Abstract
30 November 2020 was not an easy day for Sriharsha Majety, chief executive officer (CEO), and Rajiv Nagarajan, the social media and online reputation manager, Swiggy; another controversy sparkled when Swiggy responded to the satirical post of an Indian minister on a social media platform (Sharma, 2020) (Figure 1). The response soon turned viral to thousands of likes and retweets. A significant portion of the population on Twitter considered the reaction offensive and #BoycottSwiggy began the movement (Sharma, 2020). It has been just a year since Majety overcame the religious controversy (Bhalla, 2019) where a Hyderabad customer refused to accept an order knowing that the delivery boy was a Muslim. Rahul Jaimini, one of the co-founder members of Swiggy, also left the online delivery firm in May 2020 (ET Bureau, 2020). There was a list of controversies where Swiggy found itself embroiled (Singh, 2020) (Table 1). Majety was confident of sailing through these controversies on Rajiv Nagarajan’s back whom he approached to prepare a recovery plan. Nagarajan was responsible for maintaining Swiggy’s social media image and online reputation (Pathak, 2020).
List of Controversies Surrounding Swiggy
Majety and Nagarajan knew that if these controversies did not settle, Swiggy’s reputation could be in deep trouble. As the situation already stood, almost all the stakeholders had already posted against Swiggy’s reputation. The clouds of the misdoings of Swiggy had hovered over a long period now. Trending posts like #BoycottSwiggy, the religious controversy between Swiggy and its former employees and a blog post titled ‘Swiggy-A House of Cards’ stated that Swiggy cheated with its restaurant partners and fabricated and exaggerated data to gain media coverage to create a positive self-image in the market. With the reputational damage, Majety had faced hard-hitting dissension from various stakeholders regarding the food delivery (Mishra, 2017). Besides salvaging the organization’s reputation, Nagarajan and Majety had a job at hand to knock off these allegations and return Swiggy’s fortunes onto the smooth drive on the expressway lane of growth. Every plan of action would have to be meticulously planned and dealt with cautiously. Swiggy’s future expansion plans would have to be decided while minimizing the effect of Swiggy’s damage to reputation.
About Swiggy
The vision of the co-founder and CEO spoke volumes regarding the future path of Swiggy. This Bangalore-based food ordering and delivery company was founded by three visionary and courageous friends Rahul Jaimini, Sriharsha Majety and Nandan Reddy in 2014. Swiggy was motivated by the idea of serving a food order and providing an online delivery solution from one of the best nearby and neighbourhood restaurants to the customers (Singh, 2020). It gave a separate window to order from various restaurants. Swiggy had its delivery management fleet to collect and ship food orders from these local restaurants to the customer’s doorstep. Because of the fleet of delivery executives, Swiggy offered its clients a ‘No minimum order policy’ on any restaurant and accepted various modes of payments online to the wallet for restaurants. Swiggy’s workforce took one request at any given moment, which guaranteed unwavering quality and quick conveyances. Managing with such a vast workforce was no easy feat. Swiggy’s board had some of the finest managerial brains across the country right from marketing to operations and from first-line managers to top management, making sure the machinery behind Swiggy was well lubricated and ran full steam. Swiggy, established in 2014, had more than 40,000 restaurant partners in around 27 cities (PTI, 2018) in India.
