Swiggy Business Model: Money Making Secret Revealed

The way of living has changed so much in the 21st century. Technology has brought wholesome changes in the way you operate in day to day life. People can get the food they want to eat from their favorite restaurant in a fingertip via a mobile app.

Swiggy home page

Now you don’t need to worry about going to a restaurant, waiting for an hour. Just wondering when I am going to grab a delicious one. No worries more & thanks to technology. You can get the food you want to eat sitting in comfort of your house. Online food delivery services have grown by leaps and bounds in the last 5 years.

India, the second most populated country in the world with more than 1.3 billion people. It has been home to many unicorn startups in recent years. Swiggy is one of the fastest growing online food delivery services in India.

How Swiggy Started?

Swiggy started its service in the year 2014 and within 4 years of establishment, Swiggy achieved the unicorn status. It became the fastest company to achieve unicorn status beating the record of e-commerce giant Flipkart.

Swiggy was the first Indian company to have online food and delivery services by itself. It took care of order and also the delivery of food within 30 minutes which made Swiggy a household name in India.

Swiggy founders
(Left to right) Swiggy co-founders Sriharsha Majety, Rahul Jaimini and Nandan

Zomato and Foodpanda, online food service companies were in operation long before Swiggy came to the Indian market. Both the companies only provided a platform to order the food and outsourced the delivery service to other companies. But Swiggy came with the different marketing strategy then of its competitors, it also provided delivery services which changed the game of Indian online food delivery services.

Swiggy Success Story can be attributed to its core team vision. There are many factors that can be attributed to the growth of Swiggy and one of these factors is its sustainable business model.

Let’s find out about the key aspect of Swiggy business model.

Swiggy Business Model

A business model is the soul of any organization and same is the case with Swiggy. Swiggy reached in the top position in the market despite starting late because of its Sustainable business model.

The Swiggy business model is based on the hyperlocal business model. It generates massive revenue with this business model but the question is What exactly hyperlocal business model means? Let me explain it to you.

Swiggy not only aggregates restaurants but also organizes a fleet of delivery partners which deliver the food (in less than 30 minutes) on-demand. It works on a 4 steps dynamic model which goes in the following way:

  • Search

Customer can enter the location they want their food to deliver in Swiggy. For example: If you want your food to deliver in Mumbai then Swiggy will show you popular food in that area and restaurants around the area.

Swiggy Search page

They can avail special deals and offers by skimming through the restaurant community on the platform. Customer can search through their favorite restaurants and select their favorite food in a location via Swiggy.

  • Place an Order

After customer choose what they want to order, they have the option of completing the transaction by making an online payment or they can opt for cash on delivery.

Swiggy Place an Order

Customer can also get various discount offers on Swiggy in time to time. So, they can use the discount coupon while placing the order.

  • Process

After receiving the order from the customer, Swiggy redirects the order to the respective restaurants. The restaurants after receiving an order from Swiggy in turn prepare and pack and the order for delivery.

  • Delivery

Swiggy has its own fleet of delivery services, so after the restaurants pack the order for food, Swiggy collects the food from the restaurants.

Swiggy delivery Guy

Swiggy delivery personnel completes the final step by picking up the order from the respective restaurant and delivering it to the customer.

Key Partners in Swiggy Business Model

Swiggy crafted a business model which relied on a dual partnership model.  The partners of the Swiggy can be divided into two categories:

Restaurants Partners

The first and major partner of Swiggy are restaurants which opt to deliver to customers that come from Swiggy application and website.

Swiggy restaurants partners

Swiggy partners with restaurants from different places of India and feature them on their app. Customer orders from the restaurants featured in the app, Swiggy receives a commission from the restaurants.

 Delivery Partners

The second part of key partners of Swiggy business model is delivery partners. After the restaurants pack the order, Swiggy delivery personnel collect the delivery from the restaurants and deliver it to customers. Swiggy is the first Indian company to have its own fleet of delivery services.

Swiggy delivery partners

The growth of Swiggy can be attributed to its effective delivery services. Swiggy delivers the food in less than 30 minutes which enhances customer satisfaction. Other competitors such as Zomato and foodpanda used to outsource the delivery services but after Swiggy they have also started to own delivery service by themselves.

Customer segments of Swiggy business model

Customer is the major source of revenue for any organization. The majority of customer segment of Swiggy are those people who do not wish to go to restaurants and want their food to be delivered at home.

Swiggy Business Model Canvas

People nowadays prefer to have food delivery at their doorsteps instead of visiting restaurants. The traffics, busy lifestyle of people is the reason behind people preferring to order food rather than going to the restaurants.

People who like to order food online and want the food to be delivered at their doorsteps are the prominent customers of the Swiggy.

The recent business expansion has increased the customer base of Swiggy. Now people who want to buy and get other products delivered from nearby shops and stores of groceries, pharmacies, electronics, flower shops and gift shops in the city are also Swiggy’s customers.

The value proposition of Swiggy business model

Swiggy has created differentiation in many fields to gain a competitive advantage. One such differentiation is no-restriction in order policy of Swiggy. Swiggy allows its customer to order even a minimum quantity of food. In its one advertising campaign, Swiggy promoted its no-restriction order policy as “even the smallest food orders delivered”.

The company no-restriction order policy yielded huge return, Swiggy maximum times receive orders which are less than 100. The policy has increased the number of orders per month, now Swiggy averages 14 million order for a month.swiggy no minimum order

Swiggy business model is nicely constructed and operated. The Value proposition of Swiggy business model not only consist no-restriction order policy but it also provides 8 different payment method for its customers to pay conveniently for Swiggy orders.

