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Swiggy Business Model

June 30, 2022

The market for food delivery in India is one of the markets around the world with the quickest growth. In addition to this, the market is exceptionally cutthroat, with all significant companies competing against one another for a piece of the pie.

It is common knowledge that Swiggy, an app that allows users to order and have food delivered in India, has quickly become one of its most famous food ordering apps. Swiggy is a common name for the process of ordering and delivering food online.

Since its founding in August of 2014, it has more than five lakh app installations, partnerships with more than one fifty thousand restaurants, and a significant presence in more than three hundred twenty-five cities.

Swiggy is an online food ordering and delivery platform that connects customers with more customers and restaurants that make food with the food that customers are looking for.

We had come a long way from the days when we had to physically go somewhere, place an order, and then wait for our preferred foods to be brought to us.

Instead, apps such as Swiggy have made it possible for us to have renowned, high-end cuisine delivered right to our doorsteps. Swiggy has wholly transformed the food delivery industry and removed all obstacles.

Swiggy Business Model

Swiggy’s Value Proposition

Swiggy gives its restaurant partners the opportunity to increase their revenue by 25 percent by providing easy access to customers through its mobile app.


Swiggy is an online platform that facilitates food delivery to customers by connecting them with the finest local restaurants.


There is no requirement for a minimum order, which means that you can place an order for any quantity, regardless of how small or large it may be.


This is one of the core benefits that they provide for their clients. In addition, this is the reason why Swiggy can handle up to 14 million orders every single month.

The primary value proposition that restaurant partners on the platform are provided with on Swiggy is quick and straightforward access to customers through the app.


Additionally, partner restaurants that sign up for Swiggy's Access have the opportunity to cut their operational costs by up to 25 percent.

Customers can expect their groceries, flowers, medications, and other items to be delivered to their doorsteps within an hour when they use Swiggy Stores.

Swiggy Go provides instant pick-up and delivery services, which customers can take advantage of to send packages, lunch boxes to their children, documents to the office, and parcels to any location in the city.


Additionally, customers can use Swiggy Go services to drop off their laundry or retrieve lost keys.

The Business Model or Revenue Model - How Does Swiggy Generate Revenue?

Swiggy's business model is based on a hyperlocal on-demand food delivery business operation that is both straightforward and forward-thinking.


Swiggy is an innovative technology platform that acts as a single point of contact between restaurants and customers. The platform's primary function is to serve as a bridge between the two groups.


Swiggy revenue model depends on various business ventures, including food delivery, a subscription service called Swiggy food delivery, Swiggy One, advertising within the Swiggy app, Swiggy Genie, Swiggy Access Cloud Kitchens, and Swiggy Instamart.

1. Swiggy Food Delivery

The industry of delivering food is a difficult one to work in. However, Swiggy, one of the most prominent companies operating in this sector, has established itself as a formidable competitor by offering a variety of services to customers and restaurants.


Swiggy takes a cut from both the restaurants and the hungry customers it serves in the role of the middleman. In most cases, restaurants must pay a percentage commission on the entire sum of the customer's order bill.


The amount of this commission varies depending on the total number of orders received, the restaurant's location, the commission that competitors charge, and so on.


Swiggy will reduce the food delivery commission by a very specific percent to entice restaurants to list their restaurants exclusively on Swiggy.


In a similar vein, to attract restaurants to list solely on Swiggy, the company reduces the commission charged for the delivery of food by a particular percent.


Swiggy does not require a minimum order value and contributes to the increased logistical expenses associated with each order.


After establishing a solid presence in the food delivery industry, the company started charging customers a nominal delivery fee that varied according to the number of their orders.


In addition, customers in particular regions are subject to an additional surcharge whenever there is an exceptionally high demand for the service, a special occasion, or delivery after midnight.

2. Swiggy One Subscription

Swiggy One is the most convenient way to receive unlimited free deliveries from thousands of well-known restaurants and receive total free deliveries from Instamart for any order that is more than INR 100.


Furthermore, customers who use Swiggy One to place their meal orders from partner restaurants can receive up to 30 percent discounts. In addition, Swiggy One will be eligible for discounts on Genie delivery.


Plans

Actual Price

Discounted Price

3 months

499

299

12 Months

1499

899


Swiggy One is now more than just a platform for food delivery; it also functions as a membership program. You will have exclusive deals and discounts on various services, including food delivery, meal outlets, and even our neighborhood delivery service, Swiggy Genie, when you sign up for Swiggy One. 