The Beginning of Swiggy’s Journey (Table 2)
Swiggy’s Journey Since 2014
Online order and delivery was not a very lucrative space in an emerging market like India. Nevertheless, Majety rewrote history and created one of India’s most popular consumer Internet companies. As per the industry sources, Swiggy had about 14 million monthly orders. In contrast, Zomato had about 7 million, Uber Eats (acquired by Zomato) about 750,000 monthly orders and Foodpanda (acquired by Ola) about 1 million orders in a month (Table 3). Majety aimed to ‘change India’s way of eating’ making Swiggy operational in 27 of India’s largest cities. Swiggy operated with a fleet of more than 55,000 food delivery persons from more than 40,000 restaurants (Srinivasan & Bansal, 2018; PTI, 2018). It had an in-depth knowledge of the food industry and an impressive history of providing an exceptional consumer experience. Swiggy’s restaurant partners include national and international quick-service restaurants (QSRs), multi-cuisine food trucks, trendy cafes, ice cream parlours, legendary eateries, etc. To keep up the lead in the online food market, Majety eyed a long-term strategy of creating differentiated products and services around accumulating supply gaps in the marketplace. Swiggy developed the technology while keeping excellent customer experience at its core and investing in its new supply business line. Swiggy provided service with the choicest food options; it ensured consumers had access to their favourite food at their doorstep. Catchment areas of Swiggy delivery had a wider radius of 6 km (Ambre, 2020; PTI, 2017). There were no restrictions on consumers on the minimum order, and customers also tracked their orders live on the Swiggy app.
Details of the Food Delivery Apps
India as an Emerging Market
Majety knew that India was still a nascent and emerging market compared with mature markets like the UK, which was in the maturity stage, and the USA, which was in the growth stage. These were the markets where online delivery held a higher share of delivery orders (Kumar & Chaudhry, 2016). The delivery dominated the overall restaurant industry growth in India in general; the online mode of delivery was gaining traction (Gross Merchandise Value) in specific (PTI, 2018). Online food delivery was growing at an overwhelming rate of 150% to earn the US$300 million in terms of gross merchandise value in 2016. The players in online food delivery services in India served approximately 160,000 orders a day with an order value of US$5 per order (AIMS, 2020).
The restaurant market in India had great potential and appeared to have a brighter future in India. In India, the restaurant market had witnessed a marked increase to US$56 billion in 2016, which was 11% increased growth compared to the previous year. The organized restaurant market grew in 2016 to US$17 trillion compared with US$14.28 trillion in 2015, demonstrating 16% growth. However, the online delivery market in India was booming and showed a jump of 30% in growth compared to the previous year. In 2015, it was US$11.5 billion, and in 2016, it reached US$15 billion (FICCI, 2017). Consumers were getting accustomed to online shopping, especially in Tier 1 cities, to understand the system’s transparency. They had the convenience to scan menu cards, prices, peer reviews, ratings about the restaurant, and pay as per their convenient mode. In India, restaurants earned good revenue when they had delivery services. Consumers also preferred those restaurants which provided home delivery services. This delivery model had become a game-changer and revenue centre for the restaurants. They earned around 43–47% of their revenue if they provided delivery services, and out of this 47% revenue, 30–35% was earned from online services (Kumar & Chaudhary, 2016)
The Competitive Scenario in Online Food Delivery
A growth of about 15% was witnessed in the online food ordering sector with a consistent number of 400,000 average orders daily. Food delivery players like Swiggy, Zomato and Ola invested in in-sourcing deliveries. Since these players offered better services, an order’s delivery time dropped from 47 to 42 min. Due to the growth of the online delivery segment, the market witnessed the entry of big players and some acquisitions. Ola had recently acquired Foodpanda India, which had lightened the competition to a battle between Swiggy, Zomato and Google Areo. Indian food delivery had been growing at lightning speed. It was US$300 million in 2016 and had grown to US$700–750 million in 2017, that is, a staggering 140% increase. Reading into this momentum, RedSeer Consulting estimated that the market would touch GMV of US$1.5 billion in 2018 and US$2.5–3.5 billion by 2021. In 2014, Swiggy’s main operational work was to deliver food from restaurants catering to high-class and pocket-friendly restaurants, including medium range restaurants (Bhattacharya, 2019).
Modus Operandi
Swiggy had developed partnerships with restaurants to deliver food to the customer at their doorstep. Swiggy worked as a game-changer or lifesaver for the restaurants that didn’t have home delivery services. Through Swiggy, their catchment area increased, and they could reach customers staying beyond their reach. The customer had to log in to the app or the website to place the order. They could search with the restaurant’s names or the dishes they wanted to order; the Swiggy app helped the customer locate the restaurant providing the respective cuisine. Customers could pay online, via cash on delivery or through various payment modes available with the app while placing the order with Swiggy. The payment would be credited to the restaurant partner. The restaurant partner prepared the food after getting the information about the final list of the order processed by the customer. Swiggy collected the order from the restaurant partner after placing the order and delivered it to the customer (Figure 2).
