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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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