If you use Swiggy regularly, this will be an excellent opportunity to save money and ensure that each and every meal you order through us are brought to your doorstep quickly.


Swiggy One offers a range of benefits to its customers and restaurant partners:


1) Swiggy Instamart: 

This is a subscription-based service that offers one-hour delivery of groceries at a flat rate of Rs. 99 per month, including a minimum order value of Rs. 1,500 across all brands.


2) Restaurants: 

On orders over Rs. 199, you get unlimited free delivery. Extra Discounts of up to 30% (no maximum) over and above the standard offerings are available at over 70,000 well-known restaurants.


3) Swiggy Genie: 

Swiggy Genie Delivery Fees above INR 35 will be discounted by 10% for members. This benefit will be available in the near future.

3. Swiggy app Advertising

Swiggy is an app that connects users with their preferred local restaurants and enables them to place orders for delivery.Swiggy can turn a profit by selling the attention it garners on its app to restaurants that are looking to improve their marketing efforts.


The awareness gathered on the Swiggy app is then sold to restaurants looking to market themselves. This generates revenue for Swiggy.


When you use Swiggy, you are not only placing an order for food but also assisting local restaurants in promoting themselves to a broader audience.


Swiggy generates revenue, similar to that of its competitor Zomato, by selling the attention gathered on its app to restaurants looking to market themselves.


Higher priority restaurant listings and banner advertisements are the two types of advertising Swiggy enable across its web and app properties.


As users type in their search query, the listings for restaurants that are given a higher priority move to the top of the page that displays the search results.


The listings are arranged in a particular order according to various criteria, some of which include geographic location, distance from the user's current location, and the level of popularity of the respective restaurant.


When users first open the application, banner advertisements appear either at the bottom of the search results page where they are typing in their search query or on the home screen where the application is located.


Because these advertisements are placed further away from where users are interacting with content on the platform, they have a tendency to be less intrusive than a higher priority listing advertisements (i.e., searching or browsing).

4. Swiggy Genie

Swiggy, one of the most prominent platforms for ordering and delivering online food, unveiled its new Genie user interface. 


If you use Swiggy, you might have already seen the new Genie user interface introduced. The new user interface makes it possible for users to make instant deliveries from one location to another.


Additionally, it provides an opportunity for home entrepreneurs and owners of small businesses to make deliveries that are both simple and efficient.


You can deliver or receive anything, including lunch boxes, documents, laundry, items needing repair, shoes, stationery, and other materials, from one location to another from anywhere in your city with the help of Swiggy Genie. 


Swiggy Genie also makes it possible for you to purchase items from paan shops, supermarkets, pharmacies, and stationery stores, which simplifies running errands daily. 


If you own a company, you can buy business deliveries. You are not required to get in touch with any other delivery service providers; instead, you should select the delivery app of your choice for food.


You are not required to contact any other delivery service providers; instead, you can select your preferred food delivery app from the available options.


Then, you can place an order for your goods online, and the same person who delivers the food you order through the Swiggy app will bring them to you.

5. Swiggy Access Cloud Kitchens

Swiggy Access is a centralized delivery kitchen facility that brings together a variety of different restaurant partners under one roof. 


In addition to this, the facility enables partners to enter neighborhoods in which they do not already have a presence and expand their operations there.


Swiggy's Access kitchen is an innovative way for the company to collaborate with restaurant owners, allowing those owners to broaden their customer base without the expense of constructing additional restaurants or recruiting other delivery staff. 


In addition, because Swiggy does not charge partner restaurants rent or deposits, they can reduce their overall operational costs by up to 25 percent simply by becoming Access members. 


On the other hand, to receive food delivery, restaurant partners are required to pay a commission that is significantly higher than the one delivered by businesses that use the conventional marketplace model.


The Swiggy Access Kitchens are also used as a location for developing Swiggy's own branded products, which can be sold alongside those of the restaurants with which it collaborates. 


This method is comparable to the one used by Amazon in its Marketplace, in which the company acts as a host for independent vendors and sells products under its brand name.

6. Swiggy Instamart

Since 2017, the Indian grocery market has seen a compound annual growth rate of 25 percent, making it one of the fastest-growing in the world. 


Despite this, the industry is highly inefficient and fragmented due to the high costs of logistics, the lengthy delivery times, and the complex management of delivery network systems.


Big Basket and Grofers are the most notable companies competing in this space. Both of these companies have been attempting to gain traction in the market by developing innovative mobile apps and forming partnerships with traditional stores.


