Online food ordering is the process of food delivery or takeout from a local restaurants or food cooperative through a web

page
or app. Much like ordering consumer goods online, many of these services allow customers to keep accounts with them in order
to make frequent ordering convenient. A customer will search for a favorite restaurant, usually filtered via type of cuisine and
choose from available items, and choose delivery or pick-up. Payment can be amongst others either by credit card, PayPal or
cash, with the restaurant returning a percentage to the online food company.
In May 2015, Eric Kim, a contributing writer for Tech Crunch and CEO of Rush order, reported that "of the $70 billion [takeout
and delivery market], only about $9 billion (roughly 13 percent) is online. However, in China, online food delivery services are
the one of the fastest and most frequently used services, especially in tier 1 and 2 cities, growing 23% in 2017. [3]

Swiggy is food ordering and delivering company based in Bangalore. It provides a single window for ordering from a
wide range of restaurants and have their own exclusive fleet of delivery personnel pick up orders from restaurants and
deliver it to customers.It is a complete food ordering and delivery solution that connects neighborhood restaurants with
urban foodies.

Swiggy Founders:
Swiggy was founded by Nandan Reddy, Sriharsha Majety, and Rahul Jaimini in August 2014. Nandan Reddy aged 29
and Sriharsha Majety aged 31 both are both alumni of Birla Institute of Technology and Science (BITS) Pilani
while Rahul Jaimini aged 31 is an alumnus of IIT Kharagpur.

andan Reddy and Sriharsha Majety in 2013, started their first venture named Bundl, which was a logistics aggregator that
connected small and medium companies to courier service providers. After almost a year in business, they realized their
focus had to change. They had spotted the need for an online hyperlocal logistics company in the restaurant industry. Then
In August 2014, the duo rolled out the online food ordering and delivery startup Swiggy, along with Rahul Jaimini.
Swiggy Journey:
Back in 2014, Swiggy was founded in an office space in Koramangala, Bangalore. One
neighbourhood, six delivery executives and 25 partner restaurants is what Swiggy started off
with in the beginning. Almost four years into the field, Swiggy now has a major presence in
Delhi, Mumbai, Pune, Bangalore, Hyderabad, Chennai and Kolkata. Not just that, they are
partnered with 12,000 restaurants and over 13,000 delivery executives.

When it comes to food and ordering food, India is a young country with a lot of
untapped potential. As a customer centric company, Swiggy as an online platform is entirely
dedicated to improving the process and experience of food order and delivery. Since its
inception, Swiggy has rapidly grown to become a leader in the Indian food delivery sector by
consistently shrinking delivery timelines and improving customer experience.

From the time of its inception, this online platform has raised large sums of money which more
than proves Swiggy’s worth as a food ordering platform. Starting from discovery through visual
menus, massive reduction in delivery time and no minimum order, Swiggy has become the
highest used online platform. With over 12,000 restaurants in their roster, industry best average
delivery time of 37 minutes and reduced overhead costs, Swiggy has positioned itself at the top
of this field.

To make sure they are here for the long run, Swiggy has launched a host of exciting features like
Swiggy Pop, Swiggy Access and Swiggy Schedule. With constant developments in their
technology, Swiggy has made sure it has secured the number one position in the country in
relation to the online food ordering food.

Swiggy Business Model:

Swiggy has two major revenue streams.

1. The major part of Swiggy’s revenue from commission it collects from restaurants for lead generation and for
serving as a delivery partner.
2. Swiggy also charges a nominal delivery fee from customers on orders below a threshold value which 200
rupees for most cities.

Swiggy Funding:

Swiggy is backed by one of best investors available in the market. Swiggy has raised a total of
75.5 million dollars in funding from various investors, including Bessemer Venture Partners,
Norwest Venture, Accel Partners, SAIF Partners, Harmony Venture Partners, RB Investments and
Apoletto.
Swiggy Competitors:

Indian food delivery market is valued at 15 billion dollars and set for an exponential growth. Food
delivery has become a very competitive market in India. Swiggy is in direct competition with
major on-demand food aggregators like Zomato. Whereas there are other
small startups like Foodpanda and Faasos also in the competition.

