How does Swiggy makes money | Swiggy Business Model

Anagha S Anagha S
Aug 3, 2021 6 min read
How does Swiggy makes money | Swiggy Business Model

Swiggy is a very common name when it comes to online food ordering and delivery. Since its launch in August 2014, today it has more than five lakh app installations, partnerships with over 1,50,000 restaurants and has a strong presence in more than 325 city's across India.

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 to gain a place in the market.

Key partners of Swiggy
Key activities of Swiggy
Key Resources of Swiggy
Value Propositions of Swiggy
Customer relationship of Swiggy
Channels of Swiggy
Customer Segment of Swiggy
Cost Structure of Swiggy
Revenue Streams of Swiggy
FAQ

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.

Swiggy Partnership with Instagram
Swiggy Partnership with Instagram

Apart from these providers Swiggy also partners with delivery suppliers to ensure that products are delivered seamlessly. Today being a delivery boy or a delivery girl has become very common employment or side employment for people involved.

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 are an unavoidable part of Swiggy. Through Swiggy Go, it fulfils 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 and 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, Biriyani Blues tea who are bestsellers n the cities. Delivery providers and technology providers are other key resources of Swiggy which has 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 Propositions 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 another main value proposition that it has given its platforms to restaurants and stores to use. It has helped both Swiggy and the 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 utilised 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.

Swiggy Go
Swiggy Go

Customer relationship of Swiggy

Swiggy being an expanding company needs to have a very efficient customer relationship to ensure long-term growth. And hence it has active customer support at the perusal of the user.

Apart from a 24*7 telephonic system they also have chat services. Being active in 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 includes their mobile apps and websites which are available both on android and iOS. Their recent additions on 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 does 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 wants 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 on a daily basis 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 its 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.

Revenue Streams of Swiggy

Upon analysing the activities of Swiggy over the years one can observe that their revenue streams are increasing. This is indicative of very stable and long-term growth of the company. The pandemic restrictions on dine-in services have further helped Swiggy to get that extra push it needed.

One of the major sources of revenue for Swiggy is through commissions. They derive it from restaurants and other partners who come on board with Swiggy to deliver items to the customers. These phones are required to pay around 25 percent of every order placed through Swiggy.

Apart from that delivery charges constitutes a large part of their revenue. It is one of the first revenue streams of Swiggy since its inception. The delivery charges vary according to various factors like the total bill, distance of the restaurant, demand et cetera.

Swiggy also earns revenue through advertisements. It can be observed that Swiggy displays a lot of ads on their platform that are related to various topic. Apart from that Swiggy also ranks and give ratings to the service providers. This means that restaurants and other stores will have to pay money to be displayed on the priority list.

Their membership program called Swiggy Super is also a very important stream of revenue. It gives the customers a wide range of offers and concessions if they subscribe to the programme. It saves customers from surging prices that are caused due to excessive demand.

Swiggy Super
Swiggy Super

Swiggy Go is another revenue stream for Swiggy which yearns to expand delivery in Swiggy beyond food and groceries. It provides pick up and drop services to its customers to exchange and transfer anything from different locations across the city where Swiggy operates.

They have also partnered with various banks like HSBC and ICICI. Apart from gaining revenue from the affiliation they also provide discounts for the users of these banks credit cards.

Conclusion

Swiggy's growth over the time has been phenomenal. It aims to raise more funds to strengthen and expand its services to more places. Despite being a late comer into the industry, Swiggy was able to gain its deserving position through strategic planning and stable expansion.

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 valuation of Swiggy?

The Valuation of Swiggy is $5.5 billion as of 2021.

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