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Swiggy is the most successful food-tech startup in India: COO Vivek Sunder

Swiggy is the most successful food-tech startup in India: COO Vivek Sunder
Vivek Sunder

Online food delivery firm Swiggy is on a funding spree this calendar year. In June, it had raised a whopping $210 million in a Series G round led by South African technology conglomerate Naspers and Yuri Milner's DST Global. The investment valued the firm at around $1.3 billion, vaulting it into the unicorn club.

In February, it raised $100 million (Rs 640 crore then) in a Series F round led by Naspers. But the Bengaluru-based firm continues to attract investor attention. It is rumoured to be raising more capital, reportedly $500-700 million (Rs 3,500-5,000 crore), from well-known investors, including China's Tencent, anytime soon.

The company is also on an expansion drive. Last month, it acquired Mumbai-based Scootsy Logistics Pvt. Ltd, which delivers food, fashion apparel, home décor, and more. The acquisition will help Swiggy broaden its restaurant network.

In July, Vivek Sunder, formerly with FMCG major Procter & Gamble, joined the firm as its first-ever chief operating officer.
 
Sunder spoke to TechCircle from Swiggy’s corporate office in South Bengaluru about how the food-tech firm became the leader of the pack, day-to-day operations, who the company’s real heroes are and much more. Edited excerpts: 

Swiggy raised money in February this year and then again in June. How are you using these funds?

Any money we raise is usually to achieve what we call 'the next big problem to solve'. We are a technology-first company and our capital goes towards developing quality technology. Next is the investment in our core logistics operations—the staff, which consumers pay us for. The real heroes are the men and women who deliver food to homes. We also invest in ideas—it could be internal or ideas that we acquire. Recently, we announced the acquisition of Scootsy. It is a good strategic investment we have made.

How is the Scootsy acquisition working out for you? Why did you buy it?

We are trying to understand their operations, the strategic advantages they have and how we will drive synergies. It is a work-in-progress. If we find technologies, capabilities, people or an intangible asset that is worth our money, then we are not averse to an acquisition. In most cases, good people come along with the acquisition.

Do you plan to make more acquisitions?

We do not have an organisational strategy to acquire companies. We have had many learning trips. A lot of companies come here too and teach us what they do. This could be from different parts of the world. There is always constant sharing and re-applying happening. But we don’t have an M&A department.

Have you taken on board more delivery executives in the last two years?

Swiggy started in 2014 in one area of Bengaluru with seven delivery executives and was among the first companies to have a dedicated fleet. Since then, the company has grown manifold. Today, we have close to 70,000 delivery executives spread across 22 cities in India.

Earlier this month, Zomato had announced that it is buying TongueStun, which was a sign that it is taking business-to-business seriously. Is Swiggy also looking at the B2B sector?

We are a consumer-focused company. Zomato bought a B2B2C company. It is a way of reaching customers during their lunch hours. But we do have some pilots catering to office canteens, which are ongoing.

What challenges do you currently face?

The company grew around 4.4 times in terms of orders per day in the last 12 months, between August 2017 and August 2018. When you become bigger, the problems are larger. Delivering 30% growth is harder now because you start to saturate and you may get more diminishing returns. 

But the company has the ambition to continue that pace for the next couple of years. That is why we are trying to find new business cases. So running late night deliveries between 10 pm and 2 am and offering breakfast from 7 am to 11 am are relatively new but emerging categories for us. These were small percentages for our business two years ago. 

The second type of use case we are trying to solve is geographical. We are constantly expanding and will lead to growth. In the last 10 months, we added more cities than we did in the first three years of our existence. Then there is the case of our core food business of working with restaurants.

You launched a kitchen backend facility, Access, for select restaurants in Marathahalli, Bengaluru last year. How big is it in terms of private labels? Do you plan to grow that business as well?

Our agenda is to grow the business zone by zone, consumer by consumer. We do that with the different tools we have. Access is just one of them and it doesn’t come before the customer. We are married to the consumer-first strategy. We don’t give any special privileges to any private brand. I just tell them to make food at affordable rates with appealing packaging and ensure a smooth delivery experience for our customers. The reality is that consumers have loved it.

Could you tell us about your membership programme Swiggy Super? How many customers have opted for it, the growth and your target for the programme?

Swiggy Super was rolled out in August this year across seven major cities to select users. A Swiggy Super member can avail unlimited free deliveries across all restaurants, irrespective of the distance or time of day.

The response to our initial rollout has been very positive which has encouraged us to scale this programme across all our users in these markets.

There are different models in food-tech. Which one works right now and which doesn't?

If you think about who the most successful food-tech startup in India, it is obviously Swiggy. What Zomato did well was to create a good restaurant discovery and ratings platform. That is their heritage. We respect them for that. But if you are talking about delivery, then it is us. In a physical store, you have to take your car from place to place. On the phone, it is literally just an inch away. With us, choosing a store is one inch away. We have won the one-inch battle for the past two years.

Companies like Zomato and Grofers have withdrawn from smaller cities but they are re-launching in these areas now. Is money the only factor pushing you to enter these cities? Is the market here large enough for your business to be viable?

We never withdrew from any markets. It has nothing to do with funding. Money makes it easier. Are there customers willing to pay for convenience? Can we give them the same quality as we do in the metros? If the answer is yes, then we should be in those cities. 

We go by zones. A city like Bengaluru will have 30 zones, while Vishakhapatnam might only have four or five. It should be a combination of restaurant partners, consumers and delivery executives.

Thanks to our IPL advertising, we have been able to reach out to smaller cities. We have the ambition and readiness to enter them. Once restaurants and consumers are ready, we enter the market.

Why did you leave P&G?

I still have another 20 years left in my professional career. Not being part of the technology startup world would limit my horizon. The challenges I faced in the last two months have forced me to be a student. At the same time, Swiggy wants a specific skill set from me. At P&G, I had to understand the product and consumer technology. In 1999, their salesmen had PalmPilots, which cost more than the annual salary of the people who carried it.

How different has been your experience working for a company that grows 10% annually to one that clocks 100% growth every quarter?

When an FMCG firm launches a brand or enters a new country or territory, the growth expectation is not that different. When we launched in Ethiopia, we were growing at Swiggy’s pace now.

It is not as if food delivery happened for the first time recently, just that takeouts were more popular. What companies like Swiggy have done is created a category from scratch and growth is an outcome of that. 

We use cutting-edge technology to alleviate friction. For instance, the traffic in our cities has become so bad that eating out is a big hassle. We remove friction when people don't need to learn new skills. Over the year, an enabling ecosystem like mobile with data and GPS to leverage technology developed. Now, we talk about voice and vernacular happening in the next decade.

If we find that the friction is people's inability to interact with the platform is language, we will introduce Indian languages. Today, our call centres are multilingual. We understand that by looking at how they interact and when or why people are dropping off the app. 

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