The business of restaurants and cafes has taken on a new form thanks to the online meal delivery service. Customers now have access to an enormous array of options in addition to improved connections to regional and global food chains thanks to this system. At the moment, Swiggy and Zomato are the two industry titans; while numerous other businesses attempted their hand at this market, they were unable to compete with these titans. In addition to being the biggest online food ordering and delivery service in India, Swiggy is also the number one unicorn startup in the country. Since its launch in August 2014, it has more than five lakh app installations, partnerships with over 1,50,000 restaurants, and has a strong presence in more than 325 cities across India.
Swiggy pioneered quick pick-and-drop meal delivery services to ease people’s lives. It provides a single window for placing orders from a wide selection of restaurants and a complete meal ordering and delivery system that links local restaurants with food enthusiasts.
They have revolutionised and broken all barriers pertaining to food delivery. From a time when we had to travel, order, and wait to get our favourite food parcelled, today we have grown so much through apps like Swiggy to have high favourite delicacies delivered right in front of our doors. This article will look into the business model that has helped Swiggy gain a place in the market.
Through this article, we will understand the whole ecosystem of Swiggy’s business, right from what business model it follows to how it makes money, we will put a magnifying glass on each of its developments.
About Swiggy
The Bangalore-based business Swiggy was founded in 2014 and has already spread to over 100 Indian cities. Swiggy, which was founded by Rahul Jaimini, Nandan Reddy, and Sriharsha Majety, has a vast national business network. As food ordering and delivery giants, they are currently expanding their digital presence by introducing a variety of platforms and expanding their services in response to circumstances such as “when you prefer not to dine out, they bring the restaurant to you.” In the ongoing competition between Swiggy and Zomato, the app’s features are consistently attracting customers to place orders with Swiggy. Customers may keep tabs on their orders, get real-time updates, talk to customer service, pay with cash on delivery, find incredible bargains, and so on. People from the working class and students love Swiggy because they don’t have much time to cook for themselves.
For example, Swiggy Pop is a 30-35-minute meal delivery service for a single serving. Swiggy offers a variety of products and services to its customers. The Swiggy POP menu offers several dishes such as Asian combos, burgers, bowl meals, biryanis, and Indian thalis. All single-serve meals priced between Rs 99 and Rs 200 will be delivered quickly.
Vidhi Punamiya
Swiggy Business Model
While Swiggy’s primary revenue generator is its commission model, the company does have other verticals that contribute to its success. It uses cutting-edge methods and technology to meet the market’s increasing need for foodies. In addition to being a model of efficient and effective customer service, it also follows all the latest trends in the restaurant industry.
It connects establishments with customers who are looking to eat. It runs well on a dual partnership basis, which is good news for eateries and grocery shops that want to use the platform for food delivery.
Swiggy’s business model focuses on localized, on-demand meal delivery. In addition to connecting eateries, it coordinates a network of delivery partners to provide customers with their meals whenever they want them (within 30 minutes).
Similar to Uber, Bundl Technologies Private Limited built this unicorn startup’s business model around a dual partnership arrangement.
Cooperating Restaurants: Restaurant partners are businesses that have agreed to deliver to Swiggy app and website users.
Collaboration with Delivery Partners: Individuals in the delivery fleet are in charge of picking up the order from the partner restaurant and delivering it to the final customer.
Swiggy’s entire business ecosystem runs on commission, delivery charges, subscriptions, restaurants, and cloud kitchens.
Kanimozhi Sivakumar
Business Model Canvas of Swiggy
Let’s understand the Business Model of Swiggy in detail:
Key Partners of Swiggy
- The major partners that drive Swiggy forward are the restaurants and shops that sign up to have their enterprise enter into food delivery services.
- Other than eateries, Swiggy also partnered with pharmacies, groceries, et cetera through their platform. Today, Swiggy Mart is a very important part of the company.
- Recently, they had also partnered with Instagram to allow users to use Instagram’s food order stickers in their stories. These stickers will help the viewers of such stories to order similar things from Swiggy.
Key Activities of Swiggy
- The most important activity that Swiggy has to undertake is to acquire customers and manage their orders in real-time. This is accompanied by handling delivery and payment processes simultaneously.
- Having a very efficient partnership with retail shops, restaurants, and other eateries is an unavoidable part of Swiggy. Swiggy Go fulfills another important activity of pick-up and delivery as well.
- Having a sound technical system is a very important part of Swiggy since multiple aspects need to be addressed at the same time while an order is being placed.
- Management of these technical operations, maintaining an efficient IT infrastructure, and proper updation of the system are other important activities of Swiggy.
Key Resources of Swiggy
- The key resources of Swiggy are the local partners like Keventers, Yogidthaan, and Biriyani Blues tea, which are bestsellers in the cities.
- Delivery providers and technology providers are other key resources of Swiggy, which have played a very significant role in strengthening its system.
- The resources of Swiggy are expanding as it continues to reach out to more places and more untapped markets.
