Swiggy might be have taken a significant stride towards becoming a sustainable food-tech player.
The company has managed to raise its revenues to Rs. 132 crore in FY 2017, up from a mere Rs. 20 crore last year. This represents a 6.5x increase; in contrast, Swiggy’s cost of delivery rose only 3 times to Rs. 135 crore. As a result, Swiggy managed to tame its losses — they rose to Rs. 205 crore as opposed to Rs. 137 crore last year, increasing just 1.5 times.
In normal circumstances, a 50% increase in losses might not seem like good news, but things have been grim in the food tech space in the recent past. Several companies, including Dazo, SpoonJoy, and Yumist have shut down, while even big players had suffered — Zomato and Foodpanda had both fired 10% of their workforce towards the end of 2015.
Things, though, have appeared to turn around in the space this year. It’s helped that the playing field has been cleared of lots of competitors since the beginning of 2016, allowing the three remaining players some breathing room. And companies which have remained standing have flourished — Foodpanda appears rejuvenated with an ad campaign featuring Shah Rukh Khan, and Zomato declared earlier this year that it was finally profitable.
Swiggy isn’t quite profitable yet, but it appears to be moving in the right direction. Its revenues have grown at nearly twice the pace as its operational expenses. And it’s not that the company spent a lot of money to raise its revenue — its marketing expenses only doubled, while it managed to raise its revenue 6 times. Swiggy says it now delivers 40 lakh orders a month, and has opened up four distinct revenue streams. It makes money from commissions on orders, it makes money through its deliveries, it charges a fee for restaurants to advertise on its site, and it even makes money through its own brands — The Bowl Company, Swiggy’s in-house brand, raked in revenues of Rs. 7.7 lakh this year.
All this adding up quite nicely for Swiggy. The company is already flush with funds with after raising Rs. 515 crore in May this year — and with its strong financial numbers, looks poised to grab a large slice of India’s lucrative food-tech pie.