We invest in making our core stronger: Swiggy

Swiggy, India’s largest food ordering and delivery platform, has been on a roll after gaining presence in 41 cities, acquiring Mumbai-based delivery platform Scootsy and entering the coveted unicorn club—all this year. In June, Swiggy raised $210 million in Series G funding led by existing investor Naspers and Hong Kong-based new investor DST Global—making its total funding worth $465.5 million in seven rounds. According to the company, its revenue grew 3.3 times in the last financial year. The food-tech sector is expected to touch at least $2.5 billion by 2021 from its current size of about $700 million, a report by consultancy firm RedSeer Management said. For an industry on the brink of constant disruption, there is only thing that drives Swiggy—innovation.

In an interview with Fortune India, Vivek Sunder, COO, Swiggy talks about the company’s expanding brand communication and the road ahead.

Edited excerpts:

What works for Swiggy?

Four years ago, when Swiggy started, we weren’t the first players in the industry. So, it’s not like we had the first mover advantage. But I think what Swiggy always did well was to focus on the consumer pain point. At that point of time, we found that the delivery experience was hit and miss. For working millennials, there was a need for a reliable, great-quality restaurant food, all within a reasonable time. We couldn’t have provided it, had we outsourced delivery. Back then the big innovation was to actually manage the delivery fleet ourselves. All of the competitors at that point of time were basically relaying the order to the restaurant. Now, everybody has followed us. That gave us a competitive advantage since the time we started.

How are you trying to transform the food delivery business?

We innovated with this thing called the ‘Swiggy Access’. There is an area with a bunch of customers. We find out what are the cuisines that are lacking in the area and provide these cuisines to the consumers by creating dark kitchens or cloud kitchens by inviting some of our best restaurant partners to open them. So they essentially come into our kitchen which is a cloud kitchen and provide that particular restaurant for a geographical area.

How do you understand your audience and react to their needs?

A part of the marketing innovation that we are doing is to understand the needs of the millennial mums. So, essentially our brand communication is expanding. We are not abandoning our core audience which are young people who are time-starved and want a little convenience in their lives. So, all the latest ads that you’ll see are around moms using Swiggy to order food.

What are doing to localise your business?

Historically, the way we have expanded to another city is we find restaurants to be on our platform, we hire a fleet of delivery executives, we’ll set up a city office and the team will do local marketing. While that is the right thing to do, imagine now doing that across 200 cities in the country. It will be five years by the time we cover city after city. Moving to a new city is not an innovation. It's a natural progression. But the way in which we're moving is leveraging the power of technology to open remotely. Suppose if I am in Chennai and I want to open in Pondicherry. I don't need to open an office in Pondicherry. I’ll just send a team to prospect. Consumers already know me. We are not just able to open quick but also with lesser investment. In a year from now, I could be talking about a number which is more than double of today which is a quite dramatic scale-up and most of them are Tier 2 cities.

There are speculations that the South African media giant Naspers is planning to increase its stake and might invest more than $200 million soon. How do you plan to spend the money?

On a larger scale, the good thing is that a lot of our investors have been with us through multiple rounds of funding. Like any round of funding, what we do with the money is essentially spend on three things. We invest in making our core stronger—means stronger fleet, stronger technology operations, stronger restaurant connection, etc. We also use that to enter into and expand into new spaces. The third way we use the money is to make capital investment and acquisition like we did with Scootsy a couple of months ago.

Is Uber and Ola getting into food delivery business a growing threat?

They are great companies and have transformed the landscape of India. You can either think of it as a threat or actually think of it as good news. It is almost nothing that gets Swiggy employees going to actually deliver customer service better now that these amazing players are also there. To say that customers love you even though there are good, viable alternatives is even more joyous for us.

With rising fuel prices affecting almost every sector, who bears the cost at Swiggy?

Obviously, it's a reality of our delivery fleet work and we are very responsive to the real-life changes that are happening. We have systems to compensate on cost incurred on a city by city basis. An extra cost is kind of incurred by the whole system. We make sure that we protect the delivery executives.

There was a crackdown by food regulator FSSAI as they found that more than 30-40 % of food businesses listed on online platforms do not possess a valid licence. How did you take it?

In general it's been a good thing for all of us, starting with the consumer. They will know that their food has gone through some stringent checks and made to certain standards. The crackdown was basically to ensure the consumer doesn't get bad food or a bad deal when it comes to processed food or freshly made food. We started this drive in August and already by the time 80% of our business-contributing [big] restaurants where complaint. Today if you open Swiggy, there is not a single one which doesn’t have a license. There were some restaurants but we took them off the platform.

Swiggy was a part of Fortune India’s 2018 40 under 40 list.