Swiggy Case Study – Why Companies Are Becoming Hyperlocal?

Description: Swiggy is an example of how a hyperlocal approach can be beneficial. We take Swiggy as a case study to discuss a larger push by startups to become hyperlocal.

Swiggy Case Study

In 1987, VSS Mani worked for a yellow pages company called United Database India. He had decided against giving his CA exams as he had to support his family through a tough time. Working at the company at the time, when computers were still a rare sight and the internet seemed a pipe dream, Mani had a revelation.

The yellow pages were successful because people always wound up having the need to call someone close to them. Mani knew the same when he worked at UDI. People always had the need to contact and do business with people and businesses near them. To make the process easier, he founded Just Dial in 1996. People could dial a number, query about what they were looking for, and get results.

In 1996, this was a revolutionary step towards starting a business that could serve customers looking for local solutions across the country.

Just Dial may not be the biggest Indian startup one thinks about in 2019. Nevertheless, Mani’s vision of providing hyperlocal solutions to basic problems has been at the forefront of the success of Indian startups like Ola, Flipkart, Zomato, and Swiggy.

Swiggy, like Just Dial, offers its customers a hyperlocal solution. Other Indian startups with the same measure of success have also worked because they solved an immediate impactful problem of a local audience.

In this case study, we discuss the rise of Swiggy and why focusing on hyperlocal solutions has become a priority for new startups.

Swiggy – An Introduction

Everyone knows about Swiggy. It’s a service serving different segments of the market. On one end, it is helping restaurants generate leads and streamline their food delivery service. On the other end, it is providing customers a one-stop solution to ordering food from a restaurant in their vicinity.

In other words, Swiggy is a facilitator between restaurants and customers. It’s is not the only one in the market either. Other companies such as Zomato, FoodPanda, and Uber Eats are also in the mix to gain bragging rights over the Indian food delivery market estimated at $15B back in 2017.

Its founders are Nandan Reddy, Sriharsha Majety, and Rahul Jaimini. All three are alumni of some of India’s top engineering colleges, namely IIT Kharagpur and BITS Pilani.

The company was founded in August 2014. Before its launch, Nandan and Sriharsha had been working on another startup of their own called Bundl. The startup’s speciality was providing small businesses the chance to connect with courier services. It was during this time that the idea of an online restaurant aggregator serving customers across India caught their eye.

Swiggy – Business Model

Swiggy’s business model is very simple. They understand the power of a hyperlocal service delivered effectively through a well-oiled machine. The chart below can be viewed as the core of how Swiggy works.

Order Dispatch

Discover and Place Order

Delivery

The process starts with a customer discovering a restaurant on the mobile app or website and placing an order after weighing his or her options. The restaurant accepts the order, prepares it, and waits for the delivery executive to arrive. The delivery executive, arranged by Swiggy, arrives at the restaurant, picks up the order, and delivers it to the address given earlier by the customer.

The entire process, simple as it is, is streamlined by cutting edge technology driving positive user experience. One thing Swiggy learned from the unorganized food delivery industry that existed earlier was the question of time. Independent restaurants took a lot of time to deliver orders as there was not a structure guiding each process. This is why Swiggy’s dual approach of targeting both customers and restaurants paid rich dividends.

Swiggy – The Numbers

Being such a bankable name in the industry, Swiggy has not been short on investors. It raised a whopping $1B in its last funding round. A summary of its funding has been given in the table below –

Time	Money Raised	Investors
April 2015	$2M	AccelSAIF Partners
June 2015	$16.5M	AccelNorwest Venture PartnersSAIF Partners
Jan 2016	$35M	AccelNorwest Venture PartnersSAIF PartnersHarmony PartnersRB Investments
May 2016	$7M	AccelNorwest Venture Partners
September 2016	$15M	AccelNorwest Venture PartnersSAIF PartnersBessemer Venture Partners
Jan 2017	$5M	Innoven Capital
May 2017	$80M	AccelNorwest Venture PartnersSAIF PartnersBessemer Venture PartnersProsus & NaspersHarmony Partners
February 2018	$100M	Prosus & NaspersMeituan-Dianping
June 2018	$210M	Prosus & NaspersMeituan-DianpingDST GlobalCoatue Management
December 2018	$1B	Prosus & NaspersMeituan-DianpingDST GlobalCoatue ManagementWellington ManagementTencent HoldingHillhouse Capital Group

Swiggy – Competitors

The factor that sets the food delivery industry of India apart from the taxi industry is the level of competition. In the latter, Ola and Uber have cornered most of the market leaving little space for another competitor to arrive.

