Whenever we think of ordering food online, then the first two names that pop up in our mind are Swiggy and Zomato. Why? Because these two are the most successful online food delivery app in India. That’s why they never leave a single chance to compete with each other. Although the market share of Zomato is 55.7% and that of Swiggy is 43% in FY 2022. But the latter earned a higher revenue in the same year as compared to the former one! Quite contradictory, Isn’t it? Now the question arises- Which one is doing better business? Swiggy vs Zomato? Let’s find out!
This article presents a thorough analysis and comparison of Swiggy and Zomato.
A Quick Comparison
The two key players of the online food delivery space- Swiggy and Zomato differ from each other in terms of various factors.
Some of them are-
|Establishment||2013 (Bengaluru-based start-up)||2008 (Gurugram-based start-up)|
|Market Capitalization||INR 885.18 billion||INR 445.58 billion|
|Daily Orders||14 lakhs||12.5 lakhs|
|Revenue (FY 2022)||INR 5,705 crores||INR 4,192 crores|
|Expenses (FY 2022)||INR 9,574 crores||INR 6,205 crores|
|Loss (FY 2022)||INR -3,629 crores||INR -1,222 crores|
|New Features & Services||Swiggy One, Instamart (Grocery), Genie (Concierge Delivery), Dineout (acquired)||Zomato Gold, dining, Advertising, Hyper-pure, Blinkit (acquired)|
Detailed analysis of Swiggy vs. Zomato
Image Source: Entracker
The first food delivery app that was launched in India was Zomato. Deepinder Goyal founded it in 2008. At that time it provided information about the restaurants, prices, and menus. However, it started the food delivery operations in 2015 after seeing the enormous success of Swiggy. Sriharsha Majey and Nandan Reddy founded Swiggy in 2014. However, they designed an e-commerce website “Bundl” that was rebranded as “Swiggy” to enter the food delivery sector of India.
IPO (Initial Public Offering) is the most aspired stage for a company to raise capital quickly by selling its shares. An IPO not only increases the company’s valuation but also provides more exposure and recognition. For the same reason, Zomato opened its IPO on July 2021 and raised enough funds by providing a lot size of 195 shares. Contrarily, Swiggy hasn’t opened an IPO yet. Although it is planning to go for an IPO. But even without an IPO, it earned an enormous revenue of INR 5,705 crores in the financial year 2022.
Market Capitalization and Market Share
Zomato is an encyclopedia of restaurants with ratings, menus, reviews, and costs. It is thriving hard to become a single and best destination for foodies on the online platform. It is a dominant player in the food delivery segment. Thus, it has a higher market share of 55.7% with a market cap of INR 445.58 billion. However, Swiggy is not limited to only the food delivery segment. It explored new categories to expand its ecosystem. They launched new products too. We will discuss it in upcoming sections. Even though the market share of Swiggy is just 43% but with its vast features and services, it raised its market capitalization up to INR 885.18 billion.
As you know, delivery partners are the ones that provide delivery personnel to the company. The delivery men whom you see around with the T-shirt and logo of Swiggy or Zomato are a crucial part of the food delivery ecosystem. Both Swiggy and Zomato hire and pay the delivery men based on the distance. Currently, Swiggy and Zomato have 2, 10,000, and 1, 80,000 delivery partners respectively.
Both Swiggy and Zomato drive their primary revenue from online platform services. It includes the sale of food, advertisements, subscriptions, restaurant partners, delivery partners, etc. With a successful business model, Swiggy and Zomato earned astonishingly high revenues in FY 22.
- Revenue sources of Swiggy– INR 5,705 crores. The primary sources of revenue are delivery charges and commissions. It includes Food Ordering & Delivery, Grocery & FMCG Delivery, Food Sales, etc. Also, it earns through advertising the restaurants through the display ads of the Swiggy app. Another important revenue source of Swiggy is affiliate income i.e., by partnering with financial institutions like ICICI and Citibank.
- Revenue sources of Zomato– INR 4,192 crores. The chief sources of Zomato’s revenue are Food Ordering and delivery charges, Hyperpure, and subscription fees.
Both companies have raised a huge amount of money to expand their customer base. And this is possible only when you make huge investments in technology and manpower. The principle for this objective is simple- The more the number of customers, the higher the profit! Therefore, both companies spend a vast amount on marketing methods and working strategies. Their prime objective is to allure the audience with tempting discounts, commercials, banners, and effective digital marketing.
Image Source: Fintracker
- Expenses of Swiggy– In FY 2022, Swiggy’s expense was INR 9,574 crores. It involved the Cost of materials, Outsourcing support cost, Advertising, Employee expenses, Loss on Order Cancellation, Communication & Technology, etc.
- Expenses of Zomato– Similarly, in FY 2022, Zomato’s expense was INR 6,205 crores. It included Advertisement and Sales Promotion, Delivery and Related Charges, Employee benefits expenses, etc.
New Features & Services
As we have told you earlier, the companies expand their arms to explore various segments of the market to increase their market cap. For the same purpose, they launch new products and services. Similar is the case with Swiggy and Zomato. Apart from food delivery, they also launched grocery delivery services, restaurant booking services, and many other things.
- New Features of Swiggy– Swiggy one (30% extra discount & free delivery up to 10km with membership amount of INR 299), Instamart (Grocery delivery), Genie (Concierge Delivery), Dineout (Restaurant booking, acquired)
- New Features of Zomato– Zomato gold (30% extra discount with membership amount of INR 149), dining, Advertising, Hyper-pure (Fresh ingredient delivery to restaurants), Blinkit (Grocery delivery, acquired).
Final Words for Swiggy vs Zomato
With the effective and successful business models of Swiggy and Zomato, both companies earned gigantic revenue. Also, they confronted huge losses too due to extensive expenses to improve the services. Although they are in cutthroat competition, they are leaving no stone unturned to provide exclusive services to customers. Now coming to the answer to the question, Swiggy vs Zomato, which one is doing better business? Swiggy and Zomato? To be honest there is no absolute answer to this. For the year 2022, Swiggy seems to be the winner in the competition due to its high revenue and market cap. But Zomato is not that behind either. All of it depends on stock performance and your preference! Also, the location, restaurants, and the type of service you want like food delivery or grocery delivery determine the ranking of these companies too.