Swiggy or Zomato Which is Better: 10 FAQ Answered

Swiggy or Zomato Which is Better: A Detailed Overview

In this enhanced case study, we will go beyond the basic financial and operational analysis of Swiggy and Zomato to evaluate their strategic initiatives, customer satisfaction, and future outlook. We’ll also consider external factors like market conditions and regulatory changes that could impact their performance in the long term.

1. Financial Performance Analysis: Swiggy vs Zomato

Benchmarking

To gain a broader perspective, let’s compare Swiggy and Zomato’s performance to global food delivery companies such as Uber Eats, DoorDash, and Grubhub:

Profit Margins: Zomato’s ability to achieve a profit is rare in the food delivery industry. Globally, most food delivery platforms struggle with profitability due to high costs (delivery, technology, marketing). For example, DoorDash and Uber Eats are also investing heavily, and profitability is a challenge for them too.
Revenue Growth: Both Swiggy and Zomato have impressive revenue figures of ₹11,247 crore and ₹12,114 crore, respectively. This rapid growth aligns with industry benchmarks as food delivery is one of the fastest-growing markets globally.

However, Zomato is slightly ahead with a positive profit margin, while Swiggy is in line with most industry players by operating at a loss

Sensitivity Analysis

Let’s evaluate how economic scenarios could impact their financial performance:

Recession: In a recession, consumer spending tends to decline. As people cut back on non-essential purchases, food delivery services might see a drop in orders. Both Swiggy and Zomato could face reduced revenue. Zomato might handle this better due to its current profitability, while Swiggy, already losing money, could face increased pressure.
Inflation: If inflation increases, the cost of food, fuel (for deliveries), and labor (delivery drivers) will rise. Both companies might need to raise prices, which could hurt customer demand. Swiggy may face more financial strain here since it is already operating at a loss.

Zomato’s ability to weather tough economic conditions might be stronger due to its positive cash flow, but both companies will need to carefully manage costs.

2. Customer Satisfaction and Loyalty of Swiggy and Zomato

Net Promoter Score (NPS)

Zomato has an advantage in terms of user satisfaction, with higher ratings in app stores. Users appreciate its user-friendly interface, wide selection of restaurants, and responsive customer service.
Swiggy is not far behind, but its slightly lower customer service ratings might reduce its NPS compared to Zomato.

Based on customer feedback, Zomato likely has a higher NPS, showing stronger customer loyalty.

Customer Lifetime Value (CLTV)

Customer Lifetime Value (CLTV) is a measure of how much a customer is worth to the company over time.

Zomato’s higher monthly transaction users and profitability indicate a higher CLTV. Zomato users might spend more and stay loyal longer, given the company’s focus on quality and service.
Swiggy, with its higher loss margins, could have a lower CLTV. If Swiggy can reduce customer churn and increase retention through better service, its CLTV could improve.

Loyalty programs like Zomato Gold and Swiggy Super can also boost CLTV by encouraging repeat orders.

3. Competitive Landscape and Market Trends of Swiggy and Zomato

Market Share Analysis

Zomato appears to have a larger market share based on gross order value (₹32,224 crore compared to Swiggy’s ₹24,700 crore) and monthly transaction users (18.4 million vs. Swiggy’s 12.7 million).
In regions like tier-1 cities, Zomato might dominate due to its larger restaurant network and better partnerships. However, in tier-2 and tier-3 cities, Swiggy’s presence might be stronger, as it’s focusing on expanding in those areas.

Overall, Zomato seems to hold a larger market share, but Swiggy could perform better in some smaller cities.

PESTLE Analysis

A PESTLE Analysis helps us look at the external factors that impact Swiggy and Zomato.

Political: Government regulations on labor laws, such as delivery driver wages and benefits, could increase operational costs. Both Swiggy and Zomato will need to manage this.
Economic: As mentioned in the sensitivity analysis, economic downturns or inflation could lead to higher food prices and reduced customer spending.
Social: The growing trend of health-conscious eating and organic food could push both companies to offer healthier options.
Technological: Advances in AI and machine learning can help both companies improve delivery efficiency, reduce costs, and enhance customer experience.
Legal: Legal changes around data privacy (e.g., India’s Data Protection Law) could require both platforms to tighten their security and data management.
Environmental: As consumers become more environmentally conscious, both companies are under pressure to adopt sustainable practices like reducing plastic in packaging.

