Unwrapped: Winning the subscription battle

Hi, this is Pratik Bhakta in Bengaluru along with my colleague Pranav Mukul in New Delhi.

If the first battle in the quick-commerce and food-delivery wars was fought on who can deliver faster, the next one is playing out on who offers more attractive subscription features.

On Thursday, Zepto launched ‘Zepto Pass’, its own membership programme, which will offer special discounts and free deliveries to its members for both its grocery and food-delivery businesses. It has started with an attractive and heavily discounted price of Rs 19 to Rs 39, hoping to get some initial traction. With this move, Zepto enters the subscription arena where Swiggy runs Swiggy One and Zomato has its Gold offering.

Subscriptions are not new in the consumer internet space. Be it Amazon Prime or Urban Company, in a fiercely competitive ecommerce business, startups have used subscriptions to ensure user stickiness. But the question remains: Is it working?

Business numbers generated by Zomato’s Gold show that it may be easy to launch a subscription product, but difficult to make it sustainable — at least in the short term.

How top quick-commerce players stack up_FEB 2024_Graphic_ETTECH

As of September 2023, around 40% of the overall order volume on Zomato was driven by Gold users, but it was becoming a drag on its profitability target.

Also read | In-depth: How quick-commerce became a villain for kirana stores

During its September-quarter call, Zomato CFO Akshant Goyal had pointed out that they were losing money on a Gold order compared to a non-Gold order, given the benefits the customer gets.

So perhaps subscription programmes have more to do with pricing and services included within the offering. Between Zepto, Swiggy and Zomato, it is the Bengaluru-based Swiggy that has an elaborate subscription programme covering quick-commerce on Instamart, food-delivery, and additional discounts on Genie, its pick-up-and-drop service.

Unit economics of quick-commerce_Through Blinkit lens_FEB 2024_Graphic_ETTECH

E-commerce industry executives say that the key to making a subscription programme work is always a large bouquet of offerings. The pricing can be made on the higher side and margins made higher only when the offerings become compelling enough.

In the case of Amazon, which runs the Prime programme globally, it is evident that compelling services and offers make it extremely attractive to skip.

So, the Indian consumer internet industry might have started putting its bets on subscriptions, but for it to work at scale, the players will need to offer the right set of services at the right price.

Also read | How dark stores are powering quick commerce’s rise

For consumer internet companies, building loyalty is taking more than just offering a subscription programme. Platforms like Swiggy and Tata group’s digital offerings under Tata Neu have widened the net to build customer loyalty through co-branded credit cards.

Also read | Meesho joins carts queued up at credit, grocery counters

On January 12, we wrote about how the push for co-branded cards has been a success for HDFC Bank — the financial services giant has been issuing cards with Swiggy and Tata Neu. But again, as with subscription programmes, the eventual success of co-branded credit cards lies with how ubiquitous the offerings on these cards are. Only discounts and free deliveries may not help win the game, the right strategy will be directed towards expanding the product bouquet and then pricing it accordingly.


Top Stories This Week

Online payment firms struggling to_VIDEO KYC_KYC_THUMB IMAGE_ETTECH



On KYC compliance front, payment aggregators may be second to some:
At a time when the central bank and the Union government are pushing regulated entities to adopt stringent KYC (know your customer) norms to check fraud, many large payment companies are still some distance away from conducting bank-grade KYC verifications, multiple industry insiders told ET.

kyc p

Founders’ fortunes swing with stock prices in past 12-14 months: The fortunes of startup founders have mirrored the ups and downs of the stock market performances of their firms in the past year. While some like Deepinder Goyal of Zomato, Yashish Dahiya and Alok Bansal of Policybazaar, have seen their wealth soar, Paytm’s Vijay Shekhar Sharma experienced a decline in the value of his holding in the fintech.

Value of shares held by new-age company founders_FEB 2024_Graphic_ETTECH_1

Google starts delisting Indian apps for non-compliance with Play Store norms: Google on Friday delisted several prominent apps by ten Indian developers from its online marketplace Play Store for “non-compliance with billing policies,” triggering fresh conflict with several local internet firms that have been protesting against what they term as the “unfair” policies of the American company.

Google print gfx.

Info Edge’s Naukri.com and 99acres, Matrimony.com’s BharatMatrimony, People Interactive’s Shaadi.com, online podcast platform Kuku FM, and online dating app Truly Madly were among some of the apps taken down by the tech giant.

