How Zomato and Swiggy are attempting to diversify beyond food delivery

A few years back, investors had written off the so-called food-tech industry in India as a number of startups shut shop. But things have changed perceptibly in the past year or so, as two of the major players Swiggy and Zomato started racking up millions of dollars in funds.

While both have cornered a big chunk of the online food ordering market, new entrants like UberEats and Ola-acquired Foodpanda have also been pushing the pedal.

We take a look at how Swiggy and Zomato stack up on various parameters as they try to diversify beyond food- delivery.

New Bets

Swiggy introduced a membership programme Super, Takeaway, an express delivery offering and is experimenting with Swiggy Dash as a delivery platform for grocery and medicines.

Zomato launched Gold, a dine-in subscription platform, Piggybank, a rewards programme, Hyperpure, its B2B play for restaurants, among many other offerings as it goes beyond delivering food.

Read: Zomato, Swiggy & others eating into our business: Restaurants

Increasing Supply

Diversification into cloud kitchens was one of the early initiatives by both the companies. While Swiggy started with Access, Zomato pushed its strategy through Bangalore-based Loyalty Hospitality which it acquired.

Rohan Aggarwal, an analyst at Redseer consultancy, explained, “Supply constraints will be an impending problem that the industry is going to face seeing the growth. These programmes are nascent but we can expect it to turn out to be one of the most significant initiatives.”

For Swiggy, its cloud kitchen operations under Access and its private brands under The Bowl Company and Homely, together form under 15% of the overall order volume, in the areas it is available right now.

Swiggy Pop is another offering which allows customers to order without any delivery fee. ET had earlier also reported that Swiggy is testing waters in the fast-growing corporate catering market. The Bengaluru-based startup has begun piloting a business-to-business food-aggregation offering called Swiggy Café or Swiggy Food Court that digitises corporate cafeterias. Swiggy Café or Food Court, which is not being monetised currently, handles a few hundred orders every day.

Zomato also acquired Bengaluru-based TongueStun, which aggregates caterers and restaurants for office canteens. TongueStun clocks over 150,000 orders daily.


Betting Big On Loyalty Programmes

Both their loyalty programmes are currently 6-8 months old. There’s Swiggy’s Super which gives users free deliveries and no surge pricing on becoming a member while Zomato has its flagship Gold programme and Piggybank which is invite-based, it’s latest offering.

Zomato Gold has a presence in five countries and 26 cities. In India, it claims to have a subscription base of 6,00,000 customers and over 4,000 restaurant partners. Piggybank, a rewards point-based loyalty programme lets customers who place at least five orders per month to earn back 10% on each meal. It had earlier experimented with Zomato Treat where customers can avail free desserts on every meal as part of the subscription.

Unlike multiple subscription options, Swiggy has concentrated its bets on Super. It recently started a Zomato Treat like programme Super Delight that gives free dessert or beverages when a Super member orders. Swiggy Super is priced at Rs 49 a month or Rs 149 for a quarter.

Zomato has also rolled out self pick up, which lets the customers place orders with the restaurant which can be picked up by the user. Besides, Zomato is now letting customers view restaurants through videos on its Sneakpeek section

Market share & Financials

Swiggy was clocking around 25-28 million orders per month in December and industry estimates peg its gross merchandise value run rate at over $1 billion. At the moment, Swiggy tops the market, say analysts although Zomato claimed leadership in October with 21 million orders a month. Industry sources estimate that both companies are losing $30-40 million each monthly.

Zomato ended FY18 with a 40% growth in revenues at Rs 466 crore. The firm also cut its corners squeezing losses by almost 73% to come in at Rs 106 crore in FY18 as compared to Rs 390 crore in FY17, according to financial documents filed with the Registrar of companies. Swiggy registered a 232% surge in revenue in FY18 at Rs 442 crore, with losses of Rs 397 crore.