Swiggy primarily had two revenue models. The central part was the commission that Swiggy earned from restaurant partners to generate lead and served as a restaurant’s delivery partner. Swiggy charged about 20% commission on every order from the restaurant partners. The restaurant partner and Swiggy also charged customers delivery fee if the order value was below US$2.87 per order for most cities (Tandon & Bansal, 2019). Swiggy provided a hyperlocal delivery service and had its delivery fleet of about 2,700 delivery personnel in 2016. Swiggy did not charge any delivery charges if the order was above US$2.87. Swiggy attempted to incorporate the pricing models for Cloud Kitchen and surge ahead. Swiggy had many things right in its favour, its outstanding logistics operations being the driving force behind its success. Swiggy knew that the only way to make strides was to build upon a comprehensive logistics network in the food delivery market.
In the existent scenario at that time, many of the players had outsourced delivery services, but now, most online food tech organizations preferred keeping their delivery fleets under their control. These factors helped Swiggy retain its customers, resulting in higher repeat purchase rates than the competitors. Swiggy launched a brand-new offering known as Swiggy Scheduled, which allowed customers to plan their orders and meals. With this new feature, customers could place their orders in slots of 30 min, at least 2 h in advance and 48 h at the latest. This added feature did not include any additional cost as Swiggy did not charge any delivery charge on the service. With Swiggy Scheduled, customers would get their meals and were assured that the meal would reach their tables on time (Ranipeta, 2018).
Swiggy’s Strength, Weakness, Opportunities and Challenges (SWOC) Analysis
Strengths
Majety believed in delivering the best quality service to their customers. He had been working hard to make its own and deliver the best customer service experience. He could alter User Interface depending upon the changing customer requirements. Swiggy delivered one order at a time which expedited their delivery while adding value-added services like GPS tracking for the orders. Swiggy could serve multiple cuisines at one-stop, fulfilling the consumer’s inherent need for choice (Sibanda, 2019). He devised their delivery radius, and as a consequence, its margins were boosted. Revenue of Swiggy witnessed an upward trend compared to the previous year (Figure 3).
Weaknesses
Majety had been going through the operational difficulties of post-order customer service. Though revenue depicted an increasing trend, the margins per order received had been fragile (Figures 4 and 5). High costs were incurred in marketing and promotional activities like discount coupons resulting in negative margins for the first few years, which had mounted losses for Swiggy. Swiggy was in the growing stage facing fierce competition; there had been a strong hire and fire culture, which rendered employees and teams not loyal enough towards the organization. Often, the customers complained about food taste and food quality, which was not in Swiggy’s hands, but still, the customers held it responsible, forgetting that Swiggy was in the business of delivering food. Swiggy depended on restaurants to deliver food on time to execute a smooth delivery experience for the consumer. If any restaurant partner failed to deliver the food on time, Swiggy’s customer ratings often suffered a negative trend (Bhasin, 2020).
Opportunities
The growth of population, rise in disposable income of prospective customers and an increased number of restaurants could be exponential. Owing to government initiatives, India was experiencing a great surge in the usage of digital platforms. The reason is the busy schedule of today’s professional customer-preferred online food delivery, especially for late night working professionals requiring food delivery at odd hours during the night. There was a visible rise in the health conscious segment where customers demanded healthy food but did not have time to spare, for restaurant dining. Many companies had come up with prepaid systems like Uber and Ola.
On similar lines, Majety also opted and shifted from cash to prepaid orders. India’s food delivery business was still considered to be in the nascent stage compared to the global level. In emerging markets like India, it was expected to treble in size by 2020 to at least US$2.5 billion. In India’s food delivery business, Swiggy had a market share of 35%–38% as compared to its other strong competitor Zomato, having a market share of 23%–30% (Kumar & Chaudhary, 2016).
