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Swiggy Business Model Explained

By Tanvir Singh 9th November 2020

The brand that wants to help you groove like a pro when hunger impedes your movement. The brand that wants to ensure that none of your meal is left incomplete. The brand that comes to your rescue each time when hunger tests your patience. The brand that wants to ensure that you get to capture all of your precious moments and not miss them. The brand that helps you to keep a tab on everything just by one tap on it. The brand just doesn’t take care of its customers but its employees too. They know that there’s a lot in a name. That’s what Swiggy is. Swiggy not only wants to surprise taste buds, but it also aims to deliver happiness. What’s so amazing about Swiggy Business Model?

“Making happiness available in your pockets: Making restaurants available in your pocket!”

Swiggy Business Model - magnet

Genesis of Swiggy

The start of Swiggy dates back to 2014 when to BITS Pilani graduates Nandan Reddy and Sriharsha Majety conceived this beautiful idea of changing the way India eats with the aid of hyperlocal food delivery. They spotted the untapped distance between food ordering and delivery in India, and that’s where they wanted to leave an unparalleled mark. As much as revolutionary this idea was, they wanted to keep this simple for the users and hence was born the idea of an app that makes food available with just a simple tap. Swiggy is the paragon that emerged from Bundl Technologies, the earlier venture of these two masterminds. From being an abstract idea to 5 lakh plus mobile app installations, it has been quite a journey for Swiggy.

Swiggy Business Model

Just like GrubHub, Swiggy is an on-demand hyperlocal food delivery platform. It not only lists restaurants, but it also maintains a huge fleet of delivery partners that ensures the delivery of your delicious meals within 30 minutes. This unicorn start-up mapped the steps of some big names and finally crafted a dual partnership business model. One side of the coin is the restaurant partners that agree to deliver customers that are routed to them via the Swiggy app. Another side of the coin is the fleet of delivery partners that act as a point of contact between restaurants and customers. Restaurants also benefit from this kind of deal as they can save on delivery personnel costs, leverage on Swiggy to get exposure to a vast customer base & get a hold of all of their essential business metrics in real-time.

Swiggy Business Model - target

Swiggy Business Model: Target Segment

People who are fond of eating outside but don’t enjoy going out to restaurants and eateries much. Instead, they want their delicious parcels to get delivered at their doorsteps and have the privilege of enjoying it at their convenience; they are the principal target customers for Swiggy. With the advent of recent business expansion, people vying for deliveries from the nearest electronics shops, florists, grocery stores, or even pharmacies; have also come under the umbrella of potential Swiggy customers.

Swiggy Business Model: Value Propositions

Swiggy is genuinely and immensely loved. Long-term goals and the will to learn and improve on an incremental basis is what makes Swiggy special and unique. With a pool of excellent benefits, how can one not love Swiggy! One of the reasons why Swiggy gets to witness the number of orders per month as high as 14 million is its no minimum order restriction. Swiggy receives myriads of orders worth less than Rs 100, which tells a lot about why Swiggy is the go-to app for ordering food. Swiggy obsesses about customers and believes that everything else is just the by-product of doing business right. Swiggy believes in the customer impact parameter to gauge their success. It provides the opportunity to indulge in one serve orders that, too, without extra charges. Easy access and delivery competency have always been the selling point of Swiggy. Customers are always served with very lucrative offers. In fact, partner restaurants also get a chance to cut on their operational costs. In addition to all these, it provides instant lightning-fast deliveries and real-time tracking, which is also why it’s always a beloved friend. 

Swiggy Business Model - value propositin

Main activities of Swiggy

Following are the prime activities undertaken by Swiggy:

  1. Building partnerships with restaurants, eateries, and retailers
  2. Hiring and managing delivery feet
  3. Acquiring and retaining customers
  4. Supervising the technical operations behind the delivery and payment process
  5. Instant redressal of grievances of customers and partners as well 

Swiggy Business Model: Revenue Streams

Delivery charges: This is the most obvious source of the revenue stream for Swiggy. They charge a very nominal amount per delivery somewhere between Rs 30-50. The charges might be higher during peak time or hostile weather conditions.

  • Priority listing: Well, nothing comes for free and better things command higher prices! Swiggy charges premium from restaurants who wish to occupy the top spots in the recommendation list
  • Commissions: Swiggy eases the process of delivery for partner restaurants and charges a commission of about 15-20% from their partners for each order 
  • Promotions: Swiggy constantly engages in the promotion of various restaurants. Regional places get higher exposure and visibility via banner promotions and they are charged by Swiggy for the same.
  • Affiliate income: Swiggy partners with various financial institutions to help their customers pay. This is like a two-edged sword but with benefits on both sides. Essentially, both parties earn. Customers also benefit as they receive various lucrative offers if they choose to pay via instruments of those specific partner financial institutions.
  • Swiggy Super: Inspired by the freemium model, this is a concept via which customers pay for subscribing to Swiggy, and in return, they get to enjoy unlimited free deliveries for orders above Rs 99. No surge fee & exclusive offers are few more add-ons for Swiggy Super subscribers
  • Swiggy Go: Just when we thought what else is there for Swiggy to explore, Swiggy understood their customers and came up with Swiggy Go: a pick and drop service for almost anything. This really proves that Swiggy isn’t just about food. Instead, Swiggy is all about happiness and convenience.
  • Swiggy Access: So, what if your restaurant doesn’t operate in a particular area? You can still serve customers via hosting Swiggy delivery-only kitchens. This is one of the revenue streams of Swiggy that was launched with the aim of creating new avenues of supply, i.e. cuisines, eateries, and kitchens in hyperlocal zones where demand is outpacing supply.
Swiggy Business Model - dollar

Where does Swiggy expend money?

For delivering these commendable services, Swiggy has to expend money on a lot of activities. For starters, on incentivizing and managing the delivery fleet. This expense is dependent on the frequency of deliveries, place of operation, and profile of the delivery partners. A lot of the chunk of revenues earned go towards application & website maintenance and development. Administrative and advertising costs are incurred on a large scale to keep the business operational and its partners satisfied.

Swiggy is the name that hides marvels inside it. Its business model has revolutionized the food order and delivery business paradigm. If you’re envisaging to create an online marketplace just like Swiggy, you can fearlessly trust our tool Yelo. No coding, no setup fee & launch within a day! And the surprises don’t just end there. Yelo is an industry-leading product with features crafted perfectly to run a full-blown online marketplace globally. From browsing to making payments and all the technical nitty-gritty that goes inside, Yelo takes care of it all. 

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