Swiggy business model focus on creating convenience for customers while using the app of Swiggy. The payment method available in Swiggy can be categorized into three categories:

Digital Wallet

21st century is the era of the digital wallet. Every e-commerce is linked with some kind of digital wallet to facilitate payment in the site. Swiggy has also various digital wallet through which customer can pay for the order and delivery. Some of the digital wallet available in Swiggy are:

  1. Paytm: Customer can use their Paytm account to pay for food order and delivery and in return, they can get various offers and discount from Swiggy.
  2. PhonePe: PhonePe is the other digital wallet through which you can make your payment to Swiggy. PhonePe is convenient for its users and you can make payment is 3 simple steps.
  3. FreeCharge- Swiggy has also added FreeCharge as a digital wallet option in their app to facilitate its customers.
  4. Mobikwik- The next digital wallet option in Swiggy is Mobikwik. Customers can collect SuperCash through Mobikwik’s offers.

Swiggy payment methods

Cards

If you don’t have a digital wallet or you don’t use those apps, then you can use cards to make payment on Swiggy.

  1. Debit or Credit Cards- Swiggy also provides net banking facility through which you can use any debit or credit card. You can also get great offers on the use of cards and you can even save your card details for your future payments.
  2. Sodexo Meal, Ticket Restaurants Meal & Zeta Food Card- If you have got these meal cards then you can use them to get a discount on Swiggy’s food order.

Others

Apart from digital wallet and cards, there is also the next option to pay for your food order. They are:

  1. LazyPay- With this service, you can pay for your food order now or later. LazyPay is available on Swiggy to handle your lazy moods of payment!
  2. Cash on Delivery- Isn’t it great? Order for your food and pay for it when the delivery arrives on your doorstep. Customers also can pay for Swiggy food order in the old way of cash payment if they feel convenient.

For any business model to be strong and sustainable, you need to have a great value proposition. Swiggy business model value proposition provides a great deal of value to the company.

The company’s great value lies in the delivery competency of the company. Swiggy has a wide fleet of delivery services and a collection of competent staff who work hard to deliver the food order in time. On-time delivery of Swiggy attracts a huge base of customers towards the service.

Channels in Swiggy Business Model

The channels of Swiggy business model are a mobile app, websites, and digital marketing. Swiggy mobile app is available on both the androids and ios. Customers can also order food by browsing on their websites.

Customer Relationships of Swiggy

The top priority for any organization is to maintain a positive relationship with their customers. If the customers of the organization are satisfied with the service then the company can retain its customer. Customer retention will be hard if consumers are not satisfied with the services provided by the company.

Swiggy customer support

Swiggy has always maintained a positive relationship with its customers. The online customer support is available 24/7 and it also uses ‘Customer Support Chat’ services.

Swiggy also has an active social media page where it responds promptly to the customer query. In this day and age, it is important for any organization to stay in touch with its customers and partners. So, Swiggy has developed excellent rating, review, and feedback systems to keep in touch with its customers and partners.

Revenue generation in Swiggy business model

For any business to sustain and succeed, you need a constant revenue stream. Swiggy in a short span of time achieved tremendous success. Most of you may wonder how Swiggy managed to achieved unicorn startups status within 4 years of its establishment. Well, let me explain it to you.

How Swiggy makes Money?

Swiggy is an online food delivery service provider where people can order food from a different list of restaurants available in the platform and delivered the food to their location.

Swiggy earns money from more than 1 source. The major revenue streams of Swiggy comes from the commission charged to the restaurants and delivery charges. Let’s explain the sources of Swiggy business strategy in details:

  1. Commission from Restaurants

The primary source of revenue for Swiggy is commission earned from the restaurants. Restaurants pay Swiggy commission for listing them on their sites. The amount of commission depends on a lot of factors such as Value of the order, location, and popularity of the restaurants.

Swiggy also charges an additional amount to the restaurants if they are in the featured list on the Swiggy app or site. The restaurants benefit from being in the featured list as such curated lists often help these restaurants find more business.

  1. Delivery Charges

Swiggy has the largest fleet of online food delivery services in India and its delivery services generate huge revenue for the company. The delivery charges differ according to the distance, high orders demand or unusual weather condition. Swiggy charges a nominal fee of Rs 20 to Rs 40 from the customers on orders below a threshold value of Rs 250.

  1. Advertising

Advertising for Swiggy is the secondary source of generating revenue. The company earns advertising revenue in these two ways:

  • Banner Promotion

Restaurants promote their banner ads on Swiggy app. Swiggy charges a certain amount from restaurants to promote the banners on its site. The promotion for restaurants means greater visibility in the app and more chances of getting orders. So, restaurants around different region pay huge amount of money to display their banner on the Swiggy app.

  • Priority listing of Restaurants

Swiggy has the featured list of restaurants on its app. It charges money from the restaurants to give them priority in the list of available restaurants. The restaurants have to pay high if they want their restaurants to displayed higher on the list.

  1. Affiliate Income

Affiliate income is the new revenue stream of Swiggy. Swiggy has partnered with various financial institutions like Citibank, HSBC, and ICICI Bank and Swiggy earns revenue by selling their credit cards to customers. Customers can collect various offers from Swiggy if they use the credit card from those financial companies.

Last Word

Swiggy is leading the online food delivery services despite starting late. It has overcome its competitors like Zomato and Foodpanda. The main reason behind the success of Swiggy is its unique features, innovation, and sustainable business model. The innovation of Swiggy has resulted in the organic growth of the company- which every organization dream of.

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