No matter what, deliver food from the best restaurants
nearby, deliver food with no minimum guarantee required, and fast
delivery: these are the guiding principles of one of the country’s
leading food-tech companies – Swiggy. Add one more to that you’re your
order pipe-line is clogged i.e. there are too many orders, then don’t
take them. This has, so far, ensured that each order is delivered within
30 minutes – thus adhering to the main three at all times. And it has
worked wonderfully well in this high-margin market.
The fact that
in just two years since inception, it has had three rounds VC funding
speaks a lot of the confidence of the investors in Swiggy’s business
model and the vision of its co-founders, Nandan Reddy, Sriharsha Majety,
Rahul Jaimani – who all have had their education from some of the
premier institutions of the country (Sriharsha Majety – BITS Pilani
& IIM Calcutta; Rahul Jaimani – IIT Kharagpur; Nandan Reddy – Bits
Pilani).
The terrific trio
A bit about the
co-founders: Sriharsha, after schooling from Vijayawada, went on to
complete his engineering (Master’s) from the prestigious Birla Institute
of Technology & Sciences (BITS –Pilani) and them followed it up
with a master in business management from the world renowned Indian
Institute of Management (IIM –Calcutta or Kolkata as it is now known
as). This son of businessman and a practicing doctor, he joined a
company called Nomura Securities (working in its London office) after
his MBA from IIM, with the thought that he would return to India after
an year or so and set-up his own business. It ran in his blood, you see.
However
before he could do, he had always been wishing to travel places and
explore the world at a slow pace – on a bicycle. He did it alone –
travelled many countries spanning three continents, partly on foot,
partly, hitch-hiking, partly using local public transportation where
conditions were trying.
After having travelled around many
countries on his bicycle, made friends, understanding their cultures,
and returning enriched with life’s experiences across the globe, it was
time to go about his plans for setting up a business. It was time to
give the entrepreneur in him the time to express himself fully.
He
brought along his mate from BITS Pilani Nandan Reddy and the duo
together started a service called – Bundl Technologies,basically a
logistics aggregator for e-commerce companies. Probably they had
miscalculated or the situation wasn’t right for that kind of a service,
it didn’t take off like the founders wanted it to and it was shut down
in June, 2014.
The two of them were down but not out. They knew
that is initial set-back was only a stepping stone for harnessing their
potential and making something new and different. After much
deliberation they hit upon the idea of a hyperlocal delivery business.
This was one area where they realized there were no players offering a
complete food ordering and delivery service – that too location-based
and quick.
This switch wasn’t anything new for Sriharsha who had
switched between jobs as indeed his travel expedition where there was no
specific route planned – as he himself reportedly said,“There was no
route per se and in between, I took many de tours while visiting
Portugal, Spain, France, Italy and Greece, ultimately pedaling through a
distance of 3400 kms.”
They also realized that they need
additional hands – driven as well as who shared the same vision as
theirs and who were willing to go the distance with them, come what may.
Thus they roped in Rahul Jaimini – an IIT-Kharagpur graduate who had
already worked at a few tech start-ups by then and had done well. He had
worked for NetApp with their Data Protection Group where he was
responsible for developing, testing and maintaining storage products
ensuring maximum data recovery in case of a disaster through intricate
real-time replications. This was followed by a stint at Myntra (now part
of Flipkart) where he was entrusted with leading development efforts
for the strategy team in revenue/conversion boosting efforts. (He was
opined that deliverables were always end-to-end in order to ensure that
product roadmaps don't get affected on account of strategic
enhancements).
This experience was to prove very handy when the
BITS Pilani duo of Sriharsha and Nandan Reddy roped him in and started
work on the platform. The company, Bundl Technologies was retained as
the umbrella under which their hyperlocal delivery business would
operate. They started building the platform which they called as Swiggy
in August 2014.
Initial days and Funding
The
company was initially boot-strapped and it had to really work to make
sure its business model and the customer takeaways were clearly
understood by the target customers. So, the trio wanted to make sure
their employees also shared their values and guiding principles so they
themselves personally handpicked the initial staff (Sriharsha alone
selected 50 of them).
