scorecardSwiggy says it's the most loved brand and doesn’t need discounts
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Swiggy says it's the most loved brand and doesn’t need discounts

Swiggy says it's the most loved brand and doesn’t need discounts
Business3 min read
  • The Indian foodtech war has intensified after Zomato acquired UberEats.
  • Swiggy has a smart strategy to win the race - staying away from excessive discounts to focus only on growth.
  • While the recent Zomato-Ubereats deal claims to have given Zomato a 55% market share, Swiggy has 60% revenue share with almost 45 million monthly transactions, sources told Business Insider.
If you thought that the Indian foodtech war has ended with the Zomato-UberEats acquisition, think again. It has intensified the race to become India’s largest food delivery startup.

This time around though, players might stay away from the price game. Swiggy in fact has a strategy - to stay away from excessive discounts and focus on growth.

Recently, Swiggy made an unlikely admission on Twitter after a user asked if the menu prices were higher on the platform. The foodtech unicorn replied, “The prices might be different online and offline as it is the sole discretion of the restaurant without any added input from our end.”

It shows that Swiggy is not shy of charging for its services. “Our growth comes from having created the category and the trust the ecosystem has in what we’re offering. Discounts are a tactical lever and are something we’ve never relied on for growth,” Srivats TS, VP marketing of Swiggy, told Business Insider.

Srivats added that the company’s focus has been on building different categories for consumers. Today, they have multiple offerings like – Swiggy Pop, affordable single serve offerings, Swiggy Access, the cloud kitchen service, Swiggy Stores and Swiggy Go. These categories traverse across food and grocery delivery.

“As a result of all of this, we’ve become the most loved food delivery brand in the country and continue to strengthen our strong leadership position,” he said.

Market share versus revenue market share

The recent Zomato-Ubereats deal claims to have given Swiggy’s closest competitor - Zomato - a 55% market share. But sources told Business Insider that Swiggy still holds 60% revenue share with almost 45 million monthly transactions.

“With respect to the user base and the partner restaurant base, there is a significant overlap between players. When the Zomato-Ubereats deal happened, the users from the order could have gone to Zomato or Swiggy. The fact that Zomato has access to the database of the users or that they are being redirected from the UberEats platform, does give Zomato an edge. Swiggy has a lead right now in terms of revenue share,” said Rohan Agarwal, Director, RedSeer.

Zomato might still be discounting, but in a phased manner. In order to retain customers migrating out of UberEats, Zomato is also offering three months of Gold subscription – a feature which was in the middle of all controversies in 2019.

In the second half of 2019, food aggregators like Zomato, Swiggy, EazyDiner found themselves in the middle of a turmoil with the National Restaurants Association of India calling them out for their discounts. The NRAI had then launched a logout movement against Zomato over its Gold offering and discounts.

Emotional affinity over discounts

Swiggy however insists that even with its branding and communication, it has never driven home the message of discounts but has instead focussed on emotional affinity, resonance with consumers, and occasions.

“Utilizing our high consumer engagement which is the best across ecommerce platforms in the country, higher revenue share within restaurants, increased penetration in Tier II and III markets, high repeat rates and capabilities to deliver convenience across the board puts us in a strategically advantageous position to become the convenience app of choice for consumers, making high growth rates for the company possible and sustainable,” said Srivats.

Analysts too believe that the real race has only begun now.

Agarwal said that in the pecking order, the gap has just narrowed down. “It remains for us to see how it pans out in the next couple of months. The perspective of this event is that this is going to drive the industry towards profitability. It’s easier when there are fewer players, especially when the competitive intensity is lower,” he said.