Challenges
The segment had witnessed excessive competition with millions of dollars in investments that had divided the market. There was a marked rise in restaurant frauds which used start-ups’ discounts, making them earn easy money. With the number of such fraudulent cases on the rise, fuel costs also witnessed an upward trend that increased the operational costs of online food delivery organizations. In busy work life, customers preferred to go out on weekends to spend some quality time with their family. For quick refreshment, they visited nearest malls and restaurants, resulting in a reduction in the target market numbers. With severe traffic jams hampering the service provided by these online players, food delivery came with an expiry time. Typically, food gets colder after an hour on an average. Food not being fresh and hot to be consumed, delayed delivery time, reduced customer satisfaction and damaged restaurants’ and online players’ brand image. Restaurants blamed Swiggy, stating that they prepared the food on time, but Swiggy’s team did not collect on time. Any delays due to any external reasons resulted in a reduction in customer satisfaction, trust and increased costs related to execution. Majety, in his growth path with Swiggy, faced a lot of challenges that they had to sustain the competition and maintain its position in the online food delivery segment.
Controversies Surrounding Swiggy
The thumb rule of any change in the market is controversy. Change brings movement, movement results in friction, and friction turns on the heat, resulting in controversy. Let it be any barriers that come in the way; organizations prepare themselves to jump over it. What distinguishes successful organizations from the not so successful ones is managing their success while dealing with the controversy. The winner of ET Startup of the Year Award in 2017, Swiggy, which had revolutionized India’s food delivery segment, also found itself in the eye of a controversy (ET Bureau, 2017). Increased cost and lowered profits had put a question mark on the long-term existence of Swiggy. The negative online reviews and feedbacks also ruined the positioning of the giant player.
Swiggy Versus Customers
Be it any social media platform like Facebook, Twitter or Instagram, people praise and share their bad experiences with others. Swiggy was in The Economic Times headlines, Moneycontrol News regarding their failure to deliver orders on time and blamed a technical glitch (TNM, 2017). Restaurant partners took the help of social media platforms like Twitter to express their experience with Swiggy. They complained that although they prepared food and packed on time, still, they did not send any delivery person to pick up the orders, and sometimes, the timeline crossed more than 60 min. When the food was delivered cold, the customer blamed the food quality and damaged its image. Some customers even said that restaurants and Swiggy play a blame game; they shifted blames on each other. Apart from the technical glitch, there might be issues with logistics as well. Customers also expressed their negative opinions and complaints on Twitter regarding the food aggregator’s dissatisfaction delivery service.
Swiggy Versus Restaurant Partners
Sometimes the unique selling proposition of a start-up may backfire. No doubt Swiggy had its delivery fleet, but it became a challenge to control the colossal workforce. Swiggy took the responsibility to deliver the order by itself. In contrast, other players like Zomato and Ola relied on their restaurants’ partners for delivery; hence, it became the restaurant’s responsibility to deliver the food. Still, Swiggy did not enjoy the same privilege. Scams played by Swiggy delivery guys were visible online. Restaurant partners said that every month US$72 orders (on an average) were placed and got cancelled once the order was picked up. Swiggy paid 40% of the value, which brought down the restaurant partners’ margins and hampered the trust, and consequently, Swiggy feared losing its reputation in the market (TNM, 2017). Swiggy had been tackling the issue of the scam by Swiggy delivery boys. They maintained records that included the order ID, delivery executive’s name, contact details, signature and pick up time. If the cancellation happened, it was followed up immediately by the partner support through the mail. The blog also reported that the business paid for positive feedback on Swiggy. Real (usually bad) comments were quickly deleted and buried on the social media website. Customer reviews were removed from social media rather than working on customer support. Investors too were allegedly lied to, in terms of the order volumes. A presentation made when its last rose funds showed inflated order volumes, the post said (Chengappa & Pani, 2017; Swiggypartnersupport, 2017) (Figure 7).