Swiggy Instamart is an instant delivery service for groceries, and other household items that can be delivered anywhere from 7 am until 12 midnight (and sometimes even later!). 


People who do not want to wait until morning hours to place their supply orders will find Instamart a helpful resource because it offers next-day delivery at night. 


This is the primary factor that sets Instamart apart from its competitors. In addition, it provides a greater variety of products than other services like Big Basket and Grofers because, in addition to fresh fruits and vegetables, it also sells snacks like chips and ice cream.

Swiggy is not a newcomer to the market for groceries; in fact, they have been experimenting with it for a few years now.


However, the introduction of this new service comes at a time when consumers in India are looking for ways to reduce the amount of money they spend on groceries in light of the country's ongoing economic crisis.


Swiggy's business model is already quite distinct from that of other online platforms for food ordering because it emphasizes fully cooked meals and guarantees delivery in under an hour. 


In addition, they currently pay commissions on every order with restaurants, but with Instamart, they won't have to pay commissions.

As a result, the cost of doing business for them will be lower with Instamart than with their current business model of swiggy

.

Conclusion

If you love food and like to experiment with new cuisines on a regular basis, then Swiggy is the perfect app for you.


It only takes a few taps on the app's interface to have your order delivered straight to your door, and it's available for free download on both the Android and iOS platforms. 


Once you've decided what you want to buy, you can pay for it directly through the app after taking advantage of the search filters that make it simple to zero in on exactly what you need.


And if you're looking for some fantastic deals, the app also gives users the ability to receive exciting discounts and cash backs on their purchases!


For now, it's safe to say that Swiggy should be at the top of your mind when you're planning out your delivery schedule. It is a service that has become synonymous with the Indian delivery industry.


Therefore, even if you don't live in this city, you should still go online to Swiggy, place an order for some food, and then enjoy it with complete ease, knowing that India's most well-known (and most promising) start-up is the one that is bringing it to you.

Frequently Asked Questions

1. What type of business model is Swiggy?


The business model canvas for Swiggy is based on a hyperlocal on-demand food delivery business operation. Swiggy, which acts as a bridge between restaurants and customers, employs an innovative technology platform that serves as a single point of contact.

The app allows users to search for nearby restaurants that offer delivery services, place an order through their smartphones or computers, track the progress of their orders in real-time, and receive notifications about location changes if necessary.

Once the order has been placed, it will be delivered within a specific time by motorcycle riders who use GPS tracking systems to navigate traffic congestion throughout various locations throughout cities where Swiggy operates its services.


2. How does Swiggy earn profit?

Swiggy charges 15-25% commission on total order bills (including Goods and Service Tax) from restaurants. The commission percentage depends on various factors like the number of orders, location of the restaurant, the commission charged by competitors, etc.

Swiggy doesn't follow any minimum order model. In addition to this commission fee, Swiggy also earns revenue through advertising revenue from our partner brands displayed in-app.


3. What is the income of Swiggy?


Swiggy's revenue from operations fell by 26.6 percent, to INR 2,547 crore in fiscal year 2021, from INR 3,468 crore in fiscal year 2020, despite the company facing a countrywide lockdown and delivery service restrictions for an extended period, according to regulatory filings.


4. What is Swiggy Instamart business model?


Swiggy Instamart is a unique business model that combines the convenience of a marketplace, the selection of local stores, and the delivery efficiency of Swiggy's fleet.

The company aggregates Kirana stores from which users can order groceries, fresh produce, essential products, and food items via Swiggy's delivery fleet.

Under its stores division, the company also offers a variety of specialized services such as meat and seafood, pet care, etc.


5. Why Swiggy is in loss?


The company employs outsourced labour with its procurement centers, resulting in increased delivery costs for Swiggy. Swiggy is recording delivery income after netting off these costs incurred by its suppliers to reduce these costs.

Swiggy has been facing losses since FY19. In the financial year 2020, Swiggy recorded losses of Rs 2,855 crore due to increased expenses on customer acquisition and delivery costs.

In the financial year 2021, Swiggy's operating loss was reduced to Rs 1,031 crore from Rs 2,855 crore in the financial year 2020 due to lower delivery costs. 

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About the Author

Currently working as an Editor in Chief with Ankuraggarwal.in, he is managing all the ins and outs of the content management process and editorial operations. Having an experience of 8 years in the publishing/ e-solution industry, he manages a small freelancing team of fellow editors and has worked with several domains including academics, healthcare, lifestyle and technical writings. He is a stickler for accuracy and loves to read noir-fiction and binge-watch anthologies.

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