Founded in 2014, Swiggy is India’s leading on-demand food delivery platform with a vision to raise the quality of life for the urban consumer by offering convenience. The food delivering platform has grown over 5,000,000 app installations and is a common household for anyone who wants to order food online.
In this case study, we aim to discuss the chronicles of one of the largest and fastest food ordering and delivering platforms in India, Swiggy, and how it has been able to establish and become what it is today!
Started by the alumni of India’s top engineering colleges, namely IIT Kharagpur and BITS Pilani, the founders of the Bangalore-based start-up are Nandan Reddy, Sriharsha Majety and Rahul Jaimini.
Before the launch of Swiggy, Sriharsha Majety (Co-founder and CEO, Swiggy) and Nathan Reddy (Founder and CEO, Swiggy), saw an opportunity in the unorganized logistics and shipping sector. The start-up’s speciality was providing small businesses with the chance to connect with courier services using an e-commerce platform. But with the lack of technology-focused team and major players decided to ship products on their own, things didn’t go as planned. The venture shut down within the year of its commencement.
Rise of Swiggy, after the Fall of Bundl
Learned from past experiences, they started to look for something that can be achieved with a click of a button. With the success of Ola and Uber, the three partners were mesmerised and saw a massive potential in the hyperlocal market. They planned and initiated its food delivery operations in 2014 with 6 delivery boys providing food from 25 restaurants.
Today, Swiggy by connecting consumers to over 1,00,000 restaurant partners provides a single window for ordering from a wide range of restaurants and delivering the tasty food to your door-step across 200 cities in India. With the use of innovative technology, Swiggy decided to provide a hassle-free, fast and reliable delivery experience.
A Challenge to Expand
As the existing players Zomato and Food panda had limited success, experts predicted that Swiggy is entering the already overcrowded market. To give a tough competition to the existing players, Swiggy as a late entrant needed to develop competitive brand communication strategies that led them to the path of success.
The first and foremost challenge for Swiggy was to convince the restaurants to join the platforms against the competitors. Initially, the restaurant partners did not show any interest because of the trust, but then Swiggy worked hard towards making their logistics network faster, easier and streamlined with a widespread and strong network of local delivery boys to make it stand apart in the online food delivery scenario.
Swiggy worked behind the idea of organising the unorganized food delivery industry. They observed and understood the sufferings of the customer as the restaurants took extended time to deliver the food. Back then, the food delivering options were not planned operations in place, so Swiggy’s entrance in the market worked as an1 icing on the cake.
Road Ahead Towards the Success
Swiggy started gaining traction with big investors because of their instant growth in revenue. By 2015, Swiggy raised $80 million in funding. Investors started to invest in the start-up after which the platform started to witness great heights. By the end of 2015, the food platform partnered with 100+ restaurants, delivering over 70,000 orders per month.
In March 2016, Swiggy faced losses 65 times. In April 2016, Swiggy decided to work on cutting costs and strengthening the logistics network. Swiggy invested in core engineering, automation, data sciences, machine learning, and personalization to understand the customer’s needs and to further enhance its operations in 2017. By the end of December 2017, Swiggy reached 10+ cities, tied up with over 20,000 restaurants and their balance sheet accounted for a whopping 4+ million transactions per month.
In 2018, Swiggy acquired Scootsy to diversify its operations in business categories, such as groceries, fashion items, stationery and other essential goods. By 2019, Swiggy clocked around 1.4 million orders per day, extended their delivery team with 45000 agents, partnered with 1,30,000+ restaurants and now has a presence in 325+ cities across India.
Swiggy’s Business Model
With an aim to deliver the food within 30 minutes on-demand, Swiggy’s business model is purely based upon hyperlocal on-demand food delivery business operation. Swiggy made use of innovative technology and concepts to bridge the gap between restaurants and food lovers.
Now, let’s see how swiggy works:
- 1.Customer Segment: Swiggy has gained a lot of fan following as the food platform can be operated by anyone through its mobile application or website. The application is used by urban foodies to order food online from their nearby restaurants. Swiggy also shows bug menus of restaurants on its applications so that foodies can choose from a wide variety. The platform has seen a rise in the number of users as there has been an addition in the customer type.
