Professional Documents
Culture Documents
In this project we will do comparative analysis between Zomato and Swiggy based on –
We will conclude the project by giving suggestion on improvement in strategies for higher
productivity, lower labor turnover and absenteeism.
Introduction
With Swiggy’s recent $1.25 billion dollar raise from SoftBank, Zomato’s acquisition of Uber
eats last March for $206 million, Amazon’s forage into the food delivery sector, plus the recent
IPO of Zomato, India’s online food delivery market is surely heating up and garnering a lot of
worldwide attention and heavy investments.
One factor propelling the accelerated growth of India’s online food delivery market for sure are
the changing lifestyle and eating habits of its local population. Hectic schedules compounded
with growing disposable income levels in India are pushing people towards ready-to-eat food
at a cheaper rate.
Zomato is a restaurant search, discovery & delivery service which was founded in 2008 by
DEEPINDER GOYAL & PANKAJ CHADDAH. It operates in over 23 countries includes India,
Australia and United States. It features restaurant information which gives the customer information
about best dining places, their menus and photos uploaded by local street teams as well as users
reviews and ratings.
The company also provides a variety of services like online ordering, table reservations and so on. It
collects all the required information from every restaurant on a regular basis to ensure their data is
fresh. They have a vast community of food lovers and bloggers who share their own photos and
reviews so that customers have all that they need to make their preferred choice.
Zomato is a growth-oriented company focused on increasing its presence further into every part of
the country. FY21 revenues fell by 24% to ₹1,993 crores, the number of orders declined by 41% to
239 mn, but order value increased by 43% YoY to almost ₹400
Investment Rationale
Strong network effects driven by unique content, transaction flywheels
The end-to-end food services approach makes Zomato the most unique food services platform
globally combining the offerings of platforms such as Yelp (lets user post reviews and rate
business), DoorDash (online platform for food order and delivery) and OpenTable (restaurants
table reservation) in a single mobile app. They collect and curate all structured content using
a feet-on-street approach, aided by in-house developed technology, which helps them do this in
a cost-effective manner. During FY21, 68% of new customers were acquired organically and not
by paid advertisements.
In this competitive market, Zomato has consistently gained market share over the last four years
to become the category leader in the food delivery space in India in terms of gross order value
(GOV).
Management Team
Gunjan Patidar was the third person to join Zomato and is currently the
Chief Technology Officer. He is monkish by nature and makes sure
everything works fine on the tech end.
• Clean User Experience: Zomato has regularly won awards for its app design and usability.
The design of the app is fantastic and it helps you discover restaurants nearby and, in the
area, you want to visit.
• Expansion: when you consider that the app has established itself in 24 countries, it’s a good
expansion. But at the same time, the app was launched 7 years ago, and with the resources
available to Zomato, expansion can happen much faster.
O Stands For Opportunities (External Factor)
• Advancements In AI: Zomato is an online food platform. The company should invest more
resources in artificial intelligence and automated technology.
• Cloud Kitchen: Zomato is launching the concept of cloud kitchen, where restaurants do not
need a physical space to sell their food. Instead, they will sell through Zomato and other
delivery apps.
• Google: One of the biggest threats to Zomato is Google’s Schema module, in which Google locations
themselves are included in restaurant recommendations
• Government Regulations: Govt Regulations Like GST imposition and other types of rules
and regulations may affect its business.
• Competitors can easily copy their business model.
Competition
According to the RedSeer, in India, Zomato competes with other food delivery companies, such as
Swiggy, chain restaurants that have their own online ordering platforms, such as Pizza Hut, McDonalds
and Dominos, cloud kitchens like Rebel Foods, other restaurants that own and operate their own delivery
fleets and companies that provide point of sale solutions and restaurant delivery services.
August 2014, Swiggy started activities by joining a couple of eateries in the city Koramangala in
Bengaluru. Following that, they started conveying food to their clients in just 40 minutes.
Soon after this, in May 2015, Swiggy raised its initial round of financing and came up with the
application. Through this innovative app, one can get incredible food right to their doorstep and
evolve their living standard.
