Buyers of telecom subscriptions and banking products such as credit cards will get Swiggy One as part of their package under a B2B programme called Swiggy One Lite. Swiggy One’s bundling exercise comes after rival Zomato reintroduced its ‘Gold’ subscriptions in January. The latter claimed Zomato Gold had 1.8 million subscribers as of the quarter ended March 2023. Swiggy One’s subscription stands in “the low-single-digit millions”, a person in the know told ET, without giving a specific number.
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Bengaluru-based Swiggy is also set to experiment with different pricing tiers for Swiggy One, where a higher-priced tier will provide discounts and offers across multiple verticals such as food delivery, quick commerce, and porter services, while a lower priced tier will do the same for just one or two verticals, a person in the know told ET. The experiment will likely be implemented in the quarter starting October.
Currently, Swiggy One gives users discounts and benefits such as waiving delivery fees across most of its offerings, including the food app, quick commerce vertical Swiggy