Here's How Swiggy, India's Largest Online Food Delivery Platform Earns Its Revenue

Massive Growth of Food Delivery App Market 2020|Studied Key ...

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For all the foodies, what more could you ask for than having your favorite food from your favorite restaurant, delivered within 30 minutes, wherever you are! And in this fast-paced world, who would even prefer to go out to a restaurant, be stuck in the traffic, and then wait some more at the restaurant before the food is served?

Prior to Swiggy, all options available were food ordering services, but Swiggy introduced ordering & delivering food services at your doorsteps – much needed by the customers.


Swiggy’s Market Model -

Swiggy operates on a hyperlocal on-demand food delivery business model. It not only aggregates restaurants but also organizes a fleet of delivery partners that deliver the food (in less than 30 minutes) on-demand. The three entrepreneurs who found Swiggy, first spotted a huge gap in the online food ordering and delivery industry of India. The next thing they did was to embrace the opportunity with open arms, and they filled the gap by launching Swiggy.

They crafted a business model that relied on a dual partnership model. This can be divided into categories-


1. Restaurant partners - The restaurant partners are restaurants which opt to deliver to customers that come from the Swiggy application and website.

2. Delivery partners - They form the delivery fleet which is given the responsibility to pick up the order from the partner restaurant and deliver it to the end consumer.

Because Swiggy operates as a dual-partnership model, it also benefits restaurants that can receive more orders from customers using their own Swiggy app. Once the order is placed, they will know the order details, prepare the order, and deliver it to Swiggy drivers. This way, restaurants don’t need to use their own delivery personnel, saving costs, and efforts.


How Swiggy Earns Revenue -

They have started earning revenues from other related avenues, ever since they have established themselves.

1. Commissions - Swiggy typically charges a 15% – 25% commission on the order bill amount received by the restaurant. This commission is charged on the full bill amount which is inclusive of the Goods and Service Tax charged over and above the menu price. The percentage of the commission depends on various factors like the frequency of orders received location of the restaurant, the dependency of the restaurant on Swiggy, the percentage charged by competitors, penetration to a new city, etc.

2. Delivery Charges 
- Swiggy does not have a minimum order requirement for delivery which means that Swiggy often receives orders amounting to less than Rs 100. This increases the logistics cost per order. After Swiggy got a stronghold of the market, it started charging delivery charges to low order amounts (depending and varying upon city to city). Delivery charges are typically around Rs 20 for orders less than Rs 250. Swiggy sometimes also charges a surge in delivery prices in times of high demand, rains, and special occasions and midnight delivery in select markets.

3. Advertising 
- Swiggy promotes and displays ads of various restaurants on its app. Restaurants, related to different regions, receive greater visibility via banner promotion and pay price for the displayed page. Swiggy typically displays a list of available restaurants to the customers. It has tapped this very potential into a revenue stream by charging a premium from restaurants in return for giving priority listing to the restaurants. Higher up the list, the restaurant is displayed, higher is the cost the restaurant has to pay.


Conclusion

Swiggy has undoubtedly become a leading online food ordering and delivery company. Having changed the entire landscape of how India eats, its innovative business model has made the life of every foodie easier, tastier, and more fun. With its fast deliveries, live order tracking, and no restrictions on order amount, Swiggy is not far from taking a huge chunk of India’s food-tech market.


Written by - Soham Upadhyay

Edited by - Bushra Makhdoomi


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