Yesterday, during a discussion on moats, I got asked an interesting question.
I wrote a long twitter thread in reply. Turning it into a blogpost (with some minor edits) because threads on twitter also suck.
What was the difference between Swiggy and Tinyowl in the early days?
While Tinyowl was burning money doing IPL promotions, Swiggy was razor focused on catering to the needs of the customers.
What were the needs of a customer while ordering food online?
Lets go through the purchase funnel to understand more:
- User comes on the app
- Searches for their favourite restaurant or meal
- The user can check the restaurant/meal quality through ratings, images
- The app provides a fair ETA
- The app helps in the discovery of the meal/restaurant
- You trust the item you chose to be the one you had in mind
- The app can upsell, and provide recommendations on sides
- The user checks the price, applies discount if any
- The user completes the order, gets an ETA post order which slightly changes based on availability of delivery boy and how long it takes for restaurant to accept the order
- The delivery boy brings the food to the user
- The ATA is as close to the ETA is possible
So if you had to create a business equation for Swiggy, what would be the variables?
- Diverse choices/ Good restaurant inventory
- Speed of Delivery
- Delivery fleet
- Trust and Reliability
Business equation of a food delivery business = Diverse choices * Lower price * Faster delivery * Superior product experience * Bigger delivery fleet * High reliability and Trust
Lets assume, the overall product (basic features) was same for all of these products. And like most on demand apps Swiggy raised enough money, and used the capital to acquire new customers quickly and grow.
So what were the differentiators in the early days?
Lets go through the other variables in Swiggy’s business equation.
Diverse choices/ Good restaurant inventory
There was no barrier to supply (restaurant or delivery boys) acquisition in 2014-15. Unlike now, where some restaurant chains have exclusive partnership with Swiggy or Zomato, there was no such thing back in the days when Swiggy entered the market.
And since Swiggy did their own delivery they could onboard as many restaurants as quickly as possible.
Swiggy soon had most the restaurants in the neighborhood. I was in Mumbai when I first heard of Swiggy, and you could see that Swiggy’s selection of restaurants was vastly superior to TinyOwl or FoodPanda’s. As long as you were willing to pay a deliver fee, you could rely on them to fulfill your order from most nearby restaurants.
Speed of delivery
Swiggy realised much early on that the product experience for a food delivery was not restricted to the look and feel of the app. If you have to have give a 10X experience to your users, you need to own the delivery experience.
With their superior allocation tech, and high supply of delivery boys, they ensured that you got your food on time.
Before Swiggy, you could never order from MacDonald’s or KFC. Because you would always get soggy fries. Swiggy not only allowed you to order items from more places, but also allowed you to order items which were not possible on FoodPanda or TinyOwl.
Trust and Reliability
Sharing live location of your delivery boy was a game changer. Before that you had to pray to God that the delivery guy was on the way to the restaurant and would get your food eventually. I remember ordering from FoodPanda before that, where sometimes you had to wait for an hour before realising the order was cancelled.
The Rs. 9 Kulfi from FoodPanda loses its appeal if it comes in a half molten after 2 hours.
By bringing more transparency in your order status they brought more trust in the platform.
Trust and transparency was not just in the delivery experience. They were one of the first apps to show photos of recommended items. Before Swiggy, I would always wonder what an item would look like. Should I order an Afghani kabab or just go with the usual Chicken tikka? After I learned to trust the photos shown, and also the ‘recommended tag’, my options exploded.
What about post order customer support? You just had to use Swiggy’s Help section to know how much better it was compared to the other incumbents.
Fun fact: Last time I used FoodPanda was in 2018 (to order the 49 Rs Biryaani once). The delivery boy was not assigned even after an hour and I had to use their Support. I realised then that FoodPanda’s customer support chat did not store chat history, and every time you came back to the app, it would create a new ticket and chat channel, and you had to explain to the Support person about your issue all over again.
Swiggy spent a lot of money and time in building their delivery fleet. And also training them. In a 3 sided marketplace, you can only win if you have enough supply liquidity in both restaurants and delivery fleet.
It managed to delight you with 20 min ETAs, and delivery boys who did not have to call you 5 times to understand your location, because they understood far early that owning the delivery experience is key.
Zomato at first did not deliver the food themselves and instead relied on the restaurants to fullfil the delivery. The JTBD in food delivery is delivery of fresh food on time and not just the food order placement. By not owning the end to end experience, Zomato was losing to Swiggy. Hence they also started delivering food themselves when they couldn’t compete with Swiggy’s delivery experience.
The difference between Swiggy and Tinyowl or FoodPanda was that if all 3 stopped discounts, and you would had to go with one, it would always be Swiggy. Maybe at a lower frequency, but your preference would always be Swiggy.
Jeff Bezos keeps talking about the things which remain constant for decades. In e-commerce, it is a user’s preference for the service which can provide.
- Superior Inventory
- Cheapest price
- Fastest delivery
Swiggy won in all 3 in their fight with Tinyowl and Foodpanda.
Swiggy did have an amazing product. And maybe superior tech. But without the other things mentioned in the post, they would not have been able to win the market share that they did way back in the days.
Master post: Frameworks to think about growth