Swiggy’s Business Model – Making Bank Delivering Quality Food

Swiggy Business Model - Featured Image

Introduction

Whether you’re a foodie or not, everyone loves it when something they’ve ordered arrives at their doorstep as fast as possible and without spending too much effort. But that just wasn’t possible nearly six years ago. With the exception of a few fast-food chains, you could not have your choice of food delivered home at any time of the day or night. That all changed when Nandan Reddy, Rahul Jaimini, and Sriharsha Majety came up with an idea for the everyday consumer to have a plateful of his favorite cuisines delivered to his doorstep, at one touch of his fingertips.

Swiggy is a food ordering and delivery platform which allows you to order your favourite food from your favourite restaurant. The app will get it delivered to your place within 30 minutes, at any time of the day, and all of that with just a few taps on your phone. The app also allows you to track your orders – down to the details of the delivery partner, where your food is, the time you can expect the food to reach your home, and even a 24/7 support centre.

Six years later, Swiggy still continues to grow at an enormous rate, with over 1.5 million daily orders, and it has no idea of stopping there. But how did it get there? What has led Swiggy to dominate the market, and at such a large scale? Let’s find out.

The Way To One’s Wallet Is Through Their Stomach

Swiggy’s major source of revenue comes from the demands of hyper-local areas. The app aims to act as a bridge between the customers and the restaurants, with its vast control over technology and communication systems. The whole system works through a “Single point of contact” structure, meaning you order your food the same way you order a cab – you open the app, you put in your destination and the choice of meal, and you’re put in touch with a delivery partner who accepts to deliver your food. It’s as simple as that.

Swiggy has successfully managed to get hundreds and thousands of restaurants to partner up with it, and almost every eatery in your area can be found on the app today. Couple that with extensive discounts and special coupons, plu a 30-minute delivery time, and you have a winning recipe.

The app works through what we call a “dual partnership” model. Essentially, it’s a structure that helps the customer connect to a restaurant they like, and a restaurant to increase its sales. A win-win situation for the most part is what Swiggy tries to achieve. All of this looks great on paper, but how does Swiggy fare when customers actually jump in on the platform.

How Popular Is Swiggy?

As we mentioned earlier, Swiggy gets roughly 1.5 million orders each day, so it’s more than just popular. It’s become a household name, and a lot of credit goes to how successful it’s been with its customers. Nearly every age group can order scrumptious delicacies on a whim and get them delivered at their doorstep, with as little as a few taps on their screens. The process is secure, simple, and overall, enjoyable.

With over 45000 personnel operating with more than 20000 restaurants in the country, Swiggy does have a lot of people to cater to and a lot of people to make money from. This means keeping a lot of customers happy at all times. And it does so brilliantly.

The company strives towards building a positive relationship with its customers and has been successful so far. This is largely thanks to a 24/7 active customer care support a few taps away. It uses customer support chat service and also has an active social media page with a team handling all the enquiries there. To stay in touch with the customers as well as partners, the app has developed excellent review feedback as well as a rating system.

Swiggy even went ahead and offered its users a relief during this pandemic when it announced offering delivery of essential items to every zone possible. This further helped it cement its place on top of every other food delivery company in the country. And reaching the top does have its own share of rewards. Let’s take a look at how Swiggy makes money from all this.

Swiggy’s Revenue Source

One of the most important value propositions of Swiggy is that it has a no-restriction-order policy – which means you can order for as much or as little as you want, and Swiggy will get it delivered, no questions asked. This would pose a problem if your payment gateway wasn’t as efficient or if there weren’t many payment options available. Swiggy gets rid of both these issues, and that’s where it makes money.

Swiggy makes a chunk of its money through commissions earned when customers pay its Delivery Partners or directly online through various gateways. These gateways pay Swiggy every time someone uses them to pay for their meals. It’s relatively simple, and Swiggy has a lot of these gateways.

Digital Wallets

Paytm, PhonePe, Freecharge, and MobiKwik are the most popular digital wallets available on the food delivery platform, and because they are tied together with attractive offers and cashbacks almost all year round, these wallets are really hard not to select. You even have a UPI payment option to choose from these gateways.

Cards

Swiggy has also partnered up with most card companies in the country to provide an option for online banking and payment through your national and international credit and debit cards. You also get additional coupons and other offers for choosing this method, and can also save your cards for easier checkouts in the future.

Other Methods

LazyPay: LazyPay is quite popular amongst college students, and a lot of youngsters for the sole purpose that it allows you to not pay for services immediately. It’s almost like a credit card system and Swiggy has made most of it.
Cash on Delivery: The oldest but still largely preferred method of payment, any company would be crazy not to add this feature.

Swiggy Super

Every company has certain features reserved exclusively for its high paying customers. The same is the case with Swiggy. Swiggy Super is a premium version of the app and gives its customers way more benefits like protection from price surges during high demand times, and free delivery for orders above Rs.99. It certainly is a very attractive offer, and profits Swiggy and its customers alike.

Affiliate Income

By partnering up with financial credit institutions like HBSC, ICICI, and Citibank, Swiggy earns commission every time it gets a customer to use these banks. Although the commission per customer may be low, with a large enough sample size, this method does prove quite handy.

Swiggy Access

Swiggy’s recently announced “Access” provides restaurant owners with ready-to-use kitchen spaces in areas where they might want to branch out to. Certainly a really attractive offer, we have yet to see how this “Cloud Kitchen” concept will work out. But AirBnb for Restaurants doesn’t sound so bad.

So these were the main sources of revenue for Swiggy, but they don’t earn money because they have these sources. They make money because they’re structured in such an effective way that every time a customer logs in, Swiggy will make money on either one of these sources, if not all of them. Don’t worry if it’s all a bit hazy, read on to find out why Swiggy has been able to dominate the market for so long.

Everywhere You Look

For Startups like Swiggy, which are under constant pressure to grow and get more customers than their competitors, it is crucial that they place themselves anywhere a potential customer might spend their time on. That is exactly why they have one of the best websites, the most interactive apps, and the most user friendly design. Swiggy is available on almost every electronic device that can connect to the internet – desktops, mobiles, tablets, everywhere.

Building A Partnership

Partnerships are important because they help both you and your collaborator to benefit from the exchange. Swiggy realizes this, and that is why it doesn’t want restaurants to merely advertise themselves but rather partner up with them to bring in more offers and goods that can benefit the customer. And it’s not just restaurants. Some of Swiggy’s key partners include pharmacies and groceries, because these are the kinds of shops that people are likely to frequent more than twice or even thrice a month. Pharmaceutical giants MedPlus and MedLife are already benefiting a lot by partnering up with Swiggy, and PharmEasy and Myra are also in talks to be a part of it soon enough.

Another important partnership Swiggy excels at maintaining is with its Delivery Partners. If we’re talking numbers, the company pays its prized partners anywhere between INR 4 to INR 20 per kilometer. That is a pretty attractive rate considering every order at least requires a 5 kms travel. What’s more, you can even opt to freelance as a delivery partner and spend your free time earning a few extra bucks – this is a great option for college students to get some quality earning time in.

Closing Thoughts

Swiggy has come a long way from just being another food delivery app. It has branched out into bigger avenues of growth in an attempt to get the whole food industry under one roof for customers to have access to nothing but the best and most importantly, within reach. It is a really positive indication of the direction Indian startups are taking and by the looks of things, are well on their way to compete with other giants around the world.

Shivaharsh Murugan
Shivaharsh Murugan

A company secretary and lawyer-turned SEO geek and also someone who thinks he is deeply passionate about startups.

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