Zomato and Swiggy are India’s leading food delivery platforms, transforming how people order and enjoy their meals. While they offer similar services, both companies have built diverse revenue models to sustain and grow their businesses. This blog explores the various ways Zomato and Swiggy earn money.
1. Commission from Partner Restaurants
A major portion of revenue for both Zomato and Swiggy comes from the commissions they charge restaurants for each order.
- Zomato: Typically, Zomato charges partner restaurants a commission of 15% to 25% of the order value. The commission varies based on restaurant popularity, location, and exclusivity agreements.
- Swiggy: Similar to Zomato, Swiggy collects 15% to 25% per order. Restaurants with higher order volumes or premium listings might pay slightly more.
| Platform | Commission Range | Factors Affecting Commission |
|---|---|---|
| Zomato | 15% – 25% of the order value | – Restaurant popularity
– Location – Exclusivity agreements |
| Swiggy | 15% – 25% of the order value | – Order volume
– Premium listings – Location and demand |
This commission model is a key source of income, contributing significantly to their overall revenue.
2. Delivery Charges from Customers
Both platforms charge customers a delivery fee based on distance, location, and order demand.
- Zomato: Delivery fees depend on variables like the distance between the customer and the restaurant, weather conditions, and peak hours. Zomato also offers reduced delivery fees for Zomato Pro subscribers.
- Swiggy: Swiggy follows a similar model, with dynamic pricing for deliveries. Users can subscribe to Swiggy One to enjoy free or discounted delivery services.
| Platform | Delivery Fee Model | Factors Affecting Delivery Fee | Subscription Benefits |
|---|---|---|---|
| Zomato | Variable pricing based on conditions | – Distance between customer and restaurant
– Weather conditions – Peak hours |
Zomato Pro: Reduced delivery fees and exclusive discounts. |
| Swiggy | Dynamic pricing for deliveries | – Distance and location
– Demand during peak times – Order volume |
Swiggy One: Free or discounted delivery services. |
Delivery fees not only cover the cost of delivery personnel but also provide a steady revenue stream.
3. Advertising and Sponsored Listings
Restaurants pay to improve their visibility on these platforms, creating an additional income source.
- Zomato: Offers sponsored listings where restaurants can pay to appear at the top of search results or in special sections. This increases their exposure and order volume.
- Swiggy: Allows restaurants to run promotional campaigns and sponsored ads to attract more customers. This model works well during festive seasons or peak hours.
| Platform | Advertising Method | Key Features | Best Use Cases |
|---|---|---|---|
| Zomato | Sponsored Listings | – Restaurants pay to appear at the top of search results.
– Special sections for premium visibility. |
Increasing restaurant visibility and order volume. |
| Swiggy | Promotional Campaigns & Sponsored Ads | – Restaurants can run paid ads to boost visibility.
– Custom campaigns during high-demand periods. |
Attracting customers during festivals and peak hours. |
Advertising helps restaurants increase their reach while generating consistent revenue for the platforms.
4. Subscription Services
Subscription programs encourage customer loyalty while providing predictable, recurring revenue.
- Zomato Pro: Customers pay an annual or monthly fee for benefits like free delivery, exclusive discounts, and priority service.
- Swiggy One: Offers free deliveries, exclusive partner discounts, and priority support for a fixed subscription fee.
| Feature | Zomato Pro | Swiggy One |
|---|---|---|
| Subscription Type | Annual or monthly fee | Fixed subscription fee |
| Free Delivery | Available on eligible orders | Free delivery on food and grocery orders |
| Exclusive Discounts | Special discounts on food orders and dining | Discounts on food deliveries and partner stores |
| Priority Service | Faster order processing and customer support | Priority customer support for subscribers |
| Service Coverage | Focuses on food delivery and dining benefits | Covers both food and grocery deliveries |
These programs drive customer retention while ensuring a steady revenue flow.
5. Cloud Kitchens and Private Labels
Both platforms have ventured into cloud kitchens—dedicated spaces where food is prepared exclusively for delivery.
- Zomato Kitchens: Zomato collaborates with restaurant brands to set up cloud kitchens. It earns revenue by charging a rental fee or sharing a portion of the restaurant’s sales.
