Swiggy Business Model – How Does Swiggy Make Money?
After a hectic day at work, cooking will be the last thing in your mind and you do not want to lose more energy thinking about what to cook or spend hours in your kitchen. You want cooked food to come to you. It is now made possible by Swiggy with their doorstep service of the cooked and yummy food from various restaurants, lounges and cafes. You just wish it and Swiggy assures you to get this at your doorstep.
Swiggy was established by Sriharsha Majety, Nandan Reddy, and Sriharsha Majety in 2014. It is a popular food ordering & delivering app service online and its head office is located in Bengaluru, Karnataka. The company operates in more than 25 cities across the nation and top cities include Chandigarh, Bangalore, Coimbatore, Chennai, Delhi, Dehradun, Guwahati, and Gurgaon, Indore, Hyderabad, Kochi, Jaipur, Lucknow, Kolkata, Mumbai, Ludhiana, Mysore, and many more.
How Does Swiggy Business Model Works?
Swiggy runs through their websites and their mobile apps. This application is generally used by urban foodies for ordering a wide variety of food items online from nearby restaurants and cafes. Along with listing restaurants, Swiggy shows huge menus of various restaurants on their application so that foodies will select from a huge variety.
There is a huge success and great orders seen by the local street vendors who cook delicious food but weren’t in an area of recognition as they cannot spend a lot on the marketing.
When any customer adds their products to the cart and places an order, they can track their order. Users can easily connect with their delivery partner and instruct the partner if any difficulty in finding the address. The location and address are also taken at the time of placing an order but if any customer wants information related to their order, then he/she can easily get it.
Primary Activities of Swiggy
Given are some prime activities that are undertaken by Swiggy:
- Developing partnerships with eateries, restaurants, and retailers
- Managing and hiring delivery feet
- Retaining and acquiring new customers
- Supervising technical operations behind their delivery & payment method
- Instant redressal of any customer or partner grievances
How Does Swiggy Make Money?
Swiggy’s idea of connecting the local foodies with the local restaurants gave them the brand benefit of the early mover. However, the brand relies on the restaurants and delivery personnel for growing its business. The company needs to pay some incentives to the local delivery partners for keeping their business running. Thus Swiggy’s income stream comes straight from different and multiple sources.
Swiggy earns money from the following business segments: Swiggy app advertising, Food delivery, Swiggy One Subscription, Swiggy Access Cloud Kitchens, Instacart and Swiggy Genie and affiliate income.
Swiggy Business Model
Swiggy’s business model is based on the on-demand local food delivery model. It uses modern technology & techniques for satisfying the increasing demand for the foodies in this market.
This acts as a bridge between the restaurants and eaters. This operates successfully on the dual partnership model that proved highly beneficial for the retail shops and even restaurants in case they perform the foodservice through this platform. You can explore the business model and know how this works to offer the best food ordering & delivery service to its customers, and how it makes money by benefiting the retail stores and restaurants.
Let’s explore in detail:
Commissions
Swiggy charges over 15 to 25% commission on the total order bill (that includes Goods & Service Tax) from the restaurants. This percentage of commission mainly depends on different factors like several orders, restaurant location, the commission charged by the competitors, and more.
Instamart and Swiggy Genie
Swiggy Instamart and Genie are Swiggy’s attempts of delivering food and delivering anything. Swiggy Instamart is a grocery & daily essential delivery service and Swiggy Genie allows the customers to get and receive anything delivered from place to place. Both the services earn money from the delivery fees.
Delivery Charges
Delivery charges are charged when the order is under minimum order value. And Swiggy charges very less amount of just Rs. 20 – Rs. 40 to their customers. These charges depend on high-order demands and unusual weather conditions.
Advertising
Swiggy makes advertising revenue from their restaurants featured on the app Banner promotions and Priority listing. They will allow the restaurants to place their banner ads for cost and make them pay for the higher listing on an app.
Affiliate Income
Swiggy provides credit cards from where they make income as an affiliate. The food-service brand also has partnered with the financial biggies, which include Citibank, American Express, HSBC, ICICI Bank, and more.
