Last updated on September 30th, 2020 at 10:11 am
A few years back if you wanted to order food you needed to order food from restaurants nearby you or the second way you had to order pizza or burger only.
But now you can place orders from any restaurant in your city without thinking about the distance.
You can order your food from restaurants you don’t even know about and they will deliver you the food in less than one hour.
Even you will be able to know about the taste of the foods with the help of reviews.
Like why would anyone order from a place he doesn’t know about but there comes the review section where you can know about the taste of the food and the service of the restaurants.
So in this article we will talk about Swiggy Business Model, How the idea came to the founders their growth, fundings, and investments.
So before starting Swiggy the two co-founders Sriharsha and Nandan graduated from BITS Pilani and also started their first startup Bundl.
As after they completed their graduation they did jobs for some time and then they started Bundl.
As at that time Amazon and Flipkart were growing and small shopkeepers were selling their product using their platform.
But the things those shopkeepers were not able to handle logistics and courier by themself so that’s how the idea came to the mind of Swiggy founders.
Bundl was basically a logistic and courier company aggregator website where shop owners can find the best and cheap logistic and courier companies.
But as those logistics and courier companies are not providing a good customer experience so Amazon and Flipkart ask the shopkeepers to use their courier services to maintain the customer experience.
And then their idea was now total waste so they understood that quickly and shut their operation.
How Swiggy Formed
And after their first startup shutdown they were thinking of starting something new but as they already explored the logistics and delivery segment they were thinking to start something in that segment only.
But one important thing they find before starting Swiggy is their third co-founder Rahul Jaimini who is currently CTO of the company.
As their technical part was a little bit weak so Jaimini was a very strong pillar they found.
Also at that time many different players were there in different segments but food delivery segments were still not explored by a big player.
As the segment was very tough businesses don’t want to work on that segment but they have the proper experience and that’s why their Swiggy is continuously growing.
Also, they know that once people will get a good experience they will order the food on a daily basis which is also a great advantage.
So now you know how the idea came into their mind and what problem they faced before starting the company.
Now let’s see how they became one of the top food delivery startups of India.
Business Model Of Swiggy
So as I told you they are experienced in logistics and courier, so they focused on delivering the food.
This segment needs huge capital to run and ultimately become profitable but the main thing this segment needs is properly handling all the tasks.
And Sriharsha and Nandan both have good experience of how to handle things to become profitable.
But initially, they were also experiencing huge losses but gradually they started reducing their losses, and right now they are doing great, and soon they will become profitable.
So their business model is simply solving the problem of those who don’t know how to cook food but don’t have time as well to go to a restaurant and eat food.
So their basic business model is to deliver the food to people from the restaurant their customers want.
But right now they are expanding in many different segments as they have even opened their own cloud kitchens.
Reason Behind Growth
So the first team behind their awesome growth is that they have a great team that has mastery in their own skillset.
Like Sriharsha and Nandan has their expertise in the sales and marketing part and Rahul has his expertise in the technical part.
And these days you can not build a successful start without having these skill sets.
Sustainable Business Model
So food is something which is a necessity for life and as we are becoming so busy in our life we do not have the proper time to cook food for us.
To save our time and for the search for good food we use platforms like Swiggy and if we like their services we use in our daily life.
So what do you think in the coming future, will we start cooking food or starting ordering more food through these platforms.
What do you think now will they grow in the future or not, obviously they will grow as with fast life we will order more and more foods from restaurants.
One another reason for becoming successful is that food delivery is their core business.
So they are handling it greatly and giving a great experience to its customers but others don’t have it as a core business model.
Even Zomato has entered the market quite late earlier they were a food discovery business.
So they have a first-mover advantage in the segment and they are actually getting the advantage of first-mover.
What is the first thing you have in your mind when you are about to place the order, Taste of food obviously, but there is one more thing which we consider and that is time?
Like how much time they will take to deliver the food so Swiggy did a great job and make their average delivery 37 Mins which is awesome.
And they are targeting to make the average time to 30 Mins and with some restaurants they did tie-ups like if they will be unable to deliver the food within 30 Mins the food will be free.
Swiggy Revenue Model
In the 4 years Swiggy has become a 3.3 Billion dollar company but do you know how do they earn money?
So let’s see how many different ways they earn their money to become a billion-dollar company.
So there are seven different ways through which Swiggy earn their revenue let’s see them.
So the first method is commission it means all the restaurants who use the Swiggy’s platform have to give a commission to use their platform.
The commission rates differentiate between 15-25% and there are some restaurants who sell their food exclusively in Swiggy’s platform and Swiggy charges a little less from those restaurants.
So the second method is delivery charges, they charge a small amount from the customers who ordered the food and this delivery charge also varies from time to time.
Cloud Kitchens are basically delivery units means you can only order food from there and you can not go and have food there.
Swiggy has huge data of customers and their taste so they know which food has huge demand in which place.
So they open these cloud kitchen at those places and as the full operation was handled by Swiggy so they earn huge profit with Cloud Kitchens.
Swiggy Access is basically a central kitchen where Swiggy has its cloud kitchen and also other brands have their kitchen.
So if a brand wants to expand in a different city, he has to incur huge expenses like setting up the kitchen, taste research of their customer, and many other things.
And when a brand use Swiggy Access they get the access of huge data of Swiggy so they don’t need to invest in market research.
And also in the central kitchen they had set up all the infrastructure so this also saves the money of the brands.
So whenever you order food from Swiggy you need to pay a little delivery charge but if you order more often this delivery charge will become huge.
So if you buy the Swiggy Super subscription you don’t have to pay any delivery charges or any surge prices will imply in your order.
So whenever you open the Swiggy application you can see a banner ad of a restaurant and put those ads at the top they need to pay to Swiggy.
And the second thing is whenever you search for the specific food you see some restaurants in the top with Ads written on them.
So those restaurants paid to Swiggy to get in the top for the searches of particular dishes.
So the last method of their earning is affiliate marketing like you must have seen some ads at the bottom of the application.
Whenever anyone clicks on those ads and after landing on the website and buys the product then Swiggy will earn some amount.
Hope you like all the information about Swiggy Business Model and Revenue model and if you have any question regarding the model feel free to ask in the comment section.