After food and grocery, Swiggy eyes innovating delivery business

Bengaluru: Buoyed with $1-billion funding raised last December, online food delivery firm Swiggy is not only scaling up its core business by expanding into smaller cities and towns, it is also looking at tapping into a range of new opportunities. These include reaching out to college campuses, supplying daily needs items, leveraging one of its previous buys as well as taking big restaurant brands of one region to another through its chain of cloud kitchens.

“We want to be known as a company that delivers great convenience to consumers, in whatever format that is,” said Swiggy Co-Founder and Chief Executive Sriharsha Majety. “Logistics is the super power that enables us to offer convenience.”

Last year, Swigggy acquired Mumbai-based milk delivery start-up Supr Daily for an undisclosed sum. The firm is working towards using this platform to provide daily items such as milk, bread and eggs. It is also tapping college campuses through a new service — Launchpad — by delivering food at affordable prices from nearby restaurants as well as helping institutes run canteens. Through Launchpad, Swiggy mentors students who have entrepreneurial flair to run a food enterprise on their campuses. The students who are selected also get a chance to don the title of “Campus CEO”.

“These CEOs are then brought here and trained. We say here is the budget and the resources you need to be the CEO of Swiggy in your city,” said Vivek Sunder who joined Swiggy in June as chief operating officer. He was earlier a senior executive at Procter & Gamble.

The project, which was in a pilot stage in December, was rolled out in January, and some 30 universities, including BITS Hyderabad and IIT-Kharagpur, are already a part of it.

The Naspers and Tencent Holdings-backed unicorn is also expanding its cloud kitchen platform ‘Swiggy Access’ to metros such as Delhi, Mumbai, Kolkata and Hyderabad. The platform enables its partners to set up kitchens in locations where they don’t operate but have high demand for their service. “For example, Truffles is a nice place to eat...and if it wants to go to a part of Mysuru where they feel there’s a high demand...we immediately connect the consumer to the great brand,” said Sunder. Swiggy Access houses brands such as Truffles, Vasudev Adigas and Leon Grill as well as the company's private label brands such as The Bowl Company and Homely.

Valued at $3.3 billion, the Bengaluru-based firm has forayed into hyperlocal deliveries too through ‘Swiggy Stores’. This has placed it in competition with Amazon and Flipkart as well as online grocers such as BigBasket, Grofers, and Google-backed Dunzo. The pilot for hyperlocal delivery, which is underway at Gurugram, is expected to be scaled up to every city where it has its presence.

The company is expanding in smaller cities and towns through a digital strategy of gauging the interest of customers. This included gaining insights from customers from places like Bhubaneswar, Nagpur, Patna and Jharsuguda who downloaded the Swiggy app after being asked if they wanted the service in their city through ads. “We were typically (expanding) to one city every two months. Then we said we’re a start-up, so let's disrupt ourselves. We said why don't we create a team which can do one city every two days,” said Sunder.

In the past two-three months, Swiggy has more than doubled its presence to 100-plus cities and towns.

In order to have tighter control and better management of deliveries, Swiggy is building ‘operations hub’ for hyper-local activities such as management of restaurants and delivery executives. “Swiggy wants to be like the Go-Jek of Indonesia, which operates a fleet of motorcycle taxi fleet and provides delivery services through a mobile application,” said a veteran venture capital investor, whose VC firm has a number of e-commerce start-ups in his portfolio. “It is not just meals that Swiggy wants to deliver now.” He said the firm is one of the few who seem to have perfected the art of delivery.

According to Sunder, the company is gaining knowledge and implementing best practices from tech hubs such as the Silicon Valley in the US, Israel and China with the help of its investors Naspers, SAIF, NVP and Accel. It is also eyeing to acquire innovative firms in these locations. “But it’s not like we’re actually just going to Silicon Valley with a view to buy. We are saying let’s acquire the knowledge,” said Sunder.

It is already acquiring such firms. Last month, it acqui-hired Kint.io, a Bengaluru-based AI start-up which applies deep learning and computer vision to recognise objects in videos. Swiggy's head of engineering, Dale Vaz, who was previously heading engineering at Amazon India, is helping the firm become an ‘AI-first company’.

Majety said every new business that Swiggy launches starts with deep underlining of the talent. “The thing that we are most proud of is the team that we have assembled and the culture that we have built. That is 90 per cent of everything in the company,” he said.

But Swiggy is also burning a lot of cash to expand and to retain existing customers, according to experts.

On being asked how far Swiggy had gone towards becoming profitable, Sunder said the area in which the firm is operating is a “viability” business, and competition with other players requires some level of “tactical” as well as “strategic” investments. “The good news is that we have been fortunate that our investors have allowed us to do strategic investments, and at the same time do all the tactical investments needed to compete,” he said.

“It is not one of those things, ‘Oh, my God, I don't know how we will make this company profitable.’ That’s a known problem. And it’s a path that we can see,” Sunder said.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.