Founded in 2014, Swiggy is a food–tech platform from Bengaluru that became a unicorn within 4 years. Swiggy is providing its food delivery services in more than 500 cities in India, including Chennai, Mumbai, Delhi, Bengaluru, and many more.
Do you want to know what the business model of Swiggy is? How does Swiggy earn money?
In this article, we have shared a complete Swiggy business plan / Swiggy business model, the company’s challenges, and its working model.
After reading this article, you will learn how Swiggy established itself as the fastest unicorn in India. Let’s explore.
- Swiggy Founders – Nandan Reddy, Rahul Jaimini, and Sriharsha Majety
- Industry – Food, Logistics
- Founded – in 2014
- Specialization – Food delivery
- Website – https://www.swiggy.com
- Swiggy tagline: Swiggy Karo, Phir Jo Chahe Karo!
- Swiggy business model – Customer-centric
How Swiggy Started?
In 2013, the two founders, Sriharsha Majety and Nandan Reddy, started logistics and courier services to solve the shipping problems of the local businesses within India at an online platform – “Bundl.”
However, the giant e-commerce platforms Amazon and Flipkart started providing their own delivery services, and they had to shut down their Bundl business after 1 year.
Then, after research, they found a space in food delivery logistics, which was an unorganised sector. So, they planned to start food delivery services to fulfil the gap between logistics and restaurants.
And that’s how the Swiggy business model launched.
“Did you know Swiggy claimed the number of orders per month is as high as 14 million, it’s no minimum order restriction?”
Prior to the Swiggy model, in the food sector, there were only options available for “ordering food”, not the “delivery of foods.”
Swiggy identified this problem of food delivery and introduced ordering & delivering food services at your doorsteps. And the founders created the Swiggy business model intending to bring change to the food industry.
Additionally, the company also focused on delivering on-demand food, i.e., in less than 30 minutes.
Business Model Of Swiggy – Hyper Local Customer Centric
Swiggy is an online food ordering platform that is entirely focused on core food delivery. It connects with various restaurants where people can explore dishes and order food from their app or website.
Besides that, Swiggy also partnered with pharmacies and groceries on their platform.
- The main resources of Swiggy’s business model are:
- Restaurants who want to sell their food through the Swiggy app or web
- Swiggy app and web to create a bridge between restaurants and customers, i.e., one point of contact for both parties.
- Local delivery partners who are ready to provide on-time delivery services to Swiggy customers
Now, with these resources, Swiggy working model is;
Swiggy Business Plan
Step 1: Develop strong relationships with the restaurants and retail stores
The first step of Swiggy’s business model is connecting with the restaurants. Restaurants can register themselves on the Swiggy app and connect with a wider audience, where they have to pay a commission to Swiggy for providing them with a large customer base.
Step 2: Hire full-time and part-time delivery providers
Swiggy hires local people to deliver the food to the customer’s doorstep.
Step 3: Place an order on the Swiggy app or website
Customers can open the Swiggy application on their mobile phones or visit the Swiggy website to find the list of restaurants and place their food orders.
Step 4: Acceptance of orders by the restaurants
The restaurants get the notification of the order at their own Swiggy application. They need to accept the order, and once accepted, they start preparing for the order.
Step 5: Get your on-demand delivery.
Once the order is placed, Swiggy delivery executives pick up the charges from the restaurants and deliver them to the customer’s address within 30-40 minutes. You can track your order’s location in real-time, and how much time it will take to get delivered.
In this overall business model of Swiggy, the most important thing is managing the delivery and payment process on a real-time basis to ensure a seamless delivery experience.
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Solutions offered in the Swiggy business model
Now, as Swiggy identified that very limited restaurants were providing food delivery services, and customers also don’t have easy access to the remote restaurants. It means customers don’t have enough time to visit the restaurants in other localities and get taste and varieties.
Swiggy working model found the opportunities and came up with a collaborated app, where the Swiggy business model benefitted both the restaurants and customers.
- More customers – The Swiggy model provides more business to the restaurants by registering them on their platform.
- Cloud kitchens – Provide access to Cloud kitchens, i.e. infrastructures, to the restaurants who want to start.
- On-demand delivery – The company focuses on building trust by delivering on-time food. Once trust is built, they increase delivery prices, and customers are also ready to pay, as they have already built good trust.
- Swiggy pop – Many times, customers prefer single orders. Here, customers spend so much time searching for restaurants that they don’t know the serving sizes. Like how much quantity particular restaurants sell. Moreover, it is time-consuming.
So, Swiggy launched the “Swiggy pop” option, listing 20-30 restaurants of different varieties with low prices, usually Rs. 100-150, with free delivery charges. They deliver within 3 km to save time and delivery charges.
Swiggy Business Model – Marketing Strategies
As the business model of Swiggy is to take advantage of technology, the company uses digital marketing technologies to promote their business.
Eye catchy website
Firstly, the company builds a catchy eye website to attract customers with mouth-watering food pictures. They made a super-friendly user interface that allows users to search for restaurants, filter them based on reviews, apply promo codes to get discounts, and many more conveniences.
Search engine optimization
The company benefited from SEO, where they targeted the keyword “order food online” to bring organic traffic to their website.
Social Media Marketing
Their unique social media campaign strategies set Swiggy apart from its competitors. They use attractive food images that make people crave the food. And, people can’t resist making an order from Swiggy.
Another marketing strategy that Swiggy uses is email marketing, where they offer tempting discounts and send users a lot of coupon codes.
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Swiggy Earning Model – How Does Swiggy Earn Money?
Swiggy’s business model makes money from 7 methods, including
1. Commission from restaurants
As Swiggy plays the role of middleman between the restaurants and customers, they get a commission from the restaurants between 15% – 25%.
2. Variable delivery charges, including surge pricing
Delivery charges are the primary source of revenue in the Swiggy business model. Swiggy delivery charges vary from Rs. 20 to Rs. 40 per order. Additionally, during peak times, in case of high demand, and on special occasions, Swiggy also charges a surge fee from the customers.
3. Swiggy access – Cloud kitchens
In 2017, Swiggy launched its central delivery kitchen facility, where they provide infrastructure to the new brands that want to enter the food industry.
5. Swiggy super subscription program
Swiggy also has a subscription plan that gives subscribers access to unlimited free food delivery on orders above Rs. 99 to the customers who use Swiggy frequently.
Swiggy allows two types of advertisements on its web and app, i.e., Banner ads promotion and listing ads of restaurants that work on a cost-per-click model.
7. Affiliate marketing
Another way of earning for Swiggy is from affiliate marketing, where the company promotes various financial institutions like you must have seen credit card advertisements.
So, these were the Swiggy earning model that makes it sustainable and profitable among other food startups.
The major competitors of Swiggy are:
Frequently Asked Questions
1. How does Swiggy earn profit?
Ans- The primary sources of Swiggy business model are commission charges that vary between 15 – 25% and delivery charges from customers. Other earning sources include cloud kitchen, advertisement, and affiliates.
2. Is Swiggy a profitable company?
Ans- The Swiggy business model is solid, along with multiple revenue sources. In FY 2021, Swiggy’s consolidated losses trimmed to Rs. 1,616 crores (a reduction of around 59%).
3. What is the business model of Swiggy?
Ans- Swiggy’s business model is a customer-centric hyper-local on-demand food delivery business model. It is a tech-based food startup that uses digital marketing to grow its business.
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