Swiggy Tightens Its Belt to Take on Zomato
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When it comes to ordering food online in India, you are either a Swiggy person or a Zomato lover. The food-tech segment in the fastest growing nation has seen early entrants like Zomato and Swiggy fight for the top spot and gain maximum customers.
While there were rumours of a prospective merger between the two food giants, reports suggest that the talks fell through due to differences in valuations (with Swiggy being undervalued by Zomato) and diverse business vision. Rumour had it that Swiggy would have taken over the online food delivery segment of Zomato making the latter the biggest and only player in the segment.
But in a turn of events, Swiggy has now gone on to raise USD 100 million in Series F Funding from one of the world’s largest technology investors Naspers and China-based e-commerce platform Meituan-Dianping.
With the mettle of fresh funds, Swiggy is all geared up to take on Zomato, which has enjoyed the top spot since it became a unicorn.
Entrepreneur India takes a look at how the two companies have been competing to grab the title of Foodtech King in India.
It’s All About Funds
The competition between Zomato and Swiggy was never going to be easy or cheap. Swiggy’s Series F funding of USD 100 million is its largest round yet. Led by Naspers, a global internet and entertainment group, and one of the world’s largest technology investors, the Series also includes new investor Meituan-Dianping, China's largest service e-commerce platform.
With this new funding, Swiggy plans to strengthen its market leadership position by introducing a host of unique and advanced products and services. As part of its long-term strategy of bridging the existing supply gaps in the marketplace, Swiggy is expected to make investments in its new supply business line.
“With this funding, we will further invest in building differentiated offerings, plugging the white spaces in the ecosystem, and developing our technology while keeping superlative customer experience at the core," said Sriharsha Majety, CEO, Swiggy in a statement to the press.
The funding news comes in a week after Zomato’s recent funding of $200 million from Ant Small and Micro Financial Services Group, valuing the company at about $1.1 billion. In the beginning of 2018, Zomato had also received a boost with Morgan Stanley readjusting the company's valuation to $2.5 billion.
Acquiring For Expansion
As a company grows, acquisitions become paramount. Instead of building new teams for new verticals, mature start-ups look at acquiring smaller peers that can help them plug any or all loose ends.
In a bid to win the race, both Zomato and Swiggy have been on an acquisition spree, although the former has enjoyed the upper hand till date.
Recently, Swiggy had acquihired gourmet Asian food startup 48East. With the acqui-hire option, Swiggy welcomed senior talent from the start-up 48East.
Meanwhile, Zomato has been looking at expanding its business and smoothening operations through acquisitions. In its latest, Zomato engulfed food delivery start-up Runnr to smoothen its logistics.
Runnr, in itself, was formed by a merger between hyperlocal delivery start-up Roadrunnr and food-ordering start-up TinyOwl.
In about 10 years of operations, Zomato has done 10 acquisitions, many of which are international to strengthen its foothold on the global map.
What Does The Future Hold
As the race intensifies, both Zomato and Swiggy are going to turn to aggressive marketing campaigns in a bid to steal customers, considering India is only beginning to go digital and use of technology in food is being slowly embraced by primarily millennials. Zomato's marketing campaigns often become headlines in news, the recent one being it's witty hoardings that were put up across the metropolitan cities in India. The same campaign had also come under fire for hurting sentiments by using "MC/BC".
In another advancement, the segment could also see robust consolidation. Runnr is already an example of success in the consolidation space. And the sector could see many more such cases. Another player, Foodpanda has already been acquired by Ola to reboot its attempts of entering the food delivery arena. Ola's rival Uber too has already initiated its food delivery services with UberEats. Meanwhile, there are also rumours of Flipkart being in talks to acquire Swiggy.
Given India's turn to be a Digital India and welcoming foreign players, international players like Deliveroo are likely to get interested and we could see Zomato and Swiggy join hands with interested global peers to combat competition with each other.
Only future will tell how well Zomato and Swiggy will manage their fresh funds to expand & grow domestically.While Zomato already has an international presence, Swiggy is yet to establish itself in a global space.