Swiggy's New Move: Zero Commission Strategy to Challenge Zomato
This will enable new restaurants to sign up and accelerate growth
18 March 2023
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Jayashri Ghorpade
Swiggy's Launchpad program will offer new restaurant partners a zero percent commission slab for their first month.
The platform growth will be driven by new restaurant sign-ups, following the implementation of the latest move.
In FY22, Swiggy's net losses increased to INR 3,628.9 Cr, more than double the INR 1,616.9 Cr in FY21.
Swiggy has launched a new initiative called Swiggy Launchpad, which offers newly onboarded eateries a commission-free month. According to a statement by the foodtech company, this program will allow partners to save up to INR 20,000 in commissions and other benefits.
Swiggy stated that the decision would facilitate the enrollment of new restaurants on its platform, promote the growth of the company, encourage new entrants to adopt the food delivery model and strengthen the entire ecosystem.“Swiggy Launchpad seeks to build a win-win relationship with the restaurant partner ecosystem,” added the company.
The startup's offer of 0% commission for the first month aims to encourage new partners to test the waters before fully committing to the food delivery ecosystem.
“With 0% commissions for the first month of their operations, we hope more restaurants, cloud kitchens and other food entrepreneurs feel confident about online food delivery and take the plunge. We look forward to welcoming many new partners,” said the CEO of Swiggy’s food marketplace Rohit Kapoor.
Swiggy has announced a range of incentives for new restaurant partners, including a dedicated growth manager, free app advertising, and extended delivery reach. The announcement follows reports that rival Zomato was seeking to raise commissions from restaurant chains. Despite being a key source of revenue for foodtech companies, high commission rates are also a significant expense for eateries using the platforms. Swiggy claims to add approximately 10,000 new restaurants each month, and has more than 250,000 restaurant partners on its app.
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Losses Drag Swiggy Down
Amidst mounting losses and heavy cash burn, Swiggy has announced the launch of Swiggy Money, a digital wallet. The foodtech decacorn's net losses more than doubled to INR 3,628.9 Cr in FY22 from INR 1,616.9 Cr in FY21, while the resurgent competition from Zomato has not helped either.
Swiggy has recently offloaded its loss-making kitchen infrastructure business, Swiggy Access, to cloud kitchen startup Kitchens@ in a share-swap deal, and has also closed down its private label, The Bowl Company, and meat marketplace in Delhi-NCR due to non-performance-related issues.
Swiggy, amid reports of a public listing, has been affected by weak global cues and recessionary fears, causing it to consolidate and cut costs. This resulted in the retrenchment of 380 employees earlier this year.
As Swiggy continues to launch new services, it still struggles with significant losses, despite cutting commissions for a month. With the funding winter intensifying, the impact of this move on Swiggy's financial performance remains uncertain.
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