This continued until April 2015 when they
got their first investment from SAIF Partners and Accel Partners of #2
million. This was enough to help expand and improve the service. Then,
in June of the same year, Norwest Venture Partners (NVP) pitched in with
Series B funding of $16.5 million which proved to be the huge fillip
required by Swiggy for scaling its operations or rather services beyond
Bengaluru. With subsequent rounds of funding amounting to $75.5 M
(that’s already clocking a valuation of about $300 M), the company was
able to spread to various other cities – it is now providing services in
eight Indian cities – Bengaluru, Gurgaon, Hyderabad, Delhi, Mumbai,
Pune, Kolkata and Chennai with over 5,000 restaurants listed on its
platform.
Technology Transformation
Based
on the ground experience, Swiggy was continuously refined and even
modified greatly to meet the myriad idiosyncrasies of the delivery
personnel. In due course, it transformed into something that was very
easily understood by the delivery team which now understands ever so
easily as to where to pick the food from and where exactly to deliver
the order.
Sriharsha, who is also the company’s CEO, and his team
are reasonably confident that the time is not far when a restaurant’s
online orders will outnumber its offline sales, especially in
metropolitan cities like Bengaluru. That bodes well for them as
currently only about 3% of the global food business is done online –
while they are yet to penetrate in most regions of the country, the
founders know they, more than any other contemporaries in the Indian
market, are likely to get a greater share of the pie. It is vindicated
by numbers and the fact that what Swiggy achieved in a mere 2 years is
much more than some already established players such as FoodPanda and
Zomato – although their business model is different from that of Swiggy.
Another
aspect that differentiates Swiggy is that its business is very
dinner-heavy. While this differentiation is good to talk about – like a
good chunk of Indians who order food online during evening are more
likely to go for Swiggy than other providers – the fact remains that a
good amount if business remains untapped by not being active or popular
during the day time.
Hence, looking to diversify the supply, the
trio then came up with a novel program called Swiggy Express where food
is curated by experts (gourmet) and also it is working on decreasing the
delivery time to 20 minutes – that’s why Swiggy Express. To top it all,
they are looking at the pricing as well so that combination of
gourmet-food, really quick delivery at lowered prices can bring in the
much-desired day-time sales which could act like a multiplier effect for
the company.
Growth
Inspite of the fact
that without any burn, Swiggy has been able to achieve 5x to 6x growth
rate since its inception, the founders know that without much order
activity during day-time, they are still a long way to skim the market,
so to say. That is why Swiggy Express makes for sound business expansion
as dinner orders, are by nature, very discretionary; whereas day-time
orders (which are the business-hours orders making it imperative for the
food to arrive in real quick time) – if the Swiggy Express model is
successful – can be commoditized. Swiggy wants to be the go-to platform
for customer wanting to order food – 365 days of the year and regardless
of the working hours. That is when the idea of commoditizing Swiggy
will become a reality for the awesome three-some from Bengaluru.
| Quotes | |
 “I
was switching between careers. In 2008, I embarked on my first
bag-packing and went on a two month-long vacation in South East Asia
and met a friend in Germany who had just completed his travel by
bicycle in Eastern Europe. The idea seemed as crazy as exhilarating and
I was already planning my own cycling tour.” | |
| “I
would have slept in 60 different homes in these six months.” Talking
about his cycling expedition that he took up in 2008 spanning Africa,
Asia & Europe. | |
| “When
already we decided to shut Bundl, we knew we have to dive into
hyperlocal delivery and give it a shot. We also understood that
ordering platforms for restaurants were very broken. Ordering food has
always been a big hassle, and hence, we decided to take the plunge and
fix it with Swiggy.” | |
| “The
size of the Indian restaurant sector is pegged at $50 billion and is
growing at a fast clip. The percentage of delivery in this market is
witnessing a steep increase and should see tremendous growth. The
familiarisation of the masses with home delivered food is contributing
largely to the growth rate.” | |
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