Our January 2017 order volumes were less than December 2016 volumes. Yes, we had a decline in order volumes in January (Figure 6). But we have seen the investor presentations, and they have shaved off the December numbers in the slides to show a linear growth curve across all months of our existence. Blog Says. (Srinivasan, 2017)
Swiggy Versus Employees
In the latest revelation on a Tumblr blog that claimed by the current and ex-employees of the food aggregator, the growth story of Swiggy was projected to be a farce and alleged gross mismanagement at Swiggy, detailed how the start-up was cheating its restaurant partners, customers and investors. Though Swiggy refuted those allegations, it was silent on who they think was behind the blog (Deep, 2017). A Tumblr post said it was written by four Swiggy employees—current and past—and likewise in the path of success, Swiggy had always been surrounded with controversies. According to the employees, equity, bonuses which were promised initially were never paid. There was a lot of dissatisfaction among employees prevailing in the company. The hiring was done as a cover-up intended to misguide the media and conceal the number of people leaving the organization. Many employees got fired and have not been paid their final settlements or/and bonuses. Delivery executives were poorly treated. Compensation structures were changed now and then, and their monthly payouts were dwindling.
Delivery executives had daily targets and were paid bonuses based on the number of deliveries they made, but without food, fuel or vehicle maintenance. The post also said no background check was done on delivery boys and nobody took accountability for them. Swiggy took no liability for an accident if, it ever happened. An employee would sustain if good culture prevailed in the company, but Swiggy’ culture had become questionable. The post alleged that the senior management was always plotting against each other. Swiggy claimed that the blog post aimed at distorting and damaging Swiggy’s reputation as an organization. Swiggy’s attitude concerning the employees and increasing competition in the segment raised questions on its policy (TNM, 2017).
Managing the Controversies Through the Public Relations Strategies
Majety maintained a balance between offline and online marketing campaigns through its unique marketing strategies. The campaigns were promoted on social media sites such as Facebook, Twitter, YouTube, Pinterest and Instagram—‘Secondtomom, #DiwaliGharAayi, #Singwith Swiggy, and Working Late, #SwiggywaliDiwali’, to name a few. Know Your Food Series of photos and food worked in local areas. Swiggy succeeded in building its brand awareness and connecting the target market with the help of these channels. Majety and his social media team were quite active with regular updates on Facebook and other social media platforms. They shared at least one post on an average in a day (Amarja, 2016). Majety and his team used Swiggy’s social media promotional campaigns and engaged with its customers from solving grievances to collecting the feedback. He segmented Swiggy’s market well and targeted customers between 18 and 55 years. The targeted customer could be professionals, students or entrepreneurs working in MNCs who were financially stable and living in posh localities. Swiggy stood out compared to other players like Zomato and Ola in their remarkable social media campaign strategies.
Majety and Nagarajan used influencer marketing to promote their product to impact customers’ minds significantly. Swiggy analysed WhatsApp’s enterprise solution, which allowed the food ordering service to give real-time alerts to customers through the messaging app (IANS, 2018). Swiggy app users could rely on the Swiggy chat window for the notifications within the app. Through Swiggy, WhatsApp service offered regular notifications like acceptance of orders, the order in the kitchen, delivery status and order delivered. Hence, instead of Swiggy sending text messages through SMS, customers got text messages through WhatsApp (IANS, 2018).