Now that Uber has finally released its food delivery app UberEATS in Mumbai and Google has
launched its hyperlocal services and meal delivery app Areo in Bangalore and Mumbai. The
competition is getting tougher for Swiggy. Swiggy is aiming to maintain its market share by
keeping their maximum focus on 8 major cities which are Mumbai, Pune, Bangalore, Hyderabad,
Chennai, Delhi, Gurgaon, and Kolkata.

Swiggy Marketing Strategies

Swiggy’s marketing strategy consists of both online and offline marketing campaigns.It promotes
its campaigns via Facebook, Twitter, Youtube, Pinterest, and Instagram. Some of its campaigns
include Secondtomom,#DiwaliGhayAayi, #SingwithSwiggy and Know your food series of pictures
and food walks in a local area. The company has successfully built its brand awareness and
connects with its audience through these channels. Their facebook page is quite active with
regular updates, averaging to one post a day. Swiggy uses its Social media not only for
campaigning but to engage with its customers from solving the greviences to taking the feedback.

Swiggy – Digital Marketing Strategy for Swiggy by Devesh Shah

wiggy – Digital Marketing Strategy by Devesh Shah
In this world of startups, Swiggy has turned out to be one of the most formidable and
successful startups. May it be Swiggy’s marketing strategy or social media marketing,
Swiggy has been proving its market presence. Let’s learn more about Swiggy as a
company and it’s digital marketing strategies done by the company and as suggested by
Devesh Shah in his presentation on Digital Marketing Strategy for Swiggy.
About Swiggy
Swiggy is a food ordering and Delivery Company based out of Bangalore, India. Started
In August 2014 and founded by Nandan Reddy, Sriharsha Majety, both alumni of BITS
Pilani along with Rahul Jaimini, an alumnus of IIT Kharagpur, Swiggy has been rapidly
growing and reaching greater heights.
Owned By Bundl Technologies Pvt. Ltd, it connects neighbourhood restaurants to urban
foodies. Currently, operating in 8 cities (Mumbai, Pune, Bangalore, Delhi, Kolkata,
Chennai, Hyderabad, and Gurgaon) and across 5000 top and growing restaurants, Swiggy
has been serving an average 30,000 + customers.
Their top clients include Burger King, Café Coffee Day, Goli Vada Pav & much more to
name it.
Devesh Shah, a student at IIDE has devised a Digital Marketing Strategy for Swiggy. It
entails a detailed digital plan that can improve Swiggy’s online image as well as promote
sales.

Digital Marketing Strategy by Devesh Shah-Swiggy from Indian Institute of Digital Education