The food industry though is a battle with multiple players. By December 2018, Swiggy had reportedly captured nearly half of the food delivery market. Zomato, second at 26%, has not been able to keep up with Swiggy. Zomato, however, operates on a much more diversified business model, gaining a lot of success through its Gold membership programme working well with diners. Furthermore, Zomato is a more relatable brand when it comes to the food business due to its aggregation of menus and ratings. It also operates in multiple countries, something Swiggy hasn’t done yet.

While Swiggy and Zomato dominate the industry, this hasn’t deterred other players from entering the fray.

Food Panda, one of the older players in the food delivery business, retains a key part of the industry. However, it has lost pace and seen much of its market share eroded. Its strategy to use discounts as a means to retain customers ultimately proved dangerous. Currently owned by Ola, FoodPanda is focusing on developing independent cloud kitchens to revive its growth cycle.

FoodPanda’s fall has been Uber Eats’ gained. After years of competing with Ola, Uber decided to diversify its position in the Indian market with Uber Eats. The recent fall in FoodPanda’s market share has been down to the rising popularity of Uber Eats.

These four players are not alone in the market. New companies such as Cure Fit and Faaso’s have also managed to gain a foothold.

While Swiggy leads the pack, the threat of Zomato and new innovative players entering the field will continue to pose a significant challenge.

Swiggy – SWOT Analysis

Swiggy is in a good position for now. It has a lot of cash to burn and some of the biggest names in investor circles backing its name.

Despite all these advantages, there is still relative uncertainty regarding its future. Business ultimately becomes a sport, and all sports fans know the uncertainty attached to any sport in general. With a SWOT analysis, we take a deeper look at the position of Swiggy it the market.

Strengths	Weaknesses	Opportunities	Threats
Leader in the food delivery industry	Part of an industry known for having fickle customers   Customers slowly becoming addicted to high discounts. Cashback and discount strategy unsustainable in the long run	Can expand to foreign markets	Many competitors in the field such as Zomato, Uber Eats, and Food Panda
Impressive returns from multiple funding rounds	Independent cloud kitchens present unique opportunity to maximize growth	Government regulation in the sector may disrupt operations
Favourable impression amongst customers	Yet to put its immense cash reserve to use	Fear of restaurants opting out due to introduction of cloud kitchens and frustration with excessive discounts
Large network of delivery partners across India	Brand image always in precarious position as even small customer complaints have potential of becoming viral social media campaigns harming image of brand	Make Swiggy Super has impactful as Zomato Gold	Dealing with discount-addicted customers
Great eye for running viral marketing campaigns and awareness programs	Branching into smaller niches such as healthy food, cuisine-based offering, and catering.	Having a narrow business model in comparison to Zomato

In Conclusion

In conclusion, this case study covers the bare bones of how Swiggy works, its funding history, its competitors, and position in the market. For Swiggy to grow, it will have to confront its weaknesses head-on while taking lucrative opportunities which may present themselves in the future.

There is also the question of negating the many threats Swiggy has to deal with. Competition, government regulation, and fickle customers are a trifecta of doom for Swiggy, one it will have to face in the near future.

About the Author – Gaurav Heera is a digital marketing trainer and entrepreneur. He founded DelhiCourses.in in 2008 with the vision to offer students, professionals, and entrepreneurs the chance to learn digital marketing at an affordable price. He is also well-known in the digital marketing industry, having worked with some of the biggest names in the industry. DelhiCourses is a top digital marketing institute best-known amongst students looking for a digital marketing course in Delhi.