- 2.Value Propositions: As Swiggy aims to deliver the food or essential items within 30-40 minutes, the food delivery app has the speciality of delivering food with no minimum order policy and efficient online payment systems in place that includes Paytm, PhonePe, Freecharge, Mobikwik, Credit and Debit Cards, Sodexo Meal, Ticket Restaurants Meal & Zeta Food Card, LazyPay and Cash-On-Delivery. With the aim of winning customer’s trust and confidence, Swiggy designed their mobile application with an easy to navigate user experience.
- 3.Customer Relationships: As Swiggy operates through its online platforms, it is known to promote 24*7 customer service. It has thrived to maintain a good relationship with its customer issues and services. We all have seen people getting refunds if the user is not satisfied with the food or service.
- 4.Key Resources: The platform’s main resources are:
- a. Local Food Delivery Boys
- b. Connection with Restaurants and Stores
- c. An Easy-to-Use Mobile Application
- d. Large Database of Customers and Restaurants
- 5.Key Activities: The platform’s main operations are:
- a.Establishing and managing partnerships with restaurants, eateries and retail shops,
- b.Managing delivery partners,
- c.Management of Online platforms, orders and technical operations,
- d.Advertising and acquiring customers, and
- e.Management of payment processes and handling customer concerns.
- 6.Key Partners: The food platform’s key partners are:
- a.Restaurants and retail shops: The prime key partners of Swiggy are the restaurants and shops which are listed on the application, and these are the stores which wish to deliver their food at the doorstep of people are the key partners of Swiggy like McDonalds, Burger King and many more.
- b.Delivery Providers: Delivery suppliers are the people who deliver food. They can be full-time, part-time or freelancers who work to earn some extra money.
- 7.Cost Structures: The expenses of food platforms are:
- a.Payroll expenses,
- b.Costs to maintain application and website development,
- c.Maintenance charges and Administrative charges,
- d.Advertising and Marketing Expenses,
- e.Dispute-related returns, refunds and other expenses, and
- f.Kitchen base-like facility setup Revenue Model.
Revenue Model of Swiggy
When it comes to the revenue model, Swiggy tends to earn through a lot of channels. In 2018, the food delivery platform saw the rise in expenses due to increased efforts to widen its fleet consisting of more than 90,000 delivery executives. The total expenses were more than double to Rs 865 crore as compared to Rs 350 crore. Here are the 6 Revenue streams through which Swiggy generates revenue:
- 1.Delivery charges: Swiggy charges a nominal amount of Rs. 20 to Rs. 40 to the customers for delivering the order. The charges also depend upon the high order demands or unusual weather conditions.
- 2.Advertising: There are two types of advertisements that Swiggy adopts:
- a.It allows the brand to show their banner ads on the website and app for their promotions.
- b.In mobile application, Swiggy allows restaurants to show the listing of restaurants at ‘top places’ in return for some investment from their side.
- 3.Commission: Swiggy takes a commission from all the restaurants from which orders are placed. It collects 15% -25% of commission from each order.
- 4.Swiggy Access: Swiggy has come up with a cloud kitchen concept according to which it provides kitchen spaces to restaurants in a particular area where their chain does not operate. According to a source, Swiggy is planning to expand its cloud kitchen model to include 30 restaurants onboard with 36 kitchens to four new cities which will generate around 25% of revenues in 2 years.
- 5.Swiggy Super: Swiggy Super is a membership program offered by Swiggy to its customers that gives users access to unlimited free deliveries. If customers subscribe to this program, they don’t have to pay surge pricing during excessive demands.
- 6.Affiliate: The company has established partnerships with some of the biggest financial organizations such as Citibank, HSBC, and ICICI Bank. It earns money by selling their credit cards.
Due to its unique features and great customer service, it might soon receive a competitive advantage over other such models and increase its already increasing customer base. Talking about the customer base, the brand has a well-established image on the online platforms. The food delivery app has leveraged the power of marketing in various creative ways.