It also tops the chart of India Unicorn startup lists. It’s a Bangalore based startup started in 2014, and
as of now, it’s expanded to more than 100 Indian cities. Swiggy propelled quick pick and drop food
delivery applications to make the life of people simpler. It gives a single window to request from an
extensive variety of restaurants along with an entire food entering and conveyance arrangement that
connects neighborhood eateries with foodies.
Swiggy’s revenue from food delivery grew by 2.4x factor year on year in the April-September period,
and up 91% from pre-Covid-19 levels (May 2020). This was driven by higher demand during the
second Covid-19 wave in India and expansion of Supra Daily and Instamart in the groceries
business
Swiggy Business Model: How Swiggy earns?
Swiggy is growing its business at a rapid scale and the revenue generation model of the
company is simultaneously expanding.
Delivery Charges: The main sort of income stream Swiggy acquired is from its customers.
Commissions: Swiggy acquires another major part of the revenue stream from commissions
Swiggy Access: The start-up has come up with the most innovative idea i.e. cloud kitchen idea.
It gives its restaurant partners a ready-to-use kitchen area in those zones where they don’t
work.
Management Team
Swiggy came into existence in the year 2014 when two BITS Pilani graduates, Sriharsha Majety
and Nandan Reddy came up with the concept ‘Hyper local food delivery’. They get acquainted
with Rahul Jaimini, who rejuvenated this vision with a principle site.
SWOT Analysis
Strengths — The Swiggy brand has grown to be a good and respected brand in the eight cities it
currently serves. It is associated with quick delivery, a wide range of restaurants, and well-trained
delivery executives.
Weaknesses — The company’s main weakness is the delivery charge for all orders below Rs 250
while some of their main competitors like Zomato have free delivery on all orders.
Opportunities — The food delivery market is a relatively new market in India which lacks a leader. It
is a fast-growing market which Swiggy — with the right marketing strategy — can do well to win and
become its leader.
Threats — The irregularities and constant change in Indian laws and government regulations
present a threat to startup companies like Swiggy. Another cause for concern is the growing health
consciousness in India which poses a threat to all food delivery and serving companies if they fail to
meet or maintain improved health standards.
Comparative Analysis of Zomato and Swiggy
• In terms of revenue, Swiggy has continued its strong growth momentum, whereby, it has
grown by more than 100% YoY since 2018. In FY19, its revenue had grown 176% YoY to
reach INR 1,292 Cr. The company’s net loss grew 490% to INR 2,346 Cr in 2019.
• Major growth drivers for Swigy were the service fee collected from restaurant partners, growth
of sales from private labels, advertisement income and income from delivery services.
• As for Zomato, ad sales, online ordering and Zomato Gold (now called Zomato Pro) business
segments were the major sources of revenue for the company.
• Swiggy’s income from providing delivery services nearly tripled YoY to INR 545.7 Cr, while
that for Zomato increased by 1,167%, from INR 16.28 Cr in FY19 to INR 206.3 Cr in FY20.
✓ Employee Benefit Expense Comparison
For Swiggy, the biggest contributors to the expense sheet were costs related to the operation of
private label brands and payments made to delivery workers, together making up 42.5% of the
company’s total expenditure. Employee benefit expenses also more than doubled while advertising
and promotional expenses increased 13.5%,
For Zomato, employee benefit expenses and finance costs both increased by 33% each, to INR 621
Cr and INR 77 Cr respectively, while other expenses, which includes the company’s spending on
rent, fuel, conveyance, bad debts, legal, advertising and promotional and other miscellaneous
expenses, increased by 36% to INR 3,856 Cr in FY20.
✓ Which App is More Popular?
When it comes to app popularity, we noticed that pre-covid lockdowns, Zomato dominated the
market with over 70% of users in the online food delivery market. Swiggy on the other hand,
had a combined market share of less than 30%. There seems to be little overlap in the user base
amongst the players.
Come post-covid lockdown though, Swiggy seems to have emerged stronger with roughly the
same market share as its rival Zomato (this is even when Zomato has acquired UberEats!). In
1Q21, Swiggy and Zomato shared roughly ~13% of the same user base.
So why and how did Swiggy suddenly emerge so victoriously right after the lockdown?