- Swiggy Access: Swiggy provides kitchen space to restaurant partners under the Swiggy Access program. It earns through rent and a share of the order value.
| Feature | Zomato Kitchens | Swiggy Access |
|---|---|---|
| Collaboration Model | Partners with restaurant brands to establish cloud kitchens. | Provides kitchen space to restaurant partners. |
| Revenue Source | Charges a rental fee or takes a share of restaurant sales. | Earns through rent and a percentage of order value. |
| Service Focus | Expanding restaurant reach without dine-in facilities. | Supporting restaurants in high-demand areas. |
| Benefit to Restaurants | Lower operational costs and access to new customer bases. | Easy market entry and reduced overhead expenses. |
| Geographic Expansion | Helps Zomato expand in areas with high delivery demand. | Allows Swiggy to offer more options in underserved areas. |
Cloud kitchens reduce operational costs and allow both companies to expand into areas with high demand but limited dining options.
6. Logistics and Delivery Solutions
Beyond food delivery, both companies offer logistics services for groceries and other essentials.
- Zomato Market: Zomato delivers groceries through Zomato Market, charging both consumers and vendors.
- Swiggy Instamart: Swiggy’s grocery delivery service generates income by charging delivery fees and partnering with local grocery stores.
| Feature | Zomato Market | Swiggy Instamart |
|---|---|---|
| Service Model | Delivers groceries and essentials via partner stores. | On-demand grocery delivery through local stores. |
| Revenue Source | Charges delivery fees from customers and commissions from vendors. | Earns through delivery fees and partner commissions. |
| Delivery Speed | Standard delivery times are based on partner availability. | Focuses on quick delivery (within 15-45 minutes in most areas). |
| Customer Benefits | Convenient grocery shopping from the Zomato app. | Fast delivery and access to daily essentials. |
| Partnership Model | Collaborates with grocery vendors for supply. | Partners with local stores and large retailers. |
| Market Position | Secondary focus after food delivery. | Strong emphasis on instant delivery and rapid expansion. |
By diversifying into logistics, these platforms tap into additional revenue channels beyond food delivery.
7. Capital from Investors and IPO
Both companies rely on investor funding to fuel their growth. Zomato successfully launched an Initial Public Offering (IPO), allowing public investors to buy shares.
- Zomato: Raised substantial capital through its IPO, strengthening its market position.
- Swiggy: Continues to secure funding from leading investors like SoftBank and Prosus, supporting its expansion plans.
| Feature | Zomato | Swiggy |
|---|---|---|
| Funding Source | Raised significant capital through an IPO (Initial Public Offering). | Secures funding from major investors like SoftBank and Prosus. |
| Public/Private Status | Publicly listed on stock exchanges. | Privately held, not yet listed on any exchange. |
| Market Position | Strengthened market presence with increased investor confidence. | Uses external funding to fuel aggressive expansion and innovation. |
| Growth Strategy | Expanding through acquisitions, cloud kitchens, and new services. | Focuses on geographic expansion, grocery delivery, and logistics. |
| Financial Stability | Increased transparency and regulatory compliance due to public listing. | Maintains flexibility for rapid decision-making and strategic growth. |
These investments provide the financial backing needed to innovate and scale operations.
8. Data Monetization and Insights
Both Zomato and Swiggy collect vast amounts of consumer data. This data is valuable for market research and personalized advertising.
- They analyze customer preferences and order patterns, offering insights to restaurants to optimize their menus and marketing strategies.
- By selling anonymized data to third-party advertisers, they unlock yet another revenue stream.
Data-driven strategies enhance both their operational efficiency and earning potential.
Conclusion
Zomato and Swiggy have built robust and diversified business models that go beyond basic food delivery. Through commissions, delivery fees, advertising, subscription plans, cloud kitchens, and logistics, these platforms generate significant revenue. Their ability to innovate and adapt to market demands ensures they remain at the forefront of the food delivery industry.
Understanding their revenue models offers valuable lessons for businesses seeking to thrive in the competitive digital landscape.