Helping Partners
On the path of online delivery, Majety was not alone. He had to help stakeholders like investors who helped it survive in the competitive market, irrespective of controversies. Food delivery continued to describe the flow of enormous capital in India’s start-up ecosystem. Investors were queuing up at Swiggy. Naspers from South Africa and Chinese delivery giant Meituan Dianping, SoftBank, Russian hedge fund DST Global and US-based Coatue Management had already invested in it. Alibaba and Ant Financial had analysed a possible merger between Swiggy and Zomato. The talks failed because of differences in the alignment of business and valuation metrics. Swiggy took less time to enter the Unicorn club than Zomato as Swiggy became a US$1.3 billion company. It came under 4 years since its inception, less than half the time what Zomato took to earn this tag. The investors’ funding had helped Swiggy’s capability to be ahead of its competitors, such as Ola owned Foodpanda, Zomato and Uber Eats. Uber Eats and Foodpanda were dark horses ready to challenge the dominant position of Swiggy. Swiggy was supported by one of the market’s best investors. Swiggy raised US$75.5 million from different investors. Norwest Venture, RB Investments, Apoletto, and Bessemer Venture Partners, Accel Partners, SAIF Partners, Harmony Venture Partners, to name a few. Accel and SAIF Partners funded US$2 million. Swiggy linked with the media conglomerate Naspers in May 2017 and raised US$80 million in the E series round, and US$100 million in Naspers and Meituan Diaping Series funding, which raised a total of over US$255 million, for an estimate of US$650 million (Kashyaap, 2018).
Future Path
Majety discovered a new cash cow, the supply of milk. Discussions were on to acquire a subscription-based Super Daily milk supply company. Swiggy was flushed with funds and also wanted to start a food supply business. It was looking to diversify into carrying medicines and hyperlocal groceries to boost volume on its platform. Many factors worked favouring Swiggy, which drove the delivery segment’s growth (PTI, 2018). The population’s changed lifestyle and working, young professionals with increased disposable income boosted the delivery segment. A more significant share of women in the workforce worked like icing on the cake. Swiggy joined Indifi Tech to launch the Swiggy Capital Assistance funding programme for restaurant partners (Peermohamed, 2017). Majety assisted its restaurant partners in reaching new customers through technology. It helped restaurant partners increase order volumes and strengthened their delivery services, brand equity and recall value. Thinking about the partners, Swiggy had also launched a changed owner app for these restaurant partners that allowed them to manage various orders they received, through real-time notifications on their service performances, consumer reviews, feedback, menu analysis, etc. Swiggy covered new cities to expand its presence and operations in those cities. The new cities were Pondicherry, Dehradun Vijayawada, Mysore Nasik, Guwahati, Ludhiana and Kanpur and had already partnered with more than 1,200 restaurants in these cities (PTI, 2018). Out of 27 city operations, Bangalore and Delhi contributed more than 50% of Swiggy’s revenue. Mumbai and Hyderabad contributed to only 26% of its revenue. These facts revealed that Swiggy had big metro cities to be explored. They also launched Swiggy Packaging Assist marketplace programme (Srinivasan, 2018), Access Kitchen, for restaurant partners.
Swiggy’s Future Course of Action
The restaurant partners’ complaints, lack of satisfaction from the food aggregator, had spread the unrest. The arrival of new players like Uber Eats (acquired by Zomato now), strengthening existing players like Zomato, Ola, and other restaurants starting their delivery services had been working negatively for Swiggy. The controversies surrounding Swiggy had raised a question in the investors’ minds regarding their investment decisions. Furthermore, industry observers worked out and were excited to see new strategies that Swiggy would adopt to sustain and grow. Which marketing strategies would Swiggy adopt to clutter out from the competition and will overcome the surrounding controversies while saving its reputation, also using crisis management in creating and maintaining a good relationship with Swiggy’s stakeholders? On reflection, Majety realized that throughout the journey since 2014, Swiggy had achieved many milestones. Majety had come a long way in just 6 years of its operations but found himself surrounded by many controversies, challenges and threats on the way to success. Majety and Nagarajan planned to take on all the controversies with the help of his team. Teams were assigned to talk to delivery boys, restaurant partners and customers; one team dedicated to social media, and another team was responsible for the traditional media forms. Nagarajan was required to plan to overcome these controversies, which were impacting Swiggy’ reputation.
Footnotes
Declaration of Conflicting Interests
The authors declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.
Funding
The authors received no financial support for the research, authorship and/or publication of this article.
Note
This case has been written based on published sources only. Consequently, the interpretation and perspectives presented in this case are not necessarily those of Swiggy or any of its employees.