4. Strategic Initiatives and Future Outlook of Swiggy and Zomato

Risk Assessment

Both Swiggy and Zomato face risks associated with their strategic initiatives:

Expansion Risks: Expanding into new cities or new services like groceries or errand services involves risks, especially if customer demand doesn’t match expectations. Swiggy faces higher risk here, as it’s expanding aggressively while still operating at a loss.
Technological Innovations: While drone delivery and AI investments promise efficiency, they are costly and may take time to deliver returns. Failure to adopt the right technologies could lead to wasted resources.
Sustainability Risks: Consumers are increasingly favoring companies that prioritize sustainability. Both companies must manage the costs of eco-friendly packaging and operations without sacrificing profits.

Scenario Planning

Let’s consider three potential scenarios for Swiggy and Zomato’s future:

Optimistic Scenario:
- Zomato continues to grow profitably, expanding its market share. It successfully implements drone deliveries, reducing delivery times and costs. Its sustainability efforts attract more customers.
- Swiggy reduces its losses and expands into new markets like groceries. Its tech investments pay off, helping it compete more effectively with Zomato.
Pessimistic Scenario:
- Zomato faces rising operational costs due to stricter government regulations and inflation, which cuts into its profits. Competitors like Amazon Food capture market share.
- Swiggy’s losses continue to grow, and its expansion into grocery delivery faces stiff competition from Dunzo and BigBasket. As a result, Swiggy struggles to maintain profitability.
Most Likely Scenario:
- Zomato maintains its lead with steady profits and customer growth. Its global expansion continues but at a measured pace. It remains the market leader.
- Swiggy reduces its losses gradually, focusing on technology and customer experience. It becomes a close competitor but still remains behind Zomato in terms of profitability.

5. Conclusion: Swiggy or Zomato Which is Better

Right now, Zomato is clearly leading:

Profitability: Zomato is the only profitable company, giving it the upper hand financially.
Market Share: Zomato has more users, higher gross order value, and operates in more cities.
Customer Loyalty: With a likely higher NPS and CLTV, Zomato retains more loyal customers.

However, Swiggy is a strong challenger:

Grocery Delivery: Swiggy is branching out into quick commerce (with Instamart), which could open new revenue streams.
Technological Innovations: Swiggy is investing heavily in AI and drone delivery, which could give it an edge in the long term.

In the long run, Zomato’s solid foundation and profitability make it the current winner. However, if Swiggy can manage its costs and leverage its new services, it could pose a serious threat in the future.

FAQs

1. Which is older, Zomato or Swiggy?

Zomato is older. It was founded in 2008, while Swiggy started in 2014.

2. Why is Zomato shutting down?

Zomato is not shutting down. However, some services or branches might be closed occasionally due to operational restructuring or market conditions.

3. Who earns more, Swiggy or Zomato delivery boy?

Earnings depend on the city, incentives, and hours worked. Generally, both offer similar pay structures, but individual earnings can vary based on delivery volume and location.

4. Why is Zomato not profitable?

While Zomato has achieved profitability in some quarters, it faces challenges like high delivery costs, intense competition, and marketing expenses, making sustained profitability difficult.

5. Why choose Zomato over Swiggy?

Users might choose Zomato for its larger restaurant network, better user interface, and loyalty programs like Zomato Gold, which offer discounts and exclusive deals.

6. Is Blinkit owned by Zomato?

Yes, Zomato owns Blinkit, which focuses on quick grocery deliveries.

7. Will Zomato be successful?

Zomato’s strong brand, large customer base, and focus on technology suggest it has the potential for continued success, though competition remains a challenge.

8. Is Swiggy more famous than Zomato?

In some regions, Swiggy is more popular, especially in tier-2 and tier-3 cities. However, Zomato holds stronger brand recognition in larger cities and globally.

9. Why are customers unhappy with Zomato?

Some common complaints include delayed deliveries, inconsistent food quality, and issues with customer service. Zomato is continuously working to improve these areas.

10. Why is food costly in Zomato?

Zomato’s pricing includes delivery fees, restaurant charges, and taxes, which can make food seem more expensive. Premium features and better service also add to the cost.