Swiggy Business Model (2022)| How does Swiggy make money

Last updated: Sept 07, 2020

Company: Swiggy
CEO: Sriharsha Majety, Nandan Reddy, and Rahul Jaimini
Year founded:  2014
Headquarter: Bangalore, India

For all the foodies, what more could you ask for than having your favorite food from your favorite restaurant, delivered within 30 minutes, anywhere you are!

And in this fast-paced world, who would even prefer to go out to a restaurant, wait in the traffic, and then wait some more at the restaurant before the food is served?

A squad of 3 friends, Nandan Reddy, Rahul Jaimini, and Sriharsha Majety, perhaps knew these issues faced by every food-lover all too well.

So, what did they do?

They came up with their amazing all-new Swiggy app! An on-demand food ordering and delivery platform where you can order your favorite food from your favorite restaurant(s), and get it delivered within 30 minutes – all with just a tap!

You can also track your order to know how long it will take to get delivered.        

These three entrepreneurs 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.

Want to know more about this excellent company?

Keep reading on and take a deep dive into the business model canvas of Swiggy and know how does Swiggy make money and Swiggy’s revenue model.

Business Model Canvas of Swiggy

The business model canvas of Swiggy is based on a hyperlocal on-demand food delivery business operation. Working as a bridge between restaurants and customers, Swiggy utilizes an innovative technology platform that works as a single point of contact.

Their app allows urban foodies to order food from nearby restaurants and get it delivered at their doorstep. A broad list of restaurants and their menus with prices are exhibited in the app to choose and order from.

Apart from accumulating restaurants, Swiggy also has its own fleet of delivery partners. They pick up orders from partner restaurants and deliver it on-demand in less than 30 minutes.    

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.

All the Swiggy drivers in the vicinity receive a broadcast signal on their own Swiggy drive app when the order is placed. After they accept the order, they deliver it right on the customer’s doorsteps.

1. Customer Segments of Swiggy

The customer segments of Swiggy include those people who do not wish to go out to restaurants and eateries to buy food. People who want to order food online and want to get it delivered at their doorsteps are the principal customers of Swiggy.

After its recent business expansion, people who want to buy and get other products delivered from nearby shops and stores of groceries, pharmacies, electronics, flower shops and gift shops in the city are also Swiggy’s customers.

Few examples of stores currently available on Swiggy platform are Sodhi Super Marche, Garg Dastak, Best Basket and V.M Retail.  

2. Value Propositions of Swiggy

The main value proposition of Swiggy is its no-restriction order policy and efficient online payment system.

• Swiggy has no minimum order requirement for delivery which is why it often receives orders amounted to less than Rs. 100. It is the reason for Swiggy scaling up to 14 million orders per month.
• Easy access to customers on Swiggy’s app is the main value proposition offered to restaurant partners on the platform. Also, partner restaurants that join Swiggy’s Access can save up to 25% of their operational costs. 
• Swiggy Stores deliver groceries, flowers, medicines, and other things to the doorstep of its customers within an hour.
• Swiggy Go – It offers instant pick & drop services used by customers to send packages, lunch boxes to their kids, documents to the office, and parcels anywhere across the city. Also, customers can use Swiggy Go services to drop laundry or fetch forgotten keys.

Swiggy provides 8 different payment methods for its customers to pay conveniently for Swiggy orders. These can be categorized in 3 ways:

Digital Wallets

1. Paytm – Pay through your Paytm account and enjoy plenty of wonderful offers and food deals.
2. PhonePe – Get the ultimate convenience by paying through PhonePe, the simplest digital wallet for online payment.
3. Freecharge – Swiggy has also included Freecharge as an online payment method to facilitate its customers efficiently.
4. Mobikwik – Now you can collect SuperCash through Mobikwik’s offers. So, get ready to avail amazing benefits on many services.

Cards

1. Credit and Debit Cards – Via Swiggy’s net banking facility, you can use any debit and credit card. Plus, you can also avail great offers on them, and you can even save your card details for your future payments.
2. Sodexo Meal, Ticket Restaurants Meal & Zeta Food Card – Got these meal cards? Great! Use them on Swiggy for your food orders.

Others

1. LazyPay – Pay now or pay later for your meals, LazyPay is here on Swiggy for you to handle your lazy moods of payments!
2. Cash-On-Delivery – Old is gold, isn’t it? Pay for your Swiggy orders in cash if that is more convenient for you.

Another value proposition is its delivery competency. Its fleet size increased to 45,000 delivery personnel. It has over 20,000 active restaurant partners on its platform.

It’s operating in 8 cities and has even launched a central kitchen base facility for various restaurants. Swiggy has more than a million app downloads.

3. Customer Relationships of Swiggy

Swiggy has positive customer relationships. It provides 24/7 active customer support to help customers anytime, anywhere. It uses ‘Customer Support Chat’ services.

It also has active social media pages where it responds promptly. To stay in touch with its customers and partners, it has developed excellent rating, review, and feedback systems.

4. Channels of Swiggy

The channels of Swiggy are mobile app, websites, and digital marketing. Its mobile app is available on both Android and iOS.