Cabinet greenlights Tata’s Rs 91,000-crore semiconductor foundry proposal: The Union Cabinet on Thursday approved incentives for Tata group’s proposal to establish a semiconductor foundry with a cumulative investment of Rs 91,000 crore. This marks a significant step towards realising India’s ambition of possessing its first domestic commercial chip fabrication facility.

tata chip


ETtech Interviews


Dara Khosrowshahi_CEO Uber_Ola_rivalry_THUMB_ETTECH_2

Exclusive | While Ola taps new roads, our focus still ride-hailing: Uber CEO Dara Khosrowshahi: In an exclusive interview with ET, Uber CEO Dara Khosrowshahi spoke about the company’s focus on mobility, profitability, electric vehicle push, investment strategy in India and how his management style is different from that of Uber founder Travis Kalanick.

Uber 10-year India trip_Timeline_Graphic_FEB 2024_ETTECH

He said, “While (rival) Ola focuses on other areas…we love the ride-sharing business…Some of our competitors are distracted by shiny, new efforts and IPOs, that’s great. I’m undistracted and completely focused on the mobility business here as there’s an enormous amount of upside for us and our positioning has never been better.”

Ride-hailing competitive landscape_Graphic_FEB 2024_ETTECH



With 5x the investment, India will be among top semicon producers by 2028:
IT minister Ashwini Vaishnaw | Investment in the domestic semiconductor space will increase at least five times to 7.5 lakh crore, making India one of the top five semiconductor manufacturing nations by 2028, IT minister Ashwini Vaishnaw told us in an interview.

Vaishnaw said that the government will be focused on the execution of India’s first semiconductor fab project, by the Tata group, along with two other chip assembly proposals, in record time.


Paytm Crisis

Why did Paytm shares surge Vijay Shekhar Sharma

The finance ministry’s Financial Intelligence Unit-India (FIU-IND) imposed a fine of Rs 5.49 crore on Paytm Payments Bank (PBBL) for “violating its obligations” under the Prevention of Money Laundering Act on Friday. Earlier in the day, One 97 Communications (OCL), the parent that owns the Paytm brand, said the board has approved the discontinuation of inter-company pacts with Paytm Payments Bank to reduce dependencies.

This comes after OCL said on Wednesday that its founder Vijay Shekhar Sharma will be stepping down as part-time non-executive chairman and board member at PPBL as part of a board restructuring, and it has withdrawn all nominees from the payments bank’s board.

Paytm share price movement_1 Mar 2024_Graphic_ETTECH

Also read | No foreign remittances licence, no Fema violation: Paytm to ED

Meanwhile, ET reported on February 29 that PBBL saw a sharp jump in customer complaints in the last financial year, well before the RBI announced its strictures.

In FY23, the payments bank reported 66,751 complaints across multiple categories, two-and-a-half times higher than the previous year’s 26,692 complaints.

Also read | FM asks RBI, fintechs to hold monthly meetings in wake of Paytm crisis


Byju’s Saga

byju raveendran. byjus

The National Company Law Tribunal (NCLT) on February 26 provided three days to Byju’s and a group of its investors to file written submissions and reserved its orders for interim relief on a $200 million rights issue by the edtech firm.

top shareholders in byjus.

The next day, the NCLT told Byju’s to respond to two separate insolvency petitions filed by US lenders and the Board of Control for Cricket in India (BCCI) against the troubled edtech firm.

Also read | ETtech Explainer: What to know about Byju’s boardroom battle and shareholder resolutions

In the first matter, the NCLT provided Byju’s parent Think & Learn three weeks to file its objections to a petition filed by Glas Trust Company LLC, the administrative agent appointed by a group of lenders that had extended a $1.2-billion term loan B to its US subsidiary Alpha Inc to collect the debt under the guarantee agreement.

The tribunal has issued a notice to the embattled edtech firm for payment defaults of the loan that it had guaranteed.

Also read | MCA seeks fast submission of inspection report on Byju’s


Startup Corner

Online fashion marketplace Myntra has received funding_THUMB IMAGE_ETTECH



Myntra secures $54 million fund infusion from parent Flipkart:
Myntra received a $54 million fund infusion from parent Flipkart, at a time when the online fashion platform is witnessing intense competition from Reliance’s Ajio and Tata Cliq. According to regulatory filings made in Singapore, Myntra’s holding company, FK Myntra Holdings Pvt Ltd, received the fund in January.

Recent Flipkart investments in Myntra_Mar 2024_Graphic_ETTECH

Startup Mahakumbh to tell the world that spring is coming: ‘Startup Mahakumbh’ can bolster investor confidence and help shorten the funding winter that new enterprises have been facing, said a member of the committee that’s organising the three-day mega event for startups, investors and incubators in the national capital from March 18.

Ram Mandir sends gaming apps on a temple run: Mandir and mobile are combining to deliver a massive opportunity for Indian gaming companies that are vying to launch a plethora of so-called “spiritual games” following the unveiling of the Ram Mandir in Ayodhya. Mandir-focussed apps have witnessed a surge in downloads, nearly doubling since the Pran Pratishtha ceremony on January 22.

William Murphy

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