There’s really no other way to say it. Swiggy is taking the food-tech war to the next level. The company is shifting its strategy. From operational fine-tuning, reactive responses and focused execution to an ambitious, risk-taking, possibly market-disrupting approach.
Looking beyond the food delivery market, Swiggy is gearing up to launch a more general delivery play across three categories—grocery, alcohol, and medicines. This is the story of Swiggy’s transformation, but it’s not a story that begins here and now. Its first chapters were written over a year and a half ago.
Growth of the food-tech market
By the beginning of 2017, the food-tech market had consolidated. Two players remained— Swiggy and Zomato; locked in a battle for control of the food-tech space. It looked like battle lines were drawn. Swiggy was becoming the destination for food delivery. Zomato was the preferred option for food and restaurant discovery. It looked like the market would be split down the middle between them, and everyone would go home happy.
Then Zomato Infrastructure Services happened.
In February 2017, Zomato launched Zomato Infrastructure Services (ZIS)—their cloud-kitchen service to help restaurants. Nine months later, Swiggy responded. In November, Swiggy launched Swiggy Access. Access lets restaurants lease out kitchen space in Swiggy-owned cloud kitchens. Swiggy took it one step forward though. Access also housed two of the company’s private labels—The Bowl Company and Homely. By owning inventory and the end product, Swiggy reasoned that it could improve profitability. It was a good plan—one that could give it a leg up.
Then Zomato launched a subscription service—Zomato Gold.
The reception to Zomato Gold was like a bomb going off. Less than three months after its launch in early 2018, it had racked up over 150,000 subscribers and partnered with 2000-plus restaurants. Nobody had expected a subscription service to get such a massive reception. Once again, Swiggy had to respond. They took their time, but finally, two weeks ago, they bit the bullet by launching their own version of a subscription service. Called Swiggy Super, it offers free delivery on all orders and no surge charges.
By all accounts, Swiggy is tired of responding. It now intends to define the food-delivery war on its own terms.
Expanding the services
The four-year-old startup has realized that food delivery alone won’t help grow its user base. Which is where its new general delivery offering comes in. It is Swiggy’s attempt to go from being a habit to a lifestyle. Swiggy’s ambition is to make its app a habit-forming destination for users. Food-ordering, after all, happens only once or twice a day. At best. Swiggy sees general delivery as a way of increasing usage. In short, Swiggy is trying to get you addicted to itself.
This isn’t a half-measure. Swiggy is also trying to figure out how to make the addiction profitable for itself. The first bit might be easy. The second isn’t. Indeed, the move comes fraught with risk. Swiggy’s logistics operations—which it has built from the ground up—will help the company in its quest to diversify its use cases.
But the grocery delivery space is littered with stories of companies that have tried and failed. The ones that have survived in the grocery space, such as BigBasket and Grofers, haven’t found the going easy either. In both cases, they had to drastically revamp their business models to survive in the space.
So why, despite all these cautionary tales, is Swiggy forging ahead with these plans? What does it hope to achieve? Will its core competency of food delivery translate easily into these new spaces? And what must it do to succeed? Many questions, some easier to answer than others. Both for onlookers as well as Swiggy.