In 2019, Swiggy launched Swiggy Stores and Swiggy Go to expand beyond food delivery.

5. Key Resources of Swiggy

As it has partnerships with local restaurant and shops, its main resources are local partners.

To name a few, Biryani Blues, Keventers, BombayKery, Wok Paper Scissors, and Yogisthaan are the bestselling restaurants at Swiggy.

Other key resources are delivery providers and its own human resources to manage administrative and technical operations. Technology is another resource it uses to operate its apps.

6. Key Activities of Swiggy

Its key activities include:

1. Building partnerships with eateries and retail shops
2. Hiring delivery providers and suppliers (full-time/part-time/freelancers)
3. Acquiring customers and managing their orders
4. Managing delivery and payment process
5. Managing technical operations
6. Updating system and building IT infrastructure
7. Handling queries and concerns of customers and partners
8. Picking and delivering items for customers via Swiggy Go

7. Key Partners of Swiggy

The key partners of Swiggy are:

• Restaurants and shops – Restaurants who wish to have food delivery services to provide customers with food on-demand. Other than eateries, key partners of Swiggy are shops (like pharmacies, groceries, etc.) who wish to offer their own products and services as Swiggy’s partner.
• Grocery Stores like Sodhi Super Marche, Garg Dastak, and Best Basket are few of the Swiggy partners. While it is now on the exploratory talks with many online pharma players like MedPlus, Medlife, PharmEasy, and Myra to partner with them.   
• Instagram – Swiggy recently partnered with Instagram allowing businesses to share Instagram’s food order sticker on their stories with customers. Users can tap on the stickers to place similar orders using Swiggy’s website.

• Delivery providers – These are the delivery suppliers. They can be full-time or freelancers who wish to work and earn some extra money. For the first 4 km, Swiggy pays delivery boys Rs. 4 per km. It then pays Rs. 6 per km after they have traveled 4 km. Besides, they are paid an additional Rs.20 in unseasonal weather like rainy days. Also, Incentives are given on the basis of productive performance.  

8. Cost Structure of Swiggy

Swiggy has to incur costs and expenditures for its day-to-day functions. Its major cost sources are:

• Payroll expenses for its employees and delivery partners. It also includes incentives and benefits which Swiggy offers to restaurants. For example, giving a commission of about 2- 3%.
• Costs of application and website development
• Running costs and maintenance charges
• Administrative, advertising, and marketing costs
• Additional costs in terms of promotional offers and benefits given to customers
• Kitchen base-like facility setup and maintenance costs
• Returns, refunds, and miscellaneous expenses

9. Revenue Streams of Swiggy

Now, comes the most critical question:

How does Swiggy make money?

To get a definitive answer, we need to analyze Swiggy’s Revenue Model. As it’s expanding its business strategy and operations day by day, the revenue streams of Swiggy are also considerably increasing.

There are mainly 6 revenue streams at present through which Swiggy makes money:

1. Delivery charges

The first type of revenue stream Swiggy obtained is from its customers. A nominal delivery fee of Rs. 20 to Rs. 40 is charged from customers on orders below a threshold value of Rs. 250. Swiggy raises the charges during high order demands or unusual weather conditions.

2. Commissions

Swiggy acquires another major part of the revenue stream from commissions. It collects commissions from restaurants to generate sales leads and to deliver their food items through Swiggy’s fleet. Restaurants have to pay 15% to 25% on every order placed from Swiggy’s website.

3. Advertising

Swiggy earns advertising revenue in the following ways:

• Banner Promotions – 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.
• Priority listing of restaurants – Swiggy charges restaurants premium rates to give them priority in the list of available restaurants. A restaurant has to pay high if it wants to be displayed higher on the list.   

4. Swiggy Access

An entirely new idea based on the cloud kitchen concept, Swiggy came up with its Swiggy Access facility. It provides ready-to-use kitchen spaces to its restaurant partners in those areas where they don’t operate.

With the aim of bringing food nearer to its customers, Swiggy enables restaurants to set up their kitchens in new locations and let the food delivered to them at the fastest speed.

Expecting around 25% of revenues in 2 years, Swiggy expands its cloud kitchen model to include 30 restaurants onboard with 36 kitchens to four new cities.     

5. Swiggy Super

Swiggy has launched a membership program called ‘Swiggy Super’ for customers. This program offers unlimited free delivery on all orders above ₹99. After subscribing to this program, customers don’t have to pay surge pricing during excessive demands.

6. Swiggy Go

Another revenue stream for Swiggy is a concierge service Swiggy Go that was launched in 2019 to offer instant pick & drop service.

Through Swiggy Go, the company earns by helping customers to send, pick, and drop anything to and from different locations anywhere across the city.

 

7. Affiliate Income

Swiggy earns revenue by partnering with various financial institutions like Citibank, HSBC, and ICICI Bank. This affiliate income is a new yet successful revenue stream where both parties benefit.

It also allows customers to receive several credit card offers from those financial companies.

Final Words

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. It has been demonstrated through Swiggy’s business model.

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