logistics might also involve “Alopeyk,” “Tapsi Motor,” and “Zap Express.” Orders are sent to “Zap” via a planned algorithm and are then distributed among service providers.
How Many Partnerships Have You Established So Far?
We have contracted with over 3,000 partners in Mashhad and Shiraz. Our contracts include value propositions and a 72-hour payment settlement guarantee. Our commission structure is tiered, reducing the commission rate as order volumes increase. We are also considering integrating the Golrang Industrial Group’s supply chain for our partners.
Are You Planning to Establish Dark Stores?
Currently, we do not have serious plans for dark stores. We believe strengthening our partners through data, marketing, and branding is a better strategy than competing with platform partners. Our primary focus is to ensure the core aspects of our business—platform, logistics, and vendors—are functioning well and delivering quality service.
What is the Average Order Volume for Tapsi Food?
Average order volume metrics are not fully reliable due to various influencing factors. However, in Mashhad, after six months of operation and minimal marketing efforts, we have seen a steady increase. Now that we are integrated into the Tapsi super app, we have unlocked 35% of the app’s traffic for food services, with plans to increase this to 100% by the end of August.
Are You Still Cautious Despite Rebranding to Tapsi Food?
We are not rushing to capture market share. Our priority is ensuring service quality, which is a crucial factor in expanding our platform’s traffic.
Is There Room for New Competitors Given the Current Market Share Distribution?
The current market share distribution may be misleading. The market consists of 400,000 to 450,000 online orders daily, valued at about 110 billion IRR. With Mashhad contributing around 10% of this market, there is room for growth. The market experienced substantial pre-COVID growth and has rebounded since the pandemic. Future growth will depend on new product offerings and expansion of services.
Is the Market Showing Signs of Saturation?
Growth has been variable, with high growth linked to the introduction of new lines on platforms. While restaurants have reached moderate growth, new lines and city expansions present opportunities for platforms. Compared to Turkey, there is potential for high growth in the coming years.
Is It Expensive to Compete in This Market?
The cost of entering this market has increased significantly due to competitors, making it a serious barrier for new entrants. Investment needs to be substantial to capture market share, and businesses must be resilient. We are prepared for the long-term commitment required to succeed.
Are There Plans to Acquire or Collaborate with Other Platforms?
We have had discussions with two other platforms. If they can offer added value beyond what we currently provide, we would consider negotiations. However, we have not yet identified such value.
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