Value Proposition of Swiggy
- Swiggy’s policy of no restriction is one of the main value propositions of the firm.
- It also has a very robust online payment system, which has made the entire food ordering journey easier for the customers.
- The no minimum order policy has also helped in reaching up to 14 million orders per month, while many orders amounted to less than a hundred rupees.
- The Swiggy app’s other main value proposition is that it has given its platform to restaurants and stores to use.
- It has helped both Swiggy and its partners to save more than 30% of their operational costs.
- Recently, they also launched Swiggy Go, wherein they offer instant pick-up and drop services, which can be utilized by customers to send any kind of packages, documents, parcels, or even tiffin.
- They also have digital wallets by partnering with companies like PhonePe, Paytm, FreeCharge, etc.
Mahenoor Mansuri
Customer Relationship of Swiggy
- Swiggy, being an expanding company, needs to have a very efficient customer relationship to ensure long-term growth. Hence, it has active customer support at the perusal of user.
- Apart from a 24*7 telephonic system, they also have chat services.
- Being active on social media, customers can also send messages to Swiggy’s social media pages, where they usually reply promptly.
- It also allows you to rate the places and food delivered by Swiggy.
Channels of Swiggy
- Swiggy can be accessed in multiple ways. Various channels on Swiggy include their mobile apps and websites, which are available on both Android and iOS.
- Their recent additions to Swiggy Stores and Swiggy Go are the new channels of the firm.
Customer Segment of Swiggy
- The people who prefer dining in their own homes but do not want to cook their own food are the main customer segment of Swiggy.
- From the people who wanted food to be delivered at their doorsteps being principal customers, we can see a shift to the people who not only want food delivered but also things like groceries, gifts, flowers, medicines, etc, coming into the central stage of customer segments.
Cost Structure of Swiggy
- Swiggy also has to incur a lot of expenditure daily to ensure the proper functioning of the app and websites.
- They have to incur the expenses of their employees and delivery partners. This is apart from the 2 or 3% commission that Swiggy gives to restaurants that partner with them.
- They also have to bear the cost of website and app development, along with maintenance charges.
- Advertisements, marketing, and administration create huge expenses as well. Swiggy also has to bear the cost of other miscellaneous expenses, including returns and refunds.
How Swiggy Makes Money | Swiggy Revenue Model
Swiggy Financials 2024
| Swiggy Financials | FY23 | FY24 |
|---|---|---|
| Operating Revenue | INR 8265 crore | INR 11247 crore |
| Total Expenditure | INR 12884 crore | INR 13947 crore |
| Procurement Costs | INR 3381 crore | INR 4604 crore |
| Employee Benefit Expense | INR 2130 crore | INR 2012 crore |
| Advertising Expense | INR 2501 crore | INR 1851 crore |
| Delivery & Related Charges | INR 1694 crore | INR 1637 crore |
| Net Loss/Profit | INR -4179 crore | INR -2350 crore |
Swiggy reported a 36% rise in operating revenue to INR 11,247 crore in FY24 ahead of its IPO and reduced its losses by 44% to INR 2,350 crore. Swiggy’s total expenses rose from INR 12,884 crore in FY23 to INR 13,947 crore in FY24.
Swiggy was an early player in the Indian food delivery market because of its innovative business approach, which has allowed it to diversify its revenue streams and become a market leader. Upon analyzing the activities of Swiggy over the years, one can observe that their revenue streams are increasing. This is indicative of the company’s very stable and long-term growth. The pandemic restrictions on dine-in services have further helped Swiggy to get the extra push it needed. Below are the Swiggy revenue streams through which the company earns and runs.
Delivery Charges
Since there is no minimum order amount for delivery on Swiggy, the app frequently receives orders below Rs 100. Owing to this, the logistics cost of such orders increases. Therefore, as Swiggy established a dominant position in the market, it began charging delivery fees for small orders, the exact amount of which varied by city. Customers are Swiggy’s primary source of revenue. If a customer’s order total is less than Rs. 250, the business will charge them for delivery. The fee for each order ranges from twenty to forty rupees.
Commission
Another significant portion of the income comes from commissions, which Swiggy gets. In exchange for delivering restaurants’ food orders through the Swiggy app and generating sales leads, it receives commissions from such eateries. Every order placed through Swiggy’s site costs a 15% to 25% fee for restaurants. Restaurants receive perks on this account, such as more exposure and, on occasion, a 2% to 3% reduction in commission.
Advertisement
Swiggy also uses many methods to earn money from advertisements. It displays advertisements for a variety of restaurants on its application and charges a fee to promote them in multiple regions. On top of that, Swiggy charges certain establishments a premium to have their names shown higher on the app’s list of available places to eat. Banner ads and priority restaurant listings were the two main ways that Swiggy began to commercialize its platform. Following in the footsteps of Zomato and Foodpanda, Swiggy has just begun using banner ads. Their website and app feature regionally specific restaurant promotions and listings. The pricing for different regions on the displayed page varies according to the restaurant’s desired level of visibility through the banner ad.
Swiggy Access
Just lately, Swiggy debuted Swiggy Access, a facility similar to a central kitchen base that holds the kitchens of several restaurants, including Swiggy’s own labels. Restaurants will be able to set up kitchens in locations even when they’re not physically there, thanks to this cloud kitchen business concept. From its humble beginnings in Bangalore, the chain has grown to include 36 kitchens across 30 locations in Hyderabad, Kolkata, Delhi, and Mumbai.
Table Reservations
Swiggy has made partnerships with several high-end restaurants. When customers reserve a table at one of these restaurants, Swiggy charges a commission to the restaurant. Additionally, customers are required to pay a nominal booking fee to Swiggy.
Anish Sharma
Quick Commerce
Through its Swiggy Instamart app, Swiggy has recently expanded into the online grocery delivery area. The company operates this business through its delivery partners and has established partnerships with numerous grocery retailers. The company retains a commission on each order from the grocery store, while the client is charged with delivery and handling fees.
Swiggy Super
A new membership program called Swiggy Super has just been introduced by Swiggy. Swiggy does not impose surge pricing, requiring the consumer to pay a set amount, and offers limitless free delivery on orders above Rs 99. An introductory price of Rs 49 for a one-month membership and Rs 129 for a three-month membership are the two available alternatives, with the former costing Rs 149 and the latter Rs 349.
Swiggy Go
Swiggy, a frontrunner in the delivery space, uses “Swiggy Go” as an income generator. With its 2019 launch, it provides clients with an immediate pick-up and drop-off service. The service enables users to select, send, and drop anything from and to numerous locations throughout geographies, and the corporation earns a significant amount from it.
Financial institutions like ICICI Bank, HSBC, and Citibank are some of Swiggy’s business partners. Affiliate marketing is a relatively new but very effective revenue stream, and it works for everyone involved. The meal delivery giant has gotten an advantage over competing models thanks to its innovative features and outstanding customer service. With its top-notch service, it has expanded its clientele.
USP of Swiggy
Delivery in a timely way and the absence of a minimum order requirement are Swiggy’s primary points of differentiation.
Swiggy SWOT Analysis
Swiggy Strengths
- The speed of Swiggy’s delivery is one of the reasons for its fame.
- Swiggy has been an excellent p user-friendly platform for consumers to place orders.
- The brand’s extensive range and the variety of nearby restaurants are two more of its strengths.
Swiggy Weaknesses
- Swiggy will only take orders from establishments that are physically close to the consumer. However, to satisfy their clients, many competitors expand their territory.
- Customers’ overall bills are increased by Swiggy’s specific packing and delivery expenses.
Swiggy Opportunities
- To gain a larger portion of the market, the corporation can rebrand itself more frequently.
- Additionally, the organization may capitalize on cities in which it does not have a presence.
Swiggy Threats
- Zomato, another big player in this industry, is a direct competitor to the corporation. Since Zomato is a major player, it has the potential to offer substantial discounts to clients in the future, drawing them away from Swiggy.
- People nowadays are more health-conscious than ever before, and as a result, they prefer to cook their meals at home rather than ordering from out.
Sakshi Jadhav
Conclusion
Swiggy’s growth over time has been phenomenal. It aims to raise more funds to strengthen and expand its services to more places. Despite being a latecomer in the industry, Swiggy was able to gain its deserved position through strategic planning and stable expansion.
Swiggy is doing a fantastic job of satisfying its consumers’ appetites, and it has complemented this with a well-thought-out business plan. This venture is poised for massive growth in the years to come if it continues at its current rate. Even though it’s in a head-to-head competition with another giant named Zomato, Swiggy has a critical advantage that will determine its fate.
FAQ
Who is the founder of Swiggy?
Swiggy was founded by Nandan Reddy, Sriharsha Majety, Rahul Jaimini in 2014.
How much Commission does Swiggy charges?
Swiggy charges 22-25 per cent on order value from their restaurant partners.
What is the business model of Swiggy?
Swiggy’s business model is a hyperlocal food delivery platform. It connects customers with nearby restaurants through its app and website, charges restaurants a commission fee on each order, and collects delivery fees from customers. It also earns from ads and subscription plans like Swiggy One.
What is the revenue model of Swiggy?
Swiggy’s revenue model is multi-channel. It earns money mainly by charging a commission fee from restaurants on each order placed through its platform. It also collects delivery charges from customers, especially during peak hours or for long distances. Swiggy earns through advertisements by promoting restaurants on its app and website, and from subscription plans like Swiggy One, which offer users free deliveries and other benefits for a fee. Additionally, it has expanded into grocery and quick commerce (Instamart), adding new revenue streams.
How does Swiggy dineout make money?
Swiggy Dineout makes money by charging commission fees from partner restaurants for every table booking or dining bill paid through its platform. It also earns through subscription plans like Gourmet Passport, which offer users discounts. Additionally, it generates revenue from promotional listings and ads for restaurants.
