Swiggy Vs Zomato: Business Model, Marketing Strategies, Strengths, and Financials Compared

Craving a delicious meal but stuck in the office? The answer to this hunger is just a few taps away, thanks to food delivery giants Zomato and Swiggy. But with both eyeing for your hunger pangs, choosing between the two can be a challenge.

This blog will explore the ‘bitter-and-sweet’ battle between Swiggy and Zomato, their strengths, unique features, financial comparison, and company overview.

Overview

Swiggy

Swiggy is an Indian online food ordering and delivery company. In 2010, Sriharsha Majety and Nandan Reddy founded Bundl, an e-commerce website for courier services within India, but it failed. Majety and Reddy then teamed up with Rahul Jaimini and launched Swiggy, a company focusing on online food delivery. 

Back then, several startups struggled in the food delivery market in India. In 2015, Swiggy started operations in Bengaluru and quickly gained traction. They secured their first round of funding in May 2015 and launched their app around this time. It currently operates in over 500 Indian cities and provides on-demand grocery deliveries under the name Instamart and a same-day package delivery service called Swiggy Genie.

Zomato

Similar to Swiggy, Zomato is an Indian food delivery company and restaurant aggregator. It offers food delivery options from partner restaurants in over 1,000 Indian cities and towns. Zomato was founded in 2008 by Deepinder Goyal and Pankaj Chaddah and was originally known as “Foodiebay.” It has now grown to employ more than 1,000 people and has a presence in 19 countries. It has become India’s first food-tech unicorn and the first food-tech brand to go public.

Business Model

Swiggy

Swiggy’s business model is based on hyper-local, on-demand food delivery and operates on the following models,

1. Dual Partnership Model

Swiggy works with restaurant partners, who prepare the food for customers, and with delivery partners, who pick up restaurant orders and deliver them to customers.

2. Commission

Swiggy charges a 15-25% commission on the total order bill. The commission depends on the number of orders and the restaurant’s location, among other factors. Depending on distance and order value, customers are charged a delivery fee on top of the restaurant bill.

Zomato

Zomato, on the contrary, has two core B2C (Business-to-customer) offerings, food delivery and dining out, along with the business-to-business (B2B) offering, Hyperpure, which connects restaurants in India directly with fresh produce sourced from local farms to ensure the highest quality ingredients.

Other parts of the business include Zomato Pro, a customer loyalty program that includes both food delivery and dining out.

The company generates most of its revenue from food delivery and the related commissions from restaurant partners for using the platform. Restaurant partners also spend on advertisements on the platform.

The food delivery business thrives on a three-way partnership.

1. Customers – who conveniently order meals from their favourite restaurants.
2. Delivery Partners – who ensure that the food gets delivered promptly and safely to the customers.
3. Restaurant Partners – who offer their menus on the platform while trying to reach a wider audience and increase sales.

Furthermore, the restaurant receives the total order value and packaging charges after deducting the commission and discounts it offers. The delivery partner receives 100% of tips and delivery fees from customers, and the company also provides them with an additional incentive payment.

From browsing menus and reading reviews to booking a table and paying the bill, Zomato streamlines your entire dining-out experience.

Marketing Strategy

Swiggy

Swiggy cleverly targets the young and tech-savvy demographic in India, typically aged 18-35. These individuals use smartphones extensively and rely on online platforms for convenience. This includes students, working professionals, and families who might want to skip cooking for multiple reasons.

The company tries to reach its target audience through social media platforms like Instagram. It uses these platforms to share mouthwatering food pictures, create interactive content and giveaways to boost engagement, and partner with social media influencers. 

Zomato

Zomato focuses on paid marketing to keep the platform buzzing. The company collaborates with restaurant partners to create engaging campaigns across online and offline channels, including search engines, social media, TV & Radio ads, and eye-catching outdoor displays. This comprehensive approach attracts new customers and keeps the existing ones happy and satisfied. Zomato is also known for its engaging and witty social media presence.

Strengths

Swiggy

Swiggy boasts a larger delivery fleet, resulting in faster deliveries. They have a wider reach in tier-2 and tier-3 cities, focusing on its core food delivery service and integrating other services like grocery delivery within the same app.

Swiggy has recently ventured into the instant delivery business with its brand, Swiggy Instamart. This is an in-grown brand, and thus, it has a smaller network than Zomato’s Blinkit. 

Zomato

Zomato offers a more comprehensive user experience, including user reviews and ratings that can help you decide where to order from. They also have a wider selection of restaurants as partners. Zomato goes beyond just food delivery with its recent acquisition of Blinkit, an instant delivery app. 

Financial Highlights

Balance Sheet and Income Statement

Even though revenue from operations increased, both companies are currently unprofitable, with losses widening. However, Zomato’s losses have decreased compared to previous years, with a loss of 971 crores in 2023, and the company seems to be on track to profitability. 

Cash Flow Statement

The graph reveals the cash-burning phase of the two businesses. While both companies burn cash heavily, Swiggy is in a much better position than Zomato due to its better cash flow from the operations state. 

Conclusion

Swiggy excels in core delivery services with a user-friendly app and a focus on speed. They’ve expanded into related areas for additional revenue streams. Zomato takes a multi-faceted approach, offering features like restaurant discovery and instant delivery, aiming to be a one-stop shop for all your dining needs. Both Swiggy and Zomato constantly adopt new strategies to stay ahead in the competitive Indian food delivery market. Ultimately, both Swiggy and Zomato offer excellent services, and their constant innovation ensures a dynamic and competitive food delivery landscape in India.

Frequently Asked Questions (FAQs)

1. Which delivery company offers the fastest food delivery?

Ans. Both Swiggy and Zomato offer standard delivery times. However, Swiggy boasts that it delivers within 30 minutes of placing an order.

2. Does Zomato and Swiggy offer other services besides food delivery?

Ans. Both Swiggy and Zomato offer instant grocery delivery via their platforms, Instamart and Blinkit.

3. Which delivery company should I choose?

Ans. It completely depends on your priorities. Before deciding, consider factors like delivery speed, restaurant selection, ongoing deals, and other features.

4. Which delivery company holds the larger market share?

Ans. Zomato currently holds the larger market share.

5. Are Swiggy and Zomato listed companies?

Ans. While Swiggy is not listed, Zomato is.

Disclaimer: The securities, funds, and strategies mentioned in this blog are purely for informational purposes and are not recommendations.