After food and grocery, Swiggy eyes innovating delivery business

Buoyed with $1-billion funding raised last December, online food delivery firm Swiggy is not only scaling up its core business by rapidly expanding into smaller cities and towns, it is also looking at tapping into a range of newer opportunities. These include reaching out to college campuses to provide its service to the student community, supplying daily needs such as milk, breads, leveraging one of its previous acquisitions as well taking reputed restaurant brands of one region to another through its chain of cloud kitchens. 

“We like to design ourselves as what problems we solve for the consumers. That core is ‘convenience’. Logistics is the ‘super power’ that enables us to offer convenience,” said Swiggy Co-Founder and Chief Executive Officer Sriharsha Majety. “We want to be known as a company that delivers great convenience to consumers, in whatever format that is.”

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

“These CEOs are then brought here and they’re trained on how to be the CEO of a city. We say here is the budget and the resources you need to be the CEO of Swiggy in your city,” said Vivek Sunder, a former senior executive at consumer goods giant Procter & Gamble who joined Swiggy in June last year as the chief operating officer. 

The project, which was in a pilot stage in December last year, was rolled out in January, and some 30 universities, including institutes such as BITS Hyderabad, IIT-Kharagpur and Lovely Professional University in Jalandhar, are already part of the programme. 

At the same breadth, the Naspers and Tencent Holdings-backed unicorn start-up is also expanding its cloud kitchen platform ‘Swiggy Access’ to metros such as Delhi, Mumbai, Kolkata and Hyderabad. The platform enables its restaurant partners to set up kitchen spaces 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,” says Sunder. Swiggy Access houses brands such as Truffles, Vasudev Adigas and Leon Grill as well as the company's private label brands like The Bowl Company and Homely.

Valued at $3.3 billion, the Bengaluru-based firm has forayed into hyperlocal deliveries through its newest service, ‘Swiggy Stores’ for delivery of grocery items as well as other household needs. 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 presence. 

The company is expanding in smaller cities and towns through a digital strategy of gauging the interest of customers in places such as Bhubaneswar, Nagpur, Patna and Jharsuguda. This included gaining insights from customers 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 last two-three months, Swiggy has more than doubled its presence to 100-plus cities and towns, while it is still under rapid expansion mode.

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. “In a manner, 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 who has managed the firm’s investment in a number of internet commerce start-ups. 

“It is not just the meals that Swiggy wants to deliver now,” said the person, adding the company was one of the very few who seems to have perfected the art of delivery. 

According to Sunder, the company is gaining knowledge and implementing best practices from technology 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 acquiring, we are actually saying let's acquire the knowledge,” said Sunder.

Swiggy has also been acquiring innovative firms and making strategic investments in them as part of its strategy of building AI-first platforms to provide better customer experience. 

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% of everything in the company," he said. 

However, Swiggy is also burning a lot of cash to expand and to retain existing customers, according to industry experts. When asked about how far is Swiggy towards becoming a profitable company, 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," Sunder 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," says Sunder.