Digital Marketing Model of Swiggy
As a part of their digital marketing strategy, they wanted to target the audience of 18-35 demographic which had easy access to a smartphone. This included students who cannot cook on their own and working professionals who face hunger pangs during office hours or late at night, and to achieve that Swiggy invested in planning, designing and curating digital marketing strategies that have gained Swiggy the attention it aimed for. Here are some examples of the same:
- Search Engine Optimization:
It helps improve your website rankings on the search engine results pages (SERP’s). For a brand to rank organically high, it is important to have a good SEO strategy. Swiggy saw the great potential in SEO and thus really worked hard on its Search Engine Optimisation. They leveraged the best SEO services with a mix of relevant content marketing.
- Social Media Marketing:
Swiggy has gained a massive following over the years on social media platforms. What sets Swiggy apart from its competitors is their remarkable social media campaign. In the past, it has come up with brilliant campaigns conveying the notions of healthy eating in a humorous way by using puns and witty one-liners. They aim to crave users by posting enticing pictures of good food on Instagram. They leveraged social media optimization services which targeted the young generation and gathered a large market.Consulting a social media management agency is recommendable if you want to showcase your product or service on social media agencies.
- Email Marketing:
Swiggy has leveraged creatively the power of email marketing, using attractive subject lines and what not. Swiggy sends email with an intent, and also has a topic- like recently it has made sure that its customers are aware of the practices they are following to ensure safety. They also send users a lot of coupon codes that give discounts. The visuals in the emails are also very enticing. They also make use of current affairs and events to send humorous emails.Consult the best branding agency for best email marketing services.As Swiggy looks towards expanding in newer markets, it will have to keep finding innovative ways to reach users in these cities. Now let us have a look at Swiggy’s campaigns.
Campaigns by Swiggy
Social media marketing is a very effective and reliable source for any brand, product which is going to be launched. If social media marketing is used with a proper plan and strategy then we can see a huge difference in traffic and terms of revenue. To connect with the customers, attract engagement and build the presence of the brand online, Swiggy developed various social media campaigns. Let’s have a look into them.
Swiggy launched a video campaign which centred on customer care executives, and the abusive language they face while dealing with disgruntled customers. The campaign aims at sensitising customers against the use of abusive language while interacting with customer care executives through chats, calls and on social media.
- #WhatsInAName- Ad campaign
Swiggy launched this ad campaign with an intent to sensitise its user base to empathise with Swiggy delivery partners and highlight the dignity of labour and how they deliver happiness to our homes.
- #WhatsInAName- Ad campaign
Key Takeaways from Swiggy’s Business strategy
From the hyper-funding wave of 2014-15, Swiggy is the only brand that continues to thrive and grow. Despite the fierce competition from Zomato & Food panda, Swiggy successfully made its way to the food delivery space and became a unicorn start-up.
Let’s have a look at Swiggy’s Business Strategy:
- The Sharp focus on Logistics
The success and fame Swiggy got is just because they deeply cared about their logistics operations and aimed to make it accessible through a click. They put the logistics at the centre of their operations. Focusing on logistics led to a successful future for swiggy with low cost and happy & strong network.
- Catch the opportunity as soon as possible
Once you know what you will do, your next move is to acknowledge the latest trend. Founders of Swiggy were well-aware of the logistics industry. They knew that the food industry lacks technology and speed to connect customers with brands in one click. They took advantage of the trend and Swiggy was born.
- Build a team with growth mind-set
Swiggy is a result of a growing team that contributed towards constant efforts without failure. If the founders had accepted defeat after the shutdown of Bundl, they never would have touched the heights on which Swiggy is now. It is the combination of resilience and growth-mindset that kept the ball rolling.
Truly, Swiggy is a perfect example of a robust start-up. The brand started with delivering food in one city and now spreading across India. The food-delivery giant is also diversifying its logistics business with emergency items like groceries and stationeries. It has been a unique blend of business strategies, marketing strategies and social media strategies which has transformed the business in just 5 years of its inception. There are opportunities for Swiggy to become the No.1 food delivery platform as the company is already giving a tough competition to other competitors.