Have you ever thought how Zomato and Swiggy give so much discount? Even after giving so much discount, how are they making so much money? Today we will tell you what is their business model.
First of all, we must clarify that Zomato and Swiggy are not running in loss, in fact the valuation of these companies is around 25000 crores and big global investors are investing their money in these companies. Today we will discuss about Swiggy business model and how does Zomato make money or how Zomato works?
How Zomato Or Swiggy Makes Money?
Why would investors give their money to these companies if they were not profitable for business? There maybe a difference in Zomato and Swiggy profit margin but there is no difference between Swiggy and Zomato business model.
So if we talk about Zomato, then this company has 3 business segments – Food Delivery Service, Advertising Service and Business Consultancy Services.
Food Delivery Business
As you may be aware that Zomato and Swiggy often give 30% to 40% discount to people. But let us tell you that if a dish is found in a restaurant for Rs 100, then it will be available at Zomato or Swiggy for Rs 115 or 120.
So half the discount, they cover it from here. And the restaurant owner also finds it cheaper to deliver the customer at home due to the maintenance of the restaurant, so they give a further 15 -20% discount to Zomato and Swiggy, i.e. Rs 100 item to Rs 80 – 85.
Therefore, Zomato is serving food with no loss no profit by covering 30 – 40% discount. But still Zomato is giving more money to the delivery riders due to which they are running into losses in food delivery.
For example, if you search for a dish in Zomato’s app, you will see some restaurants at the top. To show these restaurants on the top or to add a restaurant’s ad, Zomato charges a separate fee from them and in this way he is giving a discount on the dishes of the same restaurant with the fee.
Business Consultancy Services
Zomato has all the information about which part of which state consumes which food more and which restaurant runs more. So, if you open a new restaurant and connect it with their business consultancy service, then Zomato will tell you what dishes you should keep and what the price of the dishes should be kept.
This is the way Zomato prepares the business plan for you and helps your restaurant to run. Instead Zomato charges a hefty fee. Although, because of this data, investors are investing. Maybe in the coming time, restaurants will not be able to run without Swiggy and Zomato, or if you open your restaurant, you wouldn’t be able to compete with them. So you too can join with them and earn a lot in the coming time.