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How Swiggy Makes Money?

IndianMoney.com Research Team | Posted On Friday, July 26,2019, 03:23 PM

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How Swiggy Makes Money?

 

 

What is Swiggy?

Swiggy is an online food delivery platform. Swiggy has changed the way; food is ordered and delivered in India. In the past, restaurants had low reach and stuck to their area. Customers had to visit these restaurants to avail services and enjoy the gourmet dishes.

With food delivery platforms like Swiggy, restaurants can increase the reach and offer services without the hassles of delivering food. Swiggy helps restaurants get online orders and deliver food, right at the customer’s location.

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How Swiggy Makes Money?

How Swiggy Works?

Swiggy offers its services through an online application which enlists registered restaurants in the neighbourhood and partner restaurants, allowing the customer order from a wide menu and variety of foods.

Swiggy owns a large fleet of delivery vehicles and personnel who help restaurants connect with customers. They collect the food which you have ordered and deliver it to the customer’s doorstep. There are several payment options like credit/debit card payment, mobile wallet payment or cash on delivery.

To order food on Swiggy, the customer has to download the Swiggy app on the Smartphone. Once you register on the app, open the application and you will find an extensive list of restaurants to choose from. Once the food is ordered from the selected restaurant, the restaurant sends a confirmation from the Swiggy app. Once the order is confirmed, the restaurant notes down the delivery address and starts preparing the order.

On confirmation of the order, a signal is sent to all the delivery personnel in the vicinity. Any delivery man can choose to deliver the food order, by accepting the request. Once the delivery man accepts the delivery, his name is slotted on the app. The customer can track the food delivery real-time, using the app.

Business and Revenue Model of Swiggy:

Swiggy works as an online aggregator. It does not own any restaurant, but has tie-ups and earns by charging a commission from these restaurants based on the amount, ordered. Listed below are some of the ways, Swiggy makes money.

Commissions:

Swiggy earns commission from the food delivery business, as its main source of revenue. It typically charges 15-20% commission on the total bill. The commission charges are inclusive of the GST and depend on other factors like the city, locality, value of the order and the popularity of the restaurant. Swiggy is trying to capture market share and is busy on- boarding restaurants. It offers certain benefits to restaurants like greater visibility, lower commission on the total bill and so on.

Earning Through Own Restaurants:

To increase the share of profits, Swiggy has opened its own restaurants. This helps increase the overall profit margin. In this way, they can ensure efficient delivery of food and better services to customers.

Swiggy Access:

Swiggy access helps restaurants set up delivery kitchens. This is a paid service and the purpose of doing this is to meet the demands of the customers in localities where demand is high. This helps expand their business and get more customers. This also reduces the time taken for delivery.

Earning Through Advertisements:

A major portion of Swiggy revenue comes from advertising restaurants on the app. Restaurants enjoy better visibility and make the payment.

Swiggy Membership Program:

The Swiggy membership program is known as ‘Swiggy Super’ and provides customers with unlimited free delivery over a base amount. The tenure of membership varies from 1 month to 3 months and so do the charges. People, who order food regularly like students and working professionals, can easily enrol and save a significant amount.

Sources of Expenditure for Swiggy:

Apart from earning revenue based on the above business model, there are certain expenses that Swiggy has to incur to operate the business smoothly.

  • Web development and application development charges.
  • Maintenance charges for application and the website.
  • Administrative charges.
  • Salaries for full-time employees.
  • Cost of benefits and rewards given to customers.
  • Returns and cash refunds.
  • Incentives to delivery partners.

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