Swiggy Access
Not every user knows, that Swiggy has a cloud kitchen concept that offers kitchen spaces to the restaurants in a particular area where the chain doesn’t operate. As per the source, Expecting over 25% of the revenues in the next 2 years, Swiggy plans to expand its cloud kitchen model and include 30 restaurants with over 36 kitchens in 4 new cities.
Swiggy One
This is one subscription program, where Swiggy Super offers subscribers access to the unlimited restaurant food free delivery on the orders more than 199 and unlimited delivery on Instamart free for orders more than 99, and get 10% off on the delivery fees over Rs 35 on Swiggy Genie, and many other discounts.
Swiggy’s Business Model is based on the dual-partnership model. The key partners are:
Restaurants Partners
The restaurants are Swiggy’s first partners. Swiggy features the restaurants on their app, and the restaurants deliver food to their customers. The partnership serves 3 parties.
First, the customer places an order and receives food from their favourite restaurants. Second, the restaurants can increase their sales & customer base. Third, Swiggy makes revenue just by charging the delivery fee from commission and customers from their restaurants.
Delivery Partners
Delivery partners form the second part of Swiggy’s partnership. After these restaurants pack an order, the delivery person collects an order and delivers it this to customer’s desired place.
Companies like Zomato have outsourced the delivery services, however, Swiggy has got its own fleet for delivery. The fleet will deliver food within 30 minutes. The success of Swiggy is attributed to its amazing delivery services.
Besides accumulating restaurants, Swiggy has got its fleet of delivery partners. They will pick up the orders from their partner restaurants & get them delivered on-demand in 30 minutes.
As Swiggy runs as the dual-partnership model, this benefits restaurants, which will get many more orders from the customers using their own Swiggy app.
When an order is placed by the customer, they will know their order details, prepare their order and get it delivered to the Swiggy drivers. In this way, restaurants do not have to use their delivery personnel, saving efforts and costs.
All Swiggy drivers in the vicinity get a broadcast signal on their own Swiggy drive application when an order is placed. When they accept any order, they deliver this right on their customer’s doorsteps.
Swiggy’s Cost Structure
Swiggy needs to incur costs & expenditures for its daily functions. The major sources of cost are:
- Costs of website development and application
- Payroll costs for employees & delivery partners. It includes benefits and incentives that Swiggy provides to the restaurants. For instance, giving a commission of 2 to 3%.
- Administrative, marketing and advertising costs
- Running costs & maintenance charges
- Kitchen base-such as facility setup & maintenance costs
- Returns, refunds, or miscellaneous expenses
- Extra costs in promotional offers & benefits given to the customers
Value Propositions
No restriction policy of Swiggy is the primary value proposition of this firm. It has a strong payment system online that has made the whole food ordering journey simple for its customers.
No minimum order has helped to reach over 14 million orders every month whereas many orders amounted to less than a hundred rupees. Swiggy app’s main value proposition is they have given the platforms to restaurants & stores to use. This has helped Swiggy & partners to save over 30% of the operational costs.
They recently launched Swiggy Go feature wherein they provide instant pick up & drop services that can be used by the customers to send documents, packages, parcels and even tiffin. They have got digital wallets just by partnering with the companies like Paytm, PhonePe, FreeCharge and others.
Customer Relationships
Swiggy has got positive customer relationships. They offer 24/7 active customer support that will help the customers anytime and anywhere. They use ‘Customer Support Chat’.
It has got active social media posts and pages where they respond promptly. If they want to get in touch with their partners and customers, it has developed the best review, rating, and feedback systems.
Final Words
Undoubtedly, Swiggy has become one leading portal for food ordering & delivery services. Having changed the whole landscape of how people eat in India, its unique business model has actually made the life of each foodie tastier, easier, and fun.
With the live order tracking, fast deliveries, and no restrictions on order amount, Swiggy isn’t very far from taking a large chunk of the food-tech market. This has been demonstrated by Swiggy’s business model.
