India’s internet economy has gone through a major growth spurt in the past few years and as with age, most sectors are rapidly maturing. In the case of consumer services, the maturity manifested itself through a sharper focus on revenue and profitability in 2023.

In some cases that meant entering product territory (a la Urban Company), and in others it meant relying on platform fees as seen in the quick commerce and food delivery space. But the push for revenue and improving unit economics has meant compromising on the unbridled user base growth. Instead, the attention is on maximising the revenue gained from the most active users.

But before we look at how this macro trend will trickle into the various parts of India’s consumer services economy, a look back at some of the major developments of 2023.

Three-year-old startup Zepto turned into something of a poster child with strong revenue growth and securing a big round that saw it turn into a unicorn. On the other hand, Swiggy and Zomato have looked to celebrate milestones that are closer to fundamentals aka unit economics and profits.

But the year was less than joyous for Reliance-backed Dunzo, whose fate hangs in the balance, as the hyperlocal holdout faces an unprecedented cash crunch as the market transitions to quick commerce — we have covered this in detail here.

On the mobility front, ONDC changed the picture for Ola and Uber, at least in Bengaluru, where Namma Yatri has graduated beyond a proof of concept. How will ONDC’s influence disrupt the sector that’s already facing a big challenge — i.e. the transition to electric vehicles?

9 Predictions For India’s Consumer Services Economy

Let’s take a look at this and other important trends that are likely to shape the critical consumer services sector and some of the biggest startups in India in 2024:

Consumer Services To Get Costlier

This is almost a no-brainer by now. What began with a few isolated cases in 2023 has seen much wider adoption by now. We are talking about platform fees or per-order charges by food delivery, ride hailing, quick commerce delivery and even ecommerce.

Instead of relying on discounts and cashbacks to attract new users, the focus is on charging platform fees per order from those who are any way ordering.

The founders and investors we spoke to believe despite the capital-intensive nature of consumer services, startups will continue to expand, however, now there is also a focus on not just expanding without completely considering the unit economics implications.

Ankit Nagori, cofounder and CEO of Zomato-backed Curefoods, believes that as metros and Tier 1 cities has almost reached a point of saturation, many platforms are now looking to expand to smaller market segments. As a result, they cannot afford to rely on high discounts to existing active users.

“For both food delivery and quick commerce, there are no more new avenues to tap into in metros. Hence, the focus is on increasing average order values (AOVs) through smart discounting or charging platform fees, delivery charges to sustain and make profits,” Nagori added.

An analyst working with a Bengaluru-based consulting firm said that public market pressures forced Zomato to think about platform fees, but it must be noted that it was Swiggy which added this charge before its Gurugram-based rival.

“Zomato has learned the lesson that if it has to perform well in public markets, it has to chart a sustainable path to profitability and increase margins which will attract the retail investors,” the research analyst added.

Besides Zomato and Swiggy, the likes of Uber, BigBasket, Zepto, Myntra and Dunzo have additional costs (handling fees, convenience charge and more) even as they often have discounts on the actual delivery fees. The drive for revenue has resulted in new models such as Ola Prime Plus or Namma Yatri’s subscription plans for driver-partners.

Fashion ecommerce giant Myntra began charging a fee for returns, one of the key USPs of the Flipkart-owned online shopping giant. All of this is about fixing unit economics.

Second Order Impact From National Ecommerce Policy

With the government........

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