Chapter 3: Introduction to the Topic
Introduction
The online food delivery industry has rapidly evolved, transforming the way people order
and enjoy meals. Gone are the days when customers had to physically visit restaurants or
rely on limited home delivery services from individual eateries. Today, with just a few taps
on a smartphone, people can access a vast variety of cuisines, compare prices, read reviews,
and get their favorite dishes delivered at their convenience.
Companies like Zomato and Swiggy have played a crucial role in shaping this digital
revolution, making food ordering simpler, faster, and more accessible. Swiggy was founded
as an exclusive online food delivery platform, while Zomato initially started as a restaurant
discovery service before expanding into food delivery. Despite their different origins, both
companies are now market leaders, competing fiercely in India's booming food-tech
industry.
This chapter provides an in-depth analysis of the Indian online food delivery market,
covering its evolution, business models, branding strategies, and key trends. The study also
explores how Zomato and Swiggy differentiate themselves through their unique approaches
to marketing, technology adoption, and customer engagement.
Understanding the Online Food Delivery Market
The Indian online food delivery market has witnessed exponential growth, driven by
changing consumer preferences, urbanization, and widespread smartphone adoption. A
report by RedSeer Consulting highlighted that the number of online food orders increased
by 15 percent every quarter in 2017, reaching an average of 400,000 daily orders.
Major platforms like Zomato, Swiggy, and FoodPanda have begun handling their own
logistics instead of relying solely on third-party delivery services. This strategic shift has
significantly improved efficiency, reducing average delivery time from 47 minutes in 2016 to
just 42 minutes in 2017. As a result, customer satisfaction levels have improved, leading to
higher repeat orders.
Another key development in the market is the increase in investments in food-tech
companies. For instance, Ola’s acquisition of FoodPanda, backed by a 200 million dollar
investment, intensified competition within the industry. Investors are keen on supporting
startups that offer innovative solutions in food delivery, such as cloud kitchens, AI-driven
recommendations, and subscription-based services.
Business Models of Zomato & Swiggy
Zomato and Swiggy follow distinct business models, each catering to different aspects of the
food delivery ecosystem. Understanding these models helps in analyzing how they attract
customers and generate revenue.
Swiggy’s Business Model
Swiggy operates as a dedicated food delivery platform, handling logistics for its partner
restaurants. Some key features of its model include:
No Minimum Order Policy: Customers can order any amount without a minimum spending
requirement.
Extensive Delivery Partnerships: Swiggy employs a large fleet of delivery personnel,
ensuring quick and efficient service.
Exclusive Focus on Logistics: Unlike Zomato, Swiggy does not emphasize restaurant
discovery but instead prioritizes seamless delivery services.
Zomato’s Business Model
Zomato initially started as a restaurant discovery and review platform before venturing into
food delivery. Its model includes:
Restaurant Listings & Reviews: Users can explore restaurant menus, customer ratings, and
recommendations.
Restaurant-Focused Services: Zomato provides analytics and advertising solutions to help
restaurants boost their visibility.
Acquisition of Logistics Firms: To enhance delivery capabilities, Zomato acquired the
hyperlocal delivery startup Runner.
Revenue Generation
Both companies generate revenue through multiple streams:
1. Delivery Commissions: Partner restaurants pay a commission of 15 to 25 percent per
order.
2. Advertising & Promotions: Restaurants pay for priority listings and banner ads to increase
visibility.
3. Subscription Models: Programs like Zomato Gold and Swiggy Super provide exclusive
discounts and free deliveries for members.
Branding & Marketing Strategies
Effective branding plays a crucial role in differentiating food delivery services. Zomato and
Swiggy have adopted distinct marketing approaches to attract and retain customers.
Zomato’s Strategy
Engaging Social Media Presence: Zomato frequently uses humor and memes to engage
users.
Strong Restaurant Partnerships: Collaborations with restaurants and food bloggers enhance
its credibility.
Loyalty Programs: Zomato Gold offers exclusive dining discounts, increasing customer
retention.
Swiggy’s Strategy
No Minimum Order Policy: This feature makes Swiggy appealing to customers who prefer
small orders.
AI-Driven Personalization: The app recommends dishes based on past orders and
preferences.
Cloud Kitchen Expansion: Swiggy Access allows restaurants to serve new areas without
investing in physical outlets.
Consumer Preferences & Market Trends
Customer behavior is a key factor influencing the success of food delivery platforms. Several
trends shape the current market:
Mobile-First Approach: 93 percent of users prefer ordering via mobile apps rather than
websites.
Brand Perception: 67 percent of respondents believe Zomato offers better food quality,
while Swiggy is preferred for faster deliveries.
Discount-Driven Market: Zomato’s discounts and promotional offers attract price-sensitive
consumers.
As competition intensifies, food delivery platforms must continuously innovate to meet
evolving consumer demands. Features such as faster deliveries, personalized
recommendations, and subscription benefits will play a crucial role in customer retention.
Conclusion
The online food delivery industry in India is experiencing unprecedented growth, with
Zomato and Swiggy leading the sector. Despite their dominance, both companies follow
different strategies, making the competition dynamic and exciting.
Zomato’s strength lies in its vast restaurant database, content-driven marketing, and
premium subscription offerings. Swiggy, on the other hand, focuses on efficient delivery
logistics, no-minimum-order policies, and AI-powered recommendations. As the industry
continues to evolve, factors such as affordability, convenience, and customer engagement
will determine the long-term success of these brands.
This chapter provides a strong foundation for further analysis of consumer preferences,
operational strategies, and market challenges in the upcoming sections of the study.
