Swiggy Vs Zomato
Business Today|May 01, 2022
The Foodtech Duo Take Two Different Paths To The Same Destination, But More Often Than Not, Find Themselves Crossing Each Other. And Now, They Are Squaring Off In Realms Beyond Their Comfort Zone Of Food Delivery. What Will It Take To Win?
Binu Paul
Swiggy Vs Zomato

FOR INDIA'S ONLINE food delivery giants Swiggy and Zomato, the Covid-19 lockdowns were the ultimate moment of truth. They presented a growth opportunity like never before. People were locked in their homes for months, discretionary spending on food services was at its highest, existing restaurants flocked to their platforms en masse, and new cloud kitchens mushroomed. Consequently, average order values (AOVs) peaked and order numbers shot up to record levels. Yet, improvement in operating margins remained elusive and the writing on the wall became glaringly clear—there isn't much money to be made on the pure-play food delivery business in India. But why is it so?

In food delivery, profitability means improving AOV and optimising delivery cost. The average order value of $5 for food delivery in India is approximately six times lower than that of peers in the US and Europe, according to a report by global stock investing platform Stockal. Even with one of the highest commission rates in the world that go as high as 30 per cent of the order value, Indian food delivery firms end up losing money on a majority of orders due to high delivery costs and discounts.

The biggest headache: sub-optimal usage of riders. Food delivery is always a two-peak business lunch peak and dinner peak. The low utilisation of riders in the mornings and evenings tear a massive hole through unit-level profitability. Swiggy and Zomato operate a marketplace model involving customers, restaurants, and riders, and it becomes very tough to incentivise all three as they compete against each other. Discounts for customers and restaurants, as well as incentives for riders, lead to massive cash burn.

This story is from the May 01, 2022 edition of Business Today.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

This story is from the May 01, 2022 edition of Business Today.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

MORE STORIES FROM BUSINESS TODAYView All
"Focus on the challenge of each customer"
Business Today India

"Focus on the challenge of each customer"

SHASHANK KUMAR MD & CO-FOUNDER I RAZORPAY Razorpay is India's first full-stack financial solutions company

time-read
1 min  |
December 08, 2024
PEDAL ON THE FUTURE
Business Today India

PEDAL ON THE FUTURE

THE MG WINDSOR EV, WITH ITS FUTURISTIC AND MINIMALIST DESIGN, COMBINES THE BEST OF BOTH WORLDS-COMFORT AND TECHNOLOGY

time-read
1 min  |
December 08, 2024
BREATHE EASY
Business Today India

BREATHE EASY

Whether you're battling allergies, looking to remove pollutants, or simply want to breathe easier, the right air purifier can make a difference

time-read
2 mins  |
December 08, 2024
The Taste of India in a Glass
Business Today India

The Taste of India in a Glass

FROM ROYAL LIQUEURS TO DISTILLED MAHUA, INDIAN HERITAGE ALCOHOLIC BEVERAGES ARE HAVING THEIR DAY IN THE SUN

time-read
4 mins  |
December 08, 2024
LOOK BEFORE YOU LEAP
Business Today India

LOOK BEFORE YOU LEAP

IN 2025, INVESTORS WILL NEED TO FACTOR IN VOLATILITY ACROSS ASSET CLASSES

time-read
5 mins  |
December 08, 2024
MISSING ADVISORS
Business Today India

MISSING ADVISORS

INDIA HAS JUST ONE INVESTMENT ADVISOR FOR NEARLY EVERY 200,000 INVESTORS. AT A TIME WHEN RETAIL PARTICIPATION IN THE STOCK MARKETS IS BOOMING, THIS ASSUMES SIGNIFICANCE

time-read
7 mins  |
December 08, 2024
TURNING A CORNER
Business Today India

TURNING A CORNER

SHARED ELECTRIC MOBILITY START-UP YULU'S SHIFT TO SERVICING THE QUICK COMMERCE SECTOR IS HELPING IT GROW FAST. IT IS NOW FOCUSSING ON IMPROVING ROAD SAFETY FEATURES AS IT TURNS EBITDA POSITIVE

time-read
5 mins  |
December 08, 2024
REALITY CHECK
Business Today India

REALITY CHECK

INDIAN STOCK MARKETS PLUNGED BEGINNING OCTOBER FOR A HOST OF REASONS, INCLUDING A FALL IN FII OWNERSHIP. HOW DEEP WILL THE CORRECTION BE?

time-read
6 mins  |
December 08, 2024
TRUMP'S TRADE TANGO
Business Today India

TRUMP'S TRADE TANGO

The return of Donald Trump as the 47th President of the US has put the global economy on edge. India, too, is unlikely to remain unaffected. How will policymakers meet this latest challenge?

time-read
9 mins  |
December 08, 2024
"The essence of the Trump administration will be transactional”
Business Today India

"The essence of the Trump administration will be transactional”

Global investor, analyst, and best-selling author Ruchir Sharma decodes why Donald Trump won the elections, what India should do, the risks, and more

time-read
10 mins  |
December 08, 2024