There are some similarities in the approach the companies have adopted, and one of them relates to the customer loyalty or membership programme.

How Swiggy and Zomato are trying to expand beyond food delivery
Atom Food Friday, January 04, 2019 - 19:24

Food order and delivery startups Swiggy and Zomato have come a long way from where they started. But the road to achieving complete success is still some distance away. They are yet to reach the breakeven point and spending heavily month on month. But it must be conceded that the startups are trying many things to stay relevant, expand the business and even to diversify. Here’s an update on where the two companies currently stand.

There are some similarities in the approach the companies have adopted. One of them relates to the customer loyalty or membership programme. Swiggy has its Swiggy Super, while Zomato has Gold. With the Gold membership, Zomato customers can enjoy dine-in facilities in select restaurants as well. There are other similar add-ons to their offerings which assure priority deliveries, free delivery and free desserts and so on. Swiggy plans to diversify into delivery of medicines and grocery going ahead.

Zomato has a B2B arm that consolidates the requirements of restaurants and helps with the supplies.

One major challenge for both Swiggy and Zomato, having stacked up the numbers, in terms of customers and orders per day, has been the sourcing of the food. There were even issues of quality and the country’s regulator, Food Safety and Standards Authority of India (FSSAI) had to step in following complaints. FSSAI withdrew the food licences issued to some of the restaurants on the online food delivery platforms after physically inspecting their kitchens.

Cloud kitchens looked like a very good option and both Swiggy and Zomato have made their own arrangements for this. Swiggy has Access and Zomato acquired Loyalty Hospitality. Still, Access is reportedly fulfilling just 15% of the orders that Swiggy executes.

Corporate catering is another field both are assiduously wooing. Swiggy Café and Swiggy Food Court are to be seen in this light. These are yet to take off in the real sense and can only be described as testing the waters. But there is scope seen in the segment and if they succeed, it can be a win-win situation for the startups and for employees of large corporate houses like IT companies that employ in the thousands in one complex.

Zomato has also acquired Bengaluru-based TongueStun, which aggregates caterers for office canteens. In terms of their geographical spread, Zomato has ventured beyond the Indian shores and has its presence in five countries and claims a customer base of 600,000. Its customer royalty programme Piggybank gives 10% back to the customers on their orders as cashback.

On the actual numbers, Swiggy is being rated as the market leader with around 28 million orders a month, while the orders executed by Zomato in India may be in the region of 21 million.

Based on the financial reports the companies have filed with the authorities, both are advancing steadily in terms of turnover and have been good at cutting down on the losses. But, profitability seems to be eluding them.

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