- As per our analysis we believe this has to do with Swiggy lowering its delivery fee more
aggressively than Zomato.
✓ Comparison on How well the packaging of food delivered
ZOMATO
This pie chart shows that the packaging of food delivered by Zomato is Satisfactory (60%). whereas 18% of
respondents claims that food delivered is very well packed.
SWIGGY
This pie chart shows that the packaging of food delivered by Swiggy is Satisfactory (58%). whereas 34 % of
respondents claims that food delivered is very well packed.
✓ Comparison on who provide better customer service
This bar graph shows that Zomato gives better customer service (60%) rather than Swiggy who gives 40% customer
service. The best consumer service provider will always lead the market
STRATEGIES FOR HIGHER PRODUCTIVITY AND LOWER LABOUR TURNOVER AND
ABSENTEESIM
1. Higher Productivity
From the following comparative analysis we have inferred that Zomato and Swiggy both have
performed well
in the financial year 2020. Swiggy having the edge over Zomato after the lockdown high productivity
depends on various factors:
• Man Power: Selection i.e. selection of right man for a specific job Applying well known saying
division of labour.
• Equipment and Machines: The number of machine tools, their capacity and accessories
required, replacement policy of the organization and maintenance schedules etc.
• Input Material: Appropriate quality of materials
• Time: Inspection of input materials i.e. raw material and semi-finished or finished items
required for assembly.
• Finance is required to maintain all the above requirements. The management should be for
minimum rather optimum finance.
We have also seen the forces that drives the sales and productivity in this industry are:
• Collaboration with the restaurant partners: Service fee collected.
• Ad Sales: Advertising, marketing, connecting with audience
• Marketing Campaigns: Get the market share and presence increased by attracting the
famous personalities.
• Long-term offers: Taking out plan for customer Engagements
• Enhanced food delivery facilities: Better communication with clients.
Seeing to all the factors, following strategies can be suggested for the “Online Food
Delivery Industry”:
• Low-cost Marketing:
Yes, sometimes low-cost marketing works better than the big campaigns and drives and big
advertisement ads running all over. As it all depends on targeting, people targeted by a big heavy
marketing aura having a different perspective will act accordingly but for the business of “Online
Food Delivery” one needs to target every niche of people and this low cost-marketing works as it
helps to reach every area and aspect and maximize personal reach.
Like: emailing, social media, content marketing, cross promotions, referral programs.
Let us understand these terms by example and how it relates to each other:
Low turnover means a company has a relatively small number of employees leave during a
given period relative to the employees hired or employed at the start of that period.
Let’s say, Distance from a worker's home to the jobsite seemed to have an effect on turnover at a
range of 50 to 100 miles. Excessive absenteeism is an indicator of future turnover problems.
Older and more experienced workers exhibited lower turnover, but higher absenteeism.
Keep up with the market rate and offer competitive salaries and total compensation. Pay
and benefits are key reasons people take jobs and show up for work every day. It’s also a top
reason why professionals change jobs.
Closely monitor toxic employees. Toxic co-workers are those who are overly critical, often
blame others, gossip, undermine colleagues and only look out for themselves.
Reward and recognize employees. This is an easy turnover reduction strategy to tackle. Simple
“thank you” and notes of appreciation either spoken or written for the work employees put in every
day can go a long way.
Offer flexibility. Employees are increasingly concerned with job flexibility, so giving them more
latitude here is another way to boost retention.
Prioritize work-life balance. Work-life balance is a struggle for many employees and can lead
to burnout that leaves them looking for another role. Flexible scheduling and remote work are two
ways employers are trying to help workers achieve better work-life balance, which can
increase retention.
References
• Zomato Research report prepared by ICICI Direct Research
https://www.icicidirect.com/mailimages/IDirect_Zomato_IPOReview.pdf
• https://www.researchgate.net/publication/341109906_POPULARITY_OF_ONLINE_FOOD_ORDERING_AND
_DELIVERY_SERVICES-
A_COMPARATIVE_STUDY_BETWEEN_ZOMATO_SWIGGY_AND_UBER_EATS_IN_LUDHIANA