Target Audience:
Swiggy as a brand can cater to a huge target audience. It can include the varied group of
ages, people with various demographics and even varied characteristics.
Though Swiggy has a great population to target, it’s ideal target audience will be people
between the age of 18-55.
These people could be students, entrepreneurs or professionals working in MNC’s who are
also financially stable and live in posh localities.
Search Engine Optimisation:
SEO is an integral component of every digital marketing strategy. It helps improve your
search engine rankings on the search engine results pages (SERP’s). For a brand to rank
organically high, it is important to perform a good SEO strategy. A good SEO strategy
involves satisfying important attributes like the header tags, meta tags, backlinks,
keywords and social media integration.
On performing an SEO analysis for Swiggy, two major issues were discovered.
The website of the brand didn’t have H2 tags at all. H2 tags are an important way of
communicating to the search engines what the pages of your website are about.
Also, the number of backlinks for the brand’s website was not adequate. Having a good
amount of quality backlinks defines domain’s credibility and improves ranking.
Thus, the brand’s website should inculcate H2 tags and quality backlinks to its website for
a great overall SEO performance.
Social Media Campaigns and Content Strategy:
In just 4 years, Swiggy has become a very reputed brand. And that’s not just because of
their exceptional service but also because of their excellent social media marketing
strategies. Delivery services and social media strategies have gone hand in hand for
company’s reputation.
On Facebook, Swiggy has 174K likes and followers. FoodPanda & Zomato which are
Swiggy’s biggest competitors have a whopping 2.9 million & 1.2 million likes &
followers whereas Faasos & Tiny Owlcomparatively have a mere 136K & 31K likes &
followers.
But what sets Swiggy apart from Zomato & FoodPanda is their remarkable social media
campaign strategies. Every campaign of theirs is extremely engaging, easy to consume and
have an interactive quotient in them. The posts are highly appealing, humour based and of
good quality.
Considering their past social media campaigns, Swiggy can come up with campaigns such
as #eatyourveggies, #earnyourcheatmeal & #superswiggy, where they can convey the
notion of healthy eating in a humorous way by using puns and witty one-liners.
Along with a perfect Social Media Strategy, a well-planned Content Strategy also plays an
important role in increasing a brand’s online reputation.
The brand can create various types of content such as blogs, videos or listicles on food-
related topics or must-visit restaurants & bars or maybe on how to make money through
food blogging. Such content is convenient to consume and also relevant to Swiggy’s target
audience.
Email Marketing:
An email marketing strategy should be a part of every brand’s overall marketing strategy.
Because it helps the brand build relationships with the prospects and its current customers
as well as acquire the existing customers conveniently through their inbox.
Swiggy can come up with different email marketing campaigns satisfying different
objectives. The emails could be about notifying the customers regarding the delivery of
their order or announcing latest offers and features.
This will help foster their sales, increase engagement and drive traffic to their website or
mobile app.
Influencer Marketing Strategy:
Influencer marketing is another one great strategy that Swiggy can look up to.
Influencers & Influencer marketing is the newest trend these days. Brands have started
approaching influencers to market their product because of their power to create an impact
in the minds of people.
There are a lot of famous food bloggers across the country who are also great influencers.
Some of the popular names include Mumbai Foodie by Ronak Rajani, Food Talk India
by Shuchir Suri & Anjali Batra, My Food Story by Richa Gupta & Delhi Food Guide by
Saadidilli. Swiggy can leverage itself by collaborating with these influencers and
promoting themselves to a wider audience.
Online Reputation Management:
Online Reputation Management plays a major role in defining a brand’s authority and
credibility. It helps manage and monitor a brand’s online image. Thus, to create a good
online identity of your brand practising ORM is vital.
As mentioned before, Swiggy has an exceptional service. Excellent services help brands to
gain positive reviews and ratings on social media forum. Swiggy’s Online Reputation
Management is better than its competitors. Credit goes to the service and social media
strategy which helped Swiggy to maintain its ORM.
Swiggy can further strengthen its online reputation by getting itself listed on top websites
like Justdial, Grouptable, Huffington Post, Dineout, Tripadvisor. All these websites
authentic and a perfect destination for getting listed.
Social Media and Google Ads:
Every Digital Marketing strategy is incomplete without Paid Ads. Every brand practising
digital marketing should invest in both Social Media Marketing Ads & Google Ads.
Gaining traction to your website/business page organically is a long-term process. But
with paid ads, the process becomes much faster.
In fact, Swiggy’s own biggest competitors Zomato & FoodPanda performs extensive
Facebook Advertising.
Swiggy should run a Facebook Carousel Ad showcasing its products or services or launch
a Single Image ad offering latest discounts and coupon codes.
 It should also perform Search Ads targeting keywords such as ‘order food online’, ‘food
delivery’, ‘home delivery’ etc. This will help the ad appear more often because of the
accuracy and high relevancy of the keyword with the brand.
Conclusion:
Over these years, Swiggy has grown as a brand. It has given a tough competition to other counterparts due to its
online presence. Swiggy has been way active on YouTube and the digital marketing team has utilised the platform
brilliantly by showcasing the 7-second video to its viewers. However, certain digital marketing strategies suggested
by Devesh Shah can boost the brand’s overall digital marketing performance.

India is currently witnessing a FoodTech revolution. The increase in the country’s urban population, coupled
with the growth of nuclear families where both partners are working professionals, has led to a growing
demand for FoodTech services such as on-demand delivery, cloud kitchen and food/restaurant
discovery. Swiggy, an online food delivery platform, is one example of a FoodTech startup that has been
making waves recently.

