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Swiggy vs. Zomato

Updated: May 13, 2021

After having done high-level deep diving into the idle capacity, idle fund, break-even, supply chain, advertisement costs, investments & acquisitions and contributions to society, of the 2 food-giants, here's what all our analysis boils down to:

  • Both Swiggy and Zomato have created a sizeable impact in the food services industry and seem to be on the right path towards building a sustainable business. However, the journey seems to have just started. With a penetration level of only 12% (10% for Swiggy) in the Indian Smartphones, the startups still have a loooong way to go.

  • If you have been wondering how these startups who charge a meagre ₹30 appx. for food deliveries have managed to garner so much of international-investor-attention, let us tell you, it’s a no-brainer. India has 443 Mn Millennials and 393 Mn Gen Z (total population the USA is 328.2 Mn). The number of smartphone users in India is estimated to reach 829 Mn by 2022. When such massive volumes are combined with favorable Public Policies like Digital India, Make In India and Startup India, the option is only one: Go all in.

  • When it comes to the food delivery segment, the party doesn’t stop there. India's food service industry is 1/4th the size of the USA. While India has 1 Mn Restaurants, China boasts 8 Mn. Meaning: Growth potential is massive. Backed by rising per capita income and favorable cultural changes, the Food delivery segment is poised to grow at 16%, to touch 17 billion by 2023.

  • While the potential is huge, so is the competition. According to Data Labs, the threat to new entry is high for the sector as there is easy availability of infrastructure (i.e. internet, service providers, logistics and workforce). Swiggy and Zomato will therefore have to work towards consolidation of the segment through strategic M&A and towards creation of barriers to entry through economies of scale, exclusive partnerships, loyalty programs, tangible assets development and alike. In the end, we expect the segment to turn into a duopoly, much like e-commerce’s Flipkart and Amazon or Cab aggregation’s Uber and Ola.

  • Now if you’re asking us to choose between the two startups, we have a diplomatic answer to give (obviously). From commercial standpoint: Swiggy (I did Business) and from a more comprehensive standpoint: Zomato (I did more than business). Going forward what will actually separate the two startups, will be Timely delivery à Refunds à Customer care à Customer Experience à Food Quality (in that order). (As per Data Labs, 60% of the consumers give most importance to delivery speed).

Alright, we’ll stop there. After all this talk about food, we know you cannot wait to order your next bite from your favorite delivery partner. If you are asking, personally, we can’t wait for these brands to announce an IPO (We’ll go all in).

 

This article is a part of the July'20 edition of our Startup Newsletter. Here's the complete publication:


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