Swiggy has begun reaping the rewards of its new affordable loyalty program launched in October, said a report from IIFL Securities quoting data from its parent, Prosus. The program has helped India’s second-largest food delivery platform to gain market share against Zomato in the fight to be the ‘quick commerce’ king of India.
“In the Food Delivery segment, Swiggy has gained a marginal market share vs Zomato in 1HCY23; potentially a function of aggressive pricing of their loyalty plan and higher promotions,” noted the report authored by Rishi Jhunjhunwala, Saurabh Thadani, and Vishesh Jain.
The loyalty program named ‘Swiggy One Lite’ is an upgraded version of its existing membership program ‘Swiggy One,’ launched in November, two years ago.
As per the information shared by Swiggy, the new membership program is available at a discounted launch price of Rs 99 for three months, in which members will get 10 free Food and Instamart deliveries. In addition, Swiggy One Lite also offers a 30 percent discount at more than 20,000 restaurants.
According to the broker report, Swiggy has managed a growth of 17% y-o-y in the first half of the calendar year while Zomato trailed with a 13% growth.
Zomato however continues to lead the food delivery business in India with a 54% market share, noted the report. It also dominates the quick commerce game with Blinkit surpassing Swiggy Instamart in growth.
Blinkit’s Gross Merchandise Value – a measure of the total business done on the platform – grew 83% y-o-y in the first half of CY2023, surpassing the growth of Swiggy Instamart, which grew at 63% y-o-y.
“The Quick Commerce business made rapid strides as customer adoption drove the order
growth. Basket sizes grew well ahead of inflation,” said the analysts adding that “broader
product selection, densification of store network and faster delivery times” have continued to help both the platforms in customer acquisition and retention, despite the inflation and reluctance to spend.
The analysts also noted that the two key players in India’s food delivery business were able to cut down their losses and take steps toward profitability.
Interestingly, the food delivery platforms have taken diametrically opposite strategies for expansion.
Swiggy has the larger number of active restaurants at 274k, while Zomato has 226k restaurants availing its service.
Swiggy is going ahead with its plans to expand its presence across cities while Zomato is trimming the number. Zomato has brought down the number of cities from 1000 to around 700.
Swiggy currently operates in 599 cities across the country.
According to the analysts, both the players adopting strategies that cater to the needs of the consumers will continue to benefit the food delivery business in India.
“With the favorable industry dynamics, particularly in Food Delivery and both the players in a duopoly focusing on profitability, the industry is likely to continue witnessing the improving unit
Economics,” said the analysts.