Swiggy commenced operations in 2014 in Bengaluru, India’s startup hub. As one of the late entrants, the
company faced tough competition in a no-holds barred battle for a share of the FoodTech market in 2016.
Several players like TinyOwl, Dazo, Zupermeal and Spoojoy failed for reasons such as lack of funding,
untimely launch of a product or service, lack of specialization and aggressive competition. On the other hand,
Swiggy clocked over 450.1 percent revenue growth in FY 2017*.

2018 has been a busy year for Swiggy with two rounds of funding - $100 million in February and $210 million
in June. The latest round brought Swiggy’s total funding to almost $470 million, giving it unicorn status and
making it India’s most capitalized on-demand food delivery startup, leaving Zomato (which has raised nearly
$440 million to date) slightly behind.

Does Swiggy deserve to be a Unicorn within four years of commencing operations? This question encourages
us to explore the factors that have contributed to it being where it is today.

FoodTech veterans have often highlighted the importance of logistics, scalability and customer centricity for
survival in this industry. Swiggy is arguably getting these factors right.

Generally, in the case of startups, when the value proposition is simple, scalability becomes critical. Swiggy
flaunts a delivery fleet of over 30,000 people and tie-ups with over 35,000 restaurants. Having its own fleet
gives Swiggy the flexibility to offer customers a “no minimum- order” policy on any restaurant.

Swiggy’s move to enter the cloud-kitchen, ‘Swiggy Access,’ market capitalizes on the increasing popularity of
shared services and office spaces in urban India. ‘Swiggy Access,’ gives select restaurants access to plug-and-
play kitchen space in different parts of the city so they can deliver fresh food to brand-new areas. Swiggy
Access will help restaurants across India open delivery-only kitchens in various parts of the cities they serve.
Swiggy brings innovative and advanced services to the market continuously. Recently, the company has
started testing a WhatsApp enterprise solution whereby the customers will be updated about their order status
on a real-time basis. Of course, this service is optional, but it demonstrates Swiggy’s attempt to establish an
unambiguous communication channel with customers. Further, Swiggy has launched ‘Swiggy Scheduled’
which enables customers to pre-order food in time slots of 30 mins for up to two days in advance. This feature
is live in some geographies and will soon launch across other regions. Then there is ‘Swiggy POP,’ which
offers a daily curated menu of meals from top restaurants in the customer’s area. Most of these innovations
will likely not require significant additional capital investment, but they increase the value proposition,
improve customer satisfaction and enhance stickiness.

Further bolstering its expansion strategy, Swiggy is contemplating a foray into the hyperlocal market. This has
helped the company to make use of its delivery fleet optimally during the lean time of the day (predominantly
afternoon time). Globally, food delivery players are diversifying into related businesses to best utilize their
fleet. In summary, Swiggy appears to be hitting all the right notes with a plethora of upcoming services,
strengthened senior management and value-added technological solutions.

Having said that, despite the earlier shakeout in 2016, the FoodTech industry in India is arguably still very
fragmented, with players like UberEats, FoodPanda, Scootsy and several smaller players competing fiercely
with Zomato and Swiggy. Also, there is not a shortage of visionaries in the investor community who see a
potential for more disruptive and innovative additions to the FoodTech community. How Swiggy deals with
this future innovation and disruption will ultimately determine whether its recently achieved unicorn status is
here to stay.

A RedSeer Consulting survey for the October-December period has ranked Swiggy No.1 with a total score of 96,
followed by Zomato with 82 points, Uber Eats 73 and Ola's

Bengaluru: Online food ordering and delivery startup Swiggy, run by Bundl Technologies Pvt. Ltd,
emerged on top in trust and customer satisfaction in a food-tech survey by research firm RedSeer
Management Consulting Pvt. Ltd. According to the latest edition of the RedSeer FoodTech
Leadership Index (FLI), Swiggy ranked no. 1 with a total score of 96, outscoring arch-
rival Zomato (Zomato Media Pvt. Ltd), which came in second with a score of 82 in the fourth quarter
of 2018.
Uber Eats, the online food delivery service owned by Uber Technologies Inc., and Ola’s Foodpanda
came in third and fourth at 73 and 70, respectively.
Only last month, Swiggy raised $1 billion in the biggest-ever funding round in the country’s
booming food-tech space, increasing pressure on Zomato to also quickly raise fresh funds. In the
business of food delivery, top companies such as Swiggy and Zomato need to keep raising capital to
win share in a cut-throat, hyper-competitive market.
The RedSeer survey considered over 20 parameters across three broad pillars: most preferred or
trusted brand for online consumers; maximum value for money along with a meaningful assortment;
and best buying experience from restaurant delivery to post-delivery experience.

Expand
After weighing all of these factors, an overall score was assigned to each firm. Swiggy outscored
Zomato by the widest margin when it came to parameters of trust, which included measuring aspects
like top-of-the-mind recall and unaided recall. It scored 22 on these parameters versus Zomato’s
score of 10.
Swiggy also edged past Zomato, albeit by a smaller margin, when it came to best user experience
starting from exploring and ordering dishes to cancellations, customer support and overall net
promoter score (NPS). NPS is a key customer satisfaction metric based on how likely customers are
to recommend a brand or company.
After its latest funding round, Swiggy became the country’s fifth most valuable startup, commanding
a valuation of $3.3 billion and underscoring the stunning rise of a venture that was launched four
years ago. It has raised $1.5 billion in total so far, according to data from Crunchbase, which also
showed that Zomato has, in comparison, raised $653.8 million so far. Still, Zomato has managed to
close the gap over the past year and also received over $400 million in two rounds of funding last
year.
In terms of value for money, all the top four food-tech startups were locked at around the same score
on Redseer’s survey. RedSeer surveyed over 900 customers across core cities—Delhi, Mumbai,
Bengaluru, Hyderabad, Pune, Chennai and Kolkata—during a quarter for its food-tech survey.

Swiggy is a food ordering and delivery company based out of Bangalore, India.
Swiggy was inspired by the thought of providing a complete food ordering and
delivery solution from the best neighborhood restaurants to the urban foodie. A
single window for ordering from a wide range of restaurants, we have our own
exclusive fleet of delivery personnel to pick up orders from restaurants and deliver
it to customers . Having our own fleet gives us the flexibility to offer customers a
no minimum order policy on any restaurant and accept online payments for all
partner restaurants that we work with. Our delivery personnel carry one order at a
time which ensures we get reliable and fast deliveries."

Swiggy is food delivering company based in Bangalore

It provides a single window for ordering from a wide range of restaurents
and have their own exclusive fleett of delivery personel pick up orders from
restaurents and deliver it to customers.
It is a complete food ordering and delivery solution that connects neigh
borhood restaurents with urbon foodies.
Swiggy was founded by Nandan Reddy, Sriharsha Majety, and rahul
Jaimini in August 2014.
Nandan Reddy(29) and Sriharsha Majety(31) both are alumi of Birla
Institute Of Technology and Science(BITS) Pilani while Rahul Jaimini(31)is an
alumini of IIT Kharagpur.
N.reddy and S.majety in 2013,started their first venture named Bundl a
logistic aggregator that connect small and medium companies to courier service
provider .
They run Bundl company almost one year.
In August 2014,the duo rolled out the online food ordering and delivery
startup Swiggy,along with Rahul jaimini.
Swiggy begin its journey Bengluru with six delivery executives and 25
restaurents on its platforms.
 In the time of three years it has scaled up with over 6,000 delivery
exceutives across India and more than that 8 cities like Delhi-Ncr, Bengaluru,
Hyderabad, chennai, kolkata and Pune.
Swiggy business Model: (1). The major part of Swiggy’s revenue from
commission it collect from restaurants for lead generation and for serving as a
delivery partner.
(2). Swiggy charges a nominal delivery fee from customers order below a
threshold value which 200 rupees for most cities.
Swiggy funding: Swiggy backed by one of the best best investors available
in the market. It has raised a total of 75.5 million dollars in funding from various
investors like Bessemer Venture, Norwest Venture etc.
Swiggy marketing strategies: It consists both online and off line marketing
campaigns. It promotes its campaigns via Facebook, Twitter, YouTube, Pint re.
Swiggy plans to hire over 12,000 delivery executives by end of the year.
Swiggy promises to delivery food in about 35 minutes .
The delivery executives smart phones an an app powered by an algorithm
for an efficient way of delivering food . Consumers can also discover popular
restaurants and track their food orders in real time.

One of the main reasons for their success is their business model. Swiggy has its
own set of delivery executives who are equipped with a smart phone and a Swiggy
app which thereby helps the user to track their delivery through map integration.
Swiggy doesn’t have minimum order policy, which makes it more affordable for
users apart from that they charge a delivery fee.

DM: In this world of startups, Swiggy has turned out to be one of the most formidable and
successful startups. May it be Swiggy’s marketing strategy or social media marketing, Swiggy has
been proving its market presence. Let’s learn more about Swiggy as a company and it’s digital
marketing strategies done by the company and as suggested by Devesh Shah in his presentation on
Digital Marketing Strategy for Swiggy.

Search Engine Optimization:

SEO is an integral component of every digital marketing strategy. It helps improve

your search engine rankings on the search engine results pages (SERP’s). For a
brand to rank organically high, it is important to perform a good SEO strategy. A
good SEO strategy involves satisfying important attributes like the header tags,
meta tags, backlinks, keywords and social media integration.
On performing an SEO analysis for Swiggy, two major issues were discovered.

The website of the brand didn’t have H2 tags at all. H2 tags are an important way of
communicating to the search engines what the pages of your website are about.

Also, the number of backlinks for the brand’s website was not adequate. Having a
good amount of quality backlinks defines domain’s credibility and improves
ranking.

Thus, the brand’s website should inculcate H2 tags and quality backlinks to its
website for a great overall SEO performance.

Social Media Campaigns and Content Strategy: In just 4 years,

Swiggy has become a very reputed brand. And that’s not just because of their exceptional
service but also because of their excellent social media marketing strategies. Delivery
services and social media strategies have gone hand in hand for company’s reputation.

On Facebook, Swiggy has 174K likes and followers. FoodPanda & Zomato which are Swiggy’s
biggest competitors have a whopping 2.9 million & 1.2 million likes & followers whereas Faasos & Tiny
Owlcomparatively have a mere 136K & 31K likes & followers.

Email Marketing:

Social Media and Google Ads:

Every Digital Marketing strategy is incomplete without Paid Ads. Every brand practising digital
marketing should invest in both Social Media Marketing Ads & Google Ads.
Conclusion:
Over these years, Swiggy has grown as a brand. It has given a tough competition to other counterparts due
to its online presence. Swiggy has been way active on YouTube and the digital marketing team has
utilized the platform brilliantly by showcasing the 7-second video to its viewers.
About Zomato
Zomato, an online restaurant guide, is one of the fastest ways to search places to eat around you. It is currently
serving 22 countries worldwide and covers more than 1 million restaurants. Initially known as Foodiebay, this
successful Indian startup was started by IIT graduates Deepinder Goyal and Pankaj Chaddah in 2008. Zomato
has its headquarters in New Delhi. In June 2010, it expanded its reach to Pune and Bangalore and then to
Chennai, Ahmedabad and Hyderabad in 2011. In a very short span of time, Zomato went global and started
providing its services in Dubai in September 2012. Later, it expanded to United Kingdom, Sri Lanka, Qatar,
Philippines, South Africa, Turkey, New Zealand, Brazil, Indonesia and Portugal.

In November 2014, Zomato raised $60 million funding from its biggest shareholder Info Edge (India) Ltd , Vy
Capital. Existing investor Sequoia Capital values the firm at $660 million.

Since July 2014, Zomato has acquired seven companies in various parts of the world to extend its reach in the
restaurant search space and the biggest one being of Urbanspoon which has been a dominant player in the US,
Australia and Canada. In April 2015, Zomato acquired MapleGraph, a Delhi-based startup and built a cloud-
based point of sale product for restaurants known as Maple POS which was later renamed to Zomato Base. It
has restaurant features such as menus and inventory management and has a built in payment solution to accept
credit and debit card payments. The company also acquired US based Next Table which is a restaurant
reservations and table management platform.

The collaboration of Zomato with travel itinerary planning portal TripHobo allow users to access content and
deals on restaurants in addition to itinerary based recommendations. The launch of Zomato for Business
application has helped business owners to engage with customers to drive business. Zomato’s entry in food
ordering space is likely to affect Foodpanda and TinyOwl’s business in Mumbai

Apart from listing and reviews, Zomato will now own the communication channel between hotels and
customers via online ordering and table reservations.

As the company is going more and more global, it rebranded its logo that so that it could transcend cultures,
languages and geographic boundaries.

Objectives:
 To expand across the globe as a leading service provider

 To increase their fund and revenue

 To own the communication channel between the consumer and the businesses

Strategies Adopted:
Zomato uses different platforms to engage their customers with them. It is one of the finest brands in terms of
social media marketing.
On the lines of the war for the e-commerce crown between homegrown Flipkart and Jeff
Bezos-led Amazon, the battlefield for the food delivery war has been set, and the contenders
are, well, obvious – Zomato and Swiggy.

While Swiggy started delivering food in early 2014, Zomato was a late entrant in delivery in
February 2015.

Despite the late entry, Zomato has caught up fast with Swiggy. Over the past two years, the
Gurugram-based company has been ramping up its food order business aggressively.
Recently, it reached the 3-million-orders mark and claimed to have narrowed the gap with
competitor Swiggy.

At present, Swiggy does about 4 million orders a month while Zomato processes about 3
million orders on a monthly basis. Importantly, Zomato has also turned profitable in all
geographies and to celebrate this feat, it announced a zero commission campaign for
restaurant partners.

By doing so, Zomato has opened an assault on Swiggy.

“The zero commission model is certainly going to hurt Swiggy,” says the founder of one of
the foodtech companies. Swiggy charges about 18-20% commission from restaurant partners.
On an average, a restaurant makes anywhere between 40-60% margin on an order.

By signing up for the zero commission campaign, restaurants can cut the margin they shell
out to Swiggy.

Why Zomato is playing the zero commission card and is it sustainable?

Of course, Zomato wants to give the jitters to Swiggy and grab its market share. But, is it
sustainable for Zomato, which has been eyeing a funding round?
Yes, Zomato can play with zero commission as its advertising business is pretty much sorted.

“See, over the years Zomato has streamlined its advertising business and it’s in a position to
feed its food-ordering business with that,” says the above-quoted person who didn’t wish to
be identified.
According to Zomato, its revenue from advertising stands at $38 million in FY17.

While Zomato plans not to charge anything for delivery from restaurant partners, it will
certainly pass on benefits to the customer. Since Zomato won’t charge for ordering, it will
negotiate with restaurant partners to pass on discount (in the range of 10 to 15%) to
customers.

“By passing discounts to customers, Zomato will be able to bring a major chunk of Swiggy’s
customer base on its own ordering platform,” points out Satish Meena, forecast analyst at
Forrester.

Understanding the food ordering space

Food ordering in India is largely divided into two buckets. The first bucket is where
customers usually order biryani, Chinese and Indian cuisine while the other is specialised
cuisine comprising of outlandish gourmets – pizza, burgers, pasta.

While Swiggy undoubtedly has the lead in the first category, Zomato rules the specialised
cuisine segment by striking exclusive partnerships with restaurants.

On the consumer side, Zomato has a clear edge as it brings a major chunk of search traffic
organically.

Entrackr’s sources point out that close to 80% of ordering at Zomato still happens through
its parent app (Zomato has a separate app dedicated for ordering). “Zomato drives a lot of
search traffic while Swiggy has been trying to divert that user base to its mobile and web
apps. This is where Swiggy is bleeding profusely,” adds Satish.

