Who are Swiggy’s stakeholders?

Swiggy is a platform that helps restaurants get customers and customers order food from their favourite restaurants. 4 main stakeholders are :

1. Customers

2. Restaurants

3. Delivery Partners

4. Payment Platform / Gateway

How is Swiggy’s pricing perceived by the different groups of stakeholders ?

Value = Perceived Benefits – Perceived Costs

Customers and Restaurants: From customer’s and restaurants point of view, value is the sole justification for price.

Perceived Costs to Customers from Swiggy :

  • ●  Delivery Fee

  • ●  Subscription Fee for premium services

    Perceived Benefits to Customers from Swiggy :

  • ●  Convenience

  • ●  Choice

  • ●  Quality Assurance

  • ●  Grievance Redressal

  • ●  Brand Name

  • ●  Exclusivity

    Perceived Costs to Restaurants:

● Commission paid to Swiggy Perceived Benefits to Restaurants:

  • ●  Marginal Revenue from listing the restaurant on Swiggy

  • ●  Increasing reach of restaurant

  • ●  IT support

  • ●  Build customer loyalty

  • ●  Platform for marketing and advertising

  • ●  Provision to operate as a delivery only restaurant (Cloud Kitchen)

  • ●  Swiggy’s packaging for delivery

    Delivery Partners: Swiggy pays its delivery partners per order (that’s delivered to the customers). It can be seen from a societal and demand-supply perspective.

  • ●  Because of the abundance of cheap labour, food delivery can not be priced higher unlike other developed countries.

  • ●  Delivery partners should be paid sustainable wages.

  • ●  If the demand for food delivery increases, delivery partners can command higher fees.

Payment Platform / Gateway : Swiggy pays different payment platforms, gateways and wallets and its cost is included in the price charged to the customers. It can also be seen from a value perspective.

Perceived Benefits to Swiggy:

  • ●  Customers can choose from a host of options to pay thus reducing abandonment rate.

  • ●  Easy tracking of payments.

  • ●  Faster Delivery

How would you describe Swiggy’s pricing model to the product marketers on your team?

There are three pricing models that are to be followed by Swiggy team:

1. Penetration Pricing – Initial phase

2. Demand based pricing – secondary phase onwards

3. Value based pricing – tertiary phase onwards

Penetration Pricing – While Swiggy would start with relatively lower prices to increase the market share that it has, once it has acquired a sufficient market share, it would eventually and gradually increase the prices to move towards achieving a break even such that it doesn’t affect its total number of orders/day by anything more than say 10%.

To add to the above, partnerships with banks/payment gateways can lead to good discounts further helping in penetration into the market.

Demand Based Pricing – Also known as Surge pricing, we’d implement this model during the surge times. Eg. Festivals, Rains or the most recent example, lockdowns. As the demand for the commodity increases, the price can be variably increased. This would help in regulating the number of orders received, rewarding the extra efforts of the teams simultaneously. However, the increment in prices can’t be random and must have a proportion and justification.

Value Based Pricing – This model of pricing will be seen by the feature called “Swiggy Super”. The value being delivered here will be exemption of delivery charges, surge charges and a free meal on ordering selected meals. The ones who wish to avail these special value services, must pay a little extra monthly/quarterly.

Define a pricing strategy that will help Swiggy match or even exceed its competition.

We’d suggest evolving the current pricing strategies by introducing Swiggy Credit and Wallet. It will be a revolutionary feature among the food delivery apps. The strategy here is:

  1. Figuring out a set of regular users or Swiggy Super subscribers.

  2. Giving them the option of utilizing Swiggy Wallet and Credit facility.

  1. Analyse their reaction to the same.

  2. Evolve and reiterate.

  3. Roll the facility out to other relatively less regular users.

Note: The wallet can be topped upto 2000 INR and the credit can be utilized upto 500 INR. Based on the nature and frequency of repayment, the credit limit can be increased further at later stages.

What is the main objective of your proposed pricing?

The target audience of Swiggy is mostly millennials. Younger millennials are known for having less money management skills and even lesser patience. The above pricing strategy would help millennials be worry free towards the month end and yet be regular and loyal customers of the app.

The objective is to translate Millennials’ lack of time, temporary financial deficits and impatience into value that can be offered to them and be charged appropriately on the basis of the same.

Disclaimer: The case study is from the point of view when Swiggy must have started. Kindly view it in that light. However, your suggestions are most welcome. Thanks!