Breaking Duopolies

There is a ruthless side to technology. As it disrupts, automates, and builds scale for some, it has almost always caused the downfall of others. These “others” have mostly been traditional businesses that offered a ready arena for tech disruption. Therefore, even as technology brought convenience to us, it decimated mom-and-pop stores, terminated age-old services, and forced business shifts. A sentimental and wistful person like me would shed a tear not at the tech-tonic shifts, which were frankly necessary, but rather for the business and people that couldn’t adapt quickly enough.

The growth opportunity created by startups then needed capital as fuel, and along came big VC (venture capital) bucks to propel those aspirations. Growth at all costs, meant wiping out the market, obliterating or buying out competitors, and acquiring customers with the unavoidable double charm offensive of convenience and discounts. But as always, the other shoe finally drops, and then the bloodbath begins.

Take the food delivery space for instance. When food delivery aggregators such as Swiggy and Zomato first entered the market, they were a fresh lease of life for an industry that struggles often, and yet is one of the highest job creators in the country. The platforms levelled the playing field allowing smaller restaurants and even home kitchens to do brisk business. As both intensely competed with each other, consumers received ease of doorstep food delivery and attractive discounts while restaurants could reduce expensive overheads. Over time, these two aggregators grew in scale and reach, and buoyed by external capital, they vanquished their competitors, and have eventually established a duopoly, with a chokehold on market share, prices, and consumer behaviour. Today, ask any small restaurant or food operator and the pain-points are easily noticeable. Both aggregators take hefty commissions; restaurants must run advertisements constantly in order to be discoverable on these platforms; restaurant partners pay various taxes, while the end consumer also pays additional taxes and delivery charges. Interestingly, and in what reeks of capitalism, the smallest player ends up paying the most! Established brands can negotiate down commissions to 10-16 per cent while the smaller restaurants, who obviously would find it harder to pay higher commissions, end up dishing out commissions upwards of 20-25 per cent. At the end of the month, most restaurants have paid out almost half their earnings, leaving little for their operational costs. But the stepping off the pedal is near impossible; the allure of the online traffic is hard to deny.

Duopolies are allowed to emerge where blind capitalism comes to roost. To expect, socialist ideas and practices to remain in existence in current society is idealistic. After all, who among us spends a thought for those outside our narrow existence. Who cares about equity, justice, or the future of the underdog? Such lofty ideals suited the older world order where ethics and fair play still had a place. In today's dog-eat-dog world, only strong businesses can bring about change.

Ah! But I get cynical. But it's hard not to if you look at the trends. In several sectors, duopolies exist in spite of the well-known adage that competition is good. In ecommerce, there's Amazon with a wide lead over Flipkart; in telecom, there's Bharti Airtel and Reliance Jio with Vodafone a distant third. In cab aggregators, Uber and Ola ruled the market for a long time. But with discontentment brewing on the drivers’ side as well as passengers over high commissions, surge pricing, and availability, the sector has now been further disrupted with several other players successfully entering fray.

Intriguing therefore, that food delivery continues to have such high barriers that newcomers fail to take off. There is however, no doubt that this duopoly needs to be broken — so from the National Restaurant Association of India (NRAI) to the Open Network for Digital Commerce (ONDC) and now other startups such as Rapido, the mission is to rationalise that same playing field. What does this mission need? Money bags, as always, money bags. And maybe an altruistic spirit.

The writer is an author and media entrepreneur. Views expressed are personal