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The Feedspeed Delimma

FeedSpeed is an online food delivery startup in India that promises to deliver food within 35 minutes. However, it has struggled to meet this promise during peak hours due to overloaded delivery partners and wasted time waiting at restaurants. The consultant is asked to design a flexible delivery logistics network and strategy to help FeedSpeed optimize operations and fulfill its delivery promise profitably and sustainably. Key recommendations include determining the optimal number of delivery partners, minimizing wait times at restaurants, and increasing revenue per delivery.

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Jiva Tuks
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34 views

The Feedspeed Delimma

FeedSpeed is an online food delivery startup in India that promises to deliver food within 35 minutes. However, it has struggled to meet this promise during peak hours due to overloaded delivery partners and wasted time waiting at restaurants. The consultant is asked to design a flexible delivery logistics network and strategy to help FeedSpeed optimize operations and fulfill its delivery promise profitably and sustainably. Key recommendations include determining the optimal number of delivery partners, minimizing wait times at restaurants, and increasing revenue per delivery.

Uploaded by

Jiva Tuks
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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The FeedSpeed DELImma


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Business Scenario: In India, food delivery tech is one of the fastest-growing
businesses in the e-commerce space with billions of dollars of injection from
foreign investors. In the past 3-4 years, there has been a radical shift in the way
food-tech industry functions. Online food delivery services have become the
prime driver of the growth of the food-tech industry. Growing urbanization has
played an important role in this growth and aggregation. Its effect in India can
be best seen from the change in habits of food consumption. In 2019, the
consumers of online food delivery services were estimated to be more than
180 million. Tech-savvy millennial population, coupled with rising disposable
income and changing lifestyles of Indians with an increase in working hours,
have fuelled the popularity and consumption of these services. It is estimated
that the food delivery industry processed orders worth $5Bn in 2019 and is
expected to grow to $17Bn by 2023. This potential for growth has attracted
many startups in the food delivery segment leading to fierce competition.
Each player is trying to create a differentiating factor for themselves that can
be by either heavy discounting or by focussing on the delivery experience by
guaranteeing the lowest possible delivery time.

Operations of FeedSpeed: FeedSpeed started its operations in 2018 in a Tier-3


city. At that time, the delivery orders averaged 2500 per day. That has
increased to 4000 per day now and is estimated to increase to 7000 per day
by the end of 2020. FeedSpeed is planning to gradually expand its reach to
other Tier-3 cities and eventually to Tier-1 cities once it streamlines its
operations.
Logistics
When the customers login into FeedSpeed, it figures out the actual serviceable
restaurants and estimates the delivery time from any potential restaurant to
the customer. The app shows an optimum number of restaurants to the
customer since showing few restaurants would mean the customer is not
placing an order since he may not find his choice of restaurant. Also, the
delivery time has to be estimated correctly. Showing a low delivery time and
not delivering the order within the time would mean a bad customer
experience, and also a high delivery time would mean customers not ordering
at all. The system then allocates the nearest delivery executive to the
restaurant. The delivery then visits the restaurant and waits for the food to be
prepared. Once the order is ready, the executive delivers it to the customer’s
location.
The Challenge: FeedSpeed has created a niche for itself by promising to
deliver the food maximum within 35 mins. However, lately, it has been able to
do so only partially. The challenge it is facing is that the demand is increasing
day by day. Also, it is not uniform but very dynamic. The density distribution of
orders is varied throughout the day. For example, the number of people
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ordering between 7 PM to 10 PM is far more than 3 PM to 5 PM. The Delivery
partners are overloaded during the peak of dinner hours and are at times idle
during the afternoon or early evening hours, and so it takes longer to find a
delivery partner who can be assigned to the particular order during dinner
time. This causes a delay in deliveries during peak hours, thus failing to fulfil the
promise. Its average delivery time shoots up to 1 hour during the peak hours in
the night or during weekends and festivals (Exhibit 1). It has been observed that
an increase in the number of orders doesn’t translate to an increase in waiting
times in a linear fashion but rather exponential.
As per FeedSpeed’s internal analysis, they have observed that the preparation
of food generally takes a longer time than it does for the delivery partner to
reach the restaurant. The preparation time is estimated to be in the range of
12-18 minutes, depending on the type of food to be prepared. When
FeedSpeed assigns the closest delivery partner, the delivery partner reaches
the restaurant within 7-8 minutes and thus ends up wasting 5-10 minutes waiting
to collect the order (refer the attached excel data file for a sample of orders).
Cumulatively, a lot of time in a day goes unutilized, which directly translates to
revenue loss. This wasted time is an opportunity cost for FeedSpeed, which
could have been utilized to deliver another order. FeedSpeed had also given
a thought about assigning the order late to the delivery partner to minimize the
time lost, but later it found out that if there are no nearby delivery partners to
assign, then it fails to fulfill the 35 minutes delivery promise as there is no buffer
left for contingencies. This again impacts the customer experience. With
increased competition from rivals, it has become essential for FeedSpeed to
fulfill its delivery promise; otherwise, it may risk losing its customers to its rivals.
You have been hired as consultant to FeedSpeed and are asked to design a
delivery logistics network which enables FeedSpeed to fulfil the delivery
promise. Since the orders are very volatile in nature, you are asked to design a
flexible and agile network which will be able to handle the orders faster and
at a lower cost. As onboarding delivery partners on urgent basis when there is
a surge in demand is always not feasible, you are asked to suggest an optimum
number of delivery partners as a higher number of delivery partners than
required directly impacts your profits.
You are also expected to come up with an innovative solution to eliminate or
minimize the delivery partner’s time lost in waiting at the restaurant and thus
increasing the total number of orders that can be delivered by the delivery
partners. You are also asked if you have any other recommendations for
addressing this problem.
As sustainability is the key in this business, FeedSpeed needs to reduce its cash
burn and increase its revenue generated per delivery. You are asked to devise
a strategy that will help FeedSpeed achieve it.
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Exhibit 1:

The case is assumed to be relevant to the present market scenario. You can use
industry reports if you need any data. Any assumptions should be explicitly
mentioned.
The proposed action plans/recommendations should be supported with analysis and
rationale.

Submission Guidelines:
1. Teams have to submit a PowerPoint presentation (not exceeding 10 slides) of their
proposal based on the deliverables for the case. Calculations/Analysis can be sent in
an excel file along with the PPT.
2. All assumptions, references are to be explicitly mentioned.
3. Naming Convention of submission file: _OpMach_<Team Name>_<College Name>
4. Submissions should be emailed to [email protected]

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