Shubham Saroj
Introduction – Swiggy is India’s largest and highest valued online food ordering and delivery platform founded in 2014 by Nandan Reddy and Sriharsha Majety.
Swiggy is based in Bangalore, India and is currently operating in more than 300 Indian cities. Swiggy is popularly known as a platform which is mainly used for ordering food but recently it expanded to other business models as well.
In early 2019, it expanded into general product deliveries under the name Swiggy Stores. In September 2019, Swiggy launched instant pickup and drop service Swiggy Go.
The service is used for a diverse array of items, including laundry and document or parcel deliveries to business clients and retail customers. Due to the pandemic, it fired 1,100 employees in May 2020 and launched their groceries delivery platform called InstaMart in August 2020.
But the question arises – How did they changed their business model and what will be their next move? Read on to know more about Swiggy.
Early Days – In 2013, the 2 co-founders, Nandan Reddy and Sriharsha Majety, designed an e-commerce website called Bundl to facilitate courier service & shipping in India.
But Bundl was halted and was rebranded to enter the food delivery market instead. At that time, the food delivery sector was in turmoil as several notable startups, such as Foodpanda (later acquired by Ola Cabs), TinyOwl (acquired by Zomato) and Ola Café (later closed) were struggling.
The 2 co-founders approached Rahul Jaimini and together all 3 of them, co-founded Swiggy and parent company Bundl Technologies in 2014. The company decided to build a dedicated network of food delivery service and it grew rapidly.
Marketing Strategy – Swiggy has used various marketing campaigns such as:-
- “Swiggy Karo, Phir Jo Chahe Karo” which encouraged people to order from Swiggy as soon as possible and enjoy huge discounts.
- “No Minimum Order Value” which encouraged people to order from Swiggy irrespective of how small the amount was.
- “All You Can Eat Days” where users could get up to 50% off on their orders.
- They launched a campaign after the pandemic which ensured that they follow all the safety measures and that it’s completely safe to order from Swiggy as more than 1 crore people have ordered from them since the lockdown.
User Base & Valuation – Swiggy’s android app on Google play store has been downloaded more than 50 million times. It is eyeing 100 million customers to use their app over 15 times a month in the next 10-15 years.
In April 2020, Swiggy received a funding of $43 million and after that their valuation reached $3.6 billion. In October 2020, Hurun India Unicorn Index 2020 has valued Swiggy at a valuation of $3.5 billion.
Funding – Swiggy has received a total of $1.6 billion in funding over 12 rounds from 18 investors. They have a total of 6 lead investors. Their latest funding was raised on April 6, 2020 for a total of $43 million.
There investors are as follows:-
- Prosus Ventures
- DST Global
- Bessemer Venture Partners
- ARK Impact
- Tencent Holdings
- Mirae Asset Capital
- Wellington Management
- Meituan
Revenues & Losses – Bundl Technologies which is the parent company of Swiggy clocked operating revenues of Rs 1,128 crores in the years ending March 2019. It was Rs 417 crores in the previous year.
Losses stood at Rs 2,363 crores which was just Rs 397 crores in the previous year. This is a 6 fold rise in losses. The rise was attributed to higher expenses which jumped 4 fold during FY 2019.
More than 93 per cent of Swiggy’s revenue came from its marketplace operations which stood at Rs 1,074.1 crores, while its private brands which operate on a delivery-only model generated revenues of Rs 67.5 crores.
Acquisitions & Partnerships – Swiggy has partnered with many brands for various purposes which are as follows:-
- Burger King to provide delivery services
- Google Local Guide to facilitate customer reviews
- Sodexo to enable customers for paying through meal cards
- Indifi Technologies to facilitate a financing program for partner restaurants.
- ICICI Bank to launch Swiggy Money, which is a digital wallet. The customers who do not have an account in the ICICI bank can also avail the services. It will allow the customers to store money and pay for their orders.
The Acquisitions are as follows:-
- In February 2019, Swiggy acquired Bengaluru-based AI startup io.
- In 2017, Swiggy acquired Bangalore-based Asian food start-up 48East.
- Swiggy later acquired Mumbai-based Scootsy Logistics.
- It also went on to acquire a milk delivery start-up in Mumbai called SuprDaily in an all cash deal.
- In 2019, the company invested Rs 31 crore in Mumbai-based ready-to-eat food brand Fingerlix.
Controversies – There was a major controversy to “BoycottSwiggy” after they replied to a tweet made by a parody account of Finance Minister Nirmala Sitharaman.
“Had an argument with my Bhakt friend over a farmers protest”. He said that we are not dependent on farmers for food. We can always order food from Swiggy. He won,” said the anonymous parody account.
To this came a reaction from the official Swiggy account saying: “sorry, we can’t refund education“, indicating those who believe farmers don’t contribute to food are not educated.
The tweet invited a flurry of comments, likes and retweets. At the time of writing this article, the tweet had garnered 1,900 tweets, 7,800 retweets and 27,900 likes.
While some users commended Swiggy for its tweet, others termed the tweet derogatory and threatened to boycott the food delivery app. Some also advised the companies should stay away from such controversies.
Present Condition & Future Goals – Swiggy expects daily food orders to return to pre-pandemic levels by year end as more restaurants sign up for home delivery and consumer confidence improves.
On the supply side, new restaurants sign-ups each month have almost doubled to 7,000. Swiggy’s food delivery has recovered to around 80-85% of pre-Covid-19 levels in terms of order value.
The food ordering app also said it had delivered over 100 million orders since the start of the lockdown in March to the first week of October. In comparison, rival Zomato said on October 12 that it had delivered 92 million orders since the country went into lockdown.
The company was delivering 1.5 million orders a day at its peak in October last year. We are seeing 1 in 7 customers order in from these fine-dine restaurants now, with overall order value up three-fold compared to pre-Covid-19.
If everything goes as planned for Swiggy, they can have an IPO in the next 5-10 years. It will be among many unicorn startups that are planning to launch an IPO in the near future.
Swiggy is also planning to launch InstaMart to deliver grocery and household items. InstaMart will be a chain of virtual convenience stores and will deliver grocery and household items within 45 minutes.
Swiggy is planning to offer about 2,500 items from its partner ‘dark stores’. These dark stores will not have walk-in locations and will exist only in apps, the daily added.
According to a Swiggy, there are about 10 dark stores of 1,800-2,500 sq ft in Bengaluru, covering 85-90 per cent catchment areas within a 5-6 km radius. The average basket size for grocery top-up business is close to Rs 400-450.
Swiggy is currently testing InstaMart to see how it can benefit them in the most sophisticated way.
Conclusion – Concluding things up, Swiggy’s journey has been full of ups and downs. Everything was going good but the pandemic arrived and shattered their plans but with InstaMart they have successfully added another business model in their arsenal and can now rely on both services to keep them afloat.
Even if there’s a lockdown in the future again, this time they will be better positioned as they are now equipped to deliver groceries and essential items. This means they are good even without their main business model, food delivery.
That was quite a successful implementation by Swiggy. We wish them all the very best for the future and hope they will soon go public.