Swiggy has a pole position on the merchant side. Zomato had neglected the ordering part for
a long time as it didn’t see much value in it – however, Swiggy spotted an opportunity amid
the fall of Foodpanda, Tinyowl, and others.
For small restaurant/food joints (with limited capacity for dining), the platform that rakes in
orders and ensures delivery with minimum manpower assistance is what matters the most.

“Currently, Swiggy accounts for about 50% of online orders from my kitchen while Zomato
does about 20-25% orders. I think Zomato needs to beef up its logistics part to compete with
Swiggy,” says Mihir Shrivastava who runs Punjabi kitchen in DLF Phase-II, Gurugram.
However, he expects Zomato will gain the lead over Swiggy with its zero commission
model.

Will Runnr acquisition ramp up Zomato’s in-house logistics?

Zomato recently acquired logistics company Runnr. The acquisition was touted as an effort
to improve the delivery aspect of the Info Edge-backed company. However, some believe the
acquisition of Runnr isn’t significant and Zomato will keep relying on third-party logistics
platforms to ensure delivery.

Runnr does about 3,00,000 deliveries a month, which is only 10% of Zomato’s volume. “I
see Runnr’s acquisition as a face-saving gimmick for a particular investor,” adds one of the
co-founders of a defunct hyperlocal logistics startup from Gurugram. He emphasizes that
managing riders and the entire logistics stack is cumbersome and Zomato wouldn’t work to
build that.

Cloud kitchens look like the next frontier of revenue for Zomato and Swiggy. Cloud kitchens
are restaurants without storefronts. And, they are becoming the new customer acquisition
channel for both companies. However, they follow a different model from each other.

Zomato positions its cloud kitchen as a Zomato Infrastructure Service wherein it will
promote third-party brands. Meanwhile, Swiggy has been creating its own brand – ‘The
Bowl Company’.

This looks like a smart move from both companies but they have to do it cautiously without
irking existing restaurant partners.

Swiggy has been promoting its cloud kitchen in Koramangala (Bengaluru) from early this
year. “It’s been doing about 700-800 orders from Koramangala alone,” says one of the
Bengaluru-based food-tech companies working closely with Swiggy.

With cloud kitchen, both companies have started competing with partners such as Fresh
Menu, Box8 and Inner Chef, among others.

Cloud kitchens are a new concept and are in the nascent stage not only in India but globally.
British food delivery unicorn Deliveroo also started ‘Edition’, its cloud kitchen platform,
recently. “It’s very early for the cloud kitchen format but certainly a sweet spot for Swiggy
and Zomato,” says Satish.

Cloud kitchens allow aggregators to earn 15-25% surplus as compared to orders for
restaurant partners.

Is food delivery a take-all game?

According to research firm RedSeer, India’s online food delivery market comprising of
aggregators and cloud kitchens grew at 150% last year, in comparison to 2015, with an
estimated Gross Merchandise Volume (GMV) of $300 million in 2016.
When we compare this with the Chinese food delivery market that largely grew on the back
of smartphone penetration – it’s very minuscule. China has about 256 million people who
order food online. This number is estimated to touch 346 million by next year.

While we can’t ascertain or guesstimate the number of people ordering food online in India,
it should be under 10 million (our guesstimate).

The food delivery market in India has just taken off and there is unprecedented scope for
growth. But, the bigger question is – from where will the growth come?

The answer could probably be tier II and III cities. Of course, non-metro cities will drive the
growth. However, it will take time. Maybe two-three years.

From outside, it looks like the food delivery segment is moving towards saturation in metros
– but that’s not the case.

“Despite an aggressive campaign by food delivery companies to sign-up restaurant partners

and push consumers to order online, many small-scale restaurants tap orders via phone and
consumers place them through this channel. Bringing such partners and consumers online
can offer momentum to Zomato and Swiggy,” points out Alok Jain, co-founder and CEO,
Yumist.

Analysts believe the food delivery space is unlikely to be monopolised by one player. The
market is large enough to accommodate multiple players.

“Currently, startups in this space haven’t captured even 10% of the potential in the food
delivery market,” quips Abhishek Bansal, Co-founder and CEO of Shadowfax.