“I love the Pizza there. Can we go?”
“Sure we can. But I am in no mood to get ready, wait in the traffic and wait again at the restaurant to find a table and wait some more after giving the order.”
Plan off. Eats home-cooked food again and cries.
Perhaps, a group of three friends knew these issues faced by every food-lover all too well. And after all the crying, they built Swiggy, and that made all the difference.
BORN OF SWIGGY
Sriharsha (Harsha) Majety saw his first opportunity in unorganized logistics and shipping sector of the e-commerce industry and discussed ideas with Nathan Reddy and came up with Bundl. However, things didn’t go as planned and the venture shut down within the year of its commencement. If you are thinking it’s the end, no. It’s the beginning.
Learned from past experiences, they started to seek for something that can be achieved with a click of a button. That’s when they met a technological geek, a former Myntra software engineer, Rahul Jamini.
With the success of Ola and Uber, the three entrepreneurs were mesmerised and saw an enormous potential within the hyperlocal market.They spotted a huge gap in the online food ordering and delivery industry of India. And the next thing they did was to embrace the moment with open arms, and filled the space by launching Swiggy in 2014.
Working as a bridge between restaurants and customers, Swiggy utilizes an innovative technology platform that works as a single point of contact. Based on a hyperlocal on-demand food delivery business operation, Swiggy provides a hassle-free, fast and authentic delivery experience by presenting a broad list of restaurants and handling its own fleet of delivery partners at the same time.
WANT TO BECOME A UNICORN? STRUGGLE.
As the existing players Zomato and Food panda had been successful , experts anticipated that Swiggy is entering the saturated market. But Swiggy was nourished with perseverance.
Initially, the restaurant partners did not show any interest because of the lack of confidence, but then Swiggy worked hard towards making their logistics network faster, easier and streamlined with a widespread and strong network of local delivery boys. Zomato’s ‘no expansion plan’ was further a cherry on the top. Swiggy started achieving traction with big investors because of their immediate growth in revenue and by 2015, Swiggy raised $80 million in funding.
A TOUR OF SWIGGY’S BUSINESS MODEL
One phone in hand is worth two or hundred other facilities in any other place. Ain’t it true? While you decide your stance over it, Swiggy thought it was true. And meanwhile developed its platform which could be operated by anyone through its mobile application or website. It further gained a lot of fan following because order a single piece of pastry or a meal, Swiggy wont do any ifs and buts. Swiggy also provides 24/7 active customer support to help customers anytime, anywhere.
But where is the money in all of this?
Besides the app development cost, Swiggy also has a large number of expenses. Payroll expenses to employees and delivery partners are its major operational cost. And because of the absence of minimum order criteria, the logistics cost per order increases exceptionally.
Swiggy’s costs in terms of promotional offers and benefits given to customers are necessary to keep them in the game.
And for Swiggy to do what it’s meant to do (earn profits), all these costs are needed to be covered. So here is the revenue channel of Swiggy –
Swiggy generally charges a 15% – 25% commission (depending on the frequency of orders received, location of the restaurant) on the full bill amount(inclusive of taxes) received by the restaurant. Though sometimes to get restaurants on board to be available on Swiggy exclusively, they offer a drop by 2-3%.
After Swiggy got a strong hold of the market, it made its delivery charges customisable which pushed customers in ordering above the threshold to avoid paying delivery charges. Swiggy had also launched ‘Swiggy Super’, a membership program for customers which after paying a fixed amount, offers them unlimited free delivery on orders above Rs 99 and no surge pricing.
Swiggy displays a list of available restaurants to the customers typically. It has converted this very potential to a revenue channel by charging a premium from restaurants in return of giving them a priority listing. Higher the cost the restaurant pays, higher up the list the restaurant is displayed. And the restaurants do tend to pay more because economics – benefit greater than cost.
To bring food closer to its customers, Swiggy has also recently launched the cloud kitchen model ‘Swiggy Access’ which will help restaurants to set up kitchens in locations even where they are not present.
Another revenue stream for Swiggy is its service ‘Swiggy Go’, that was launched in 2019 to offer instant pick & drop service. Through Swiggy Go, the company earns by assisting consumers to send, pick, and drop anything to and from different locations anywhere across the city.
Talking about revenue, there was an allegation on Swiggy that the prices on its portal is much more than the actual restaurant prices. But, Swiggy made it very clear that it had nothing to do with it and the prices are set by the restaurant’s discretion.
With over 150 dishes across 150000 restaurants translating to 2.25 cr menu items, it’s challenging to automate any online vs offline price comparison. And at the same time, it’s believable.
Swiggy is following a non-stop journey. The brand which started with delivering food in one city is now escalating across India. Having changed the entire landscape of how India eats, its unconventional business model has made the life of every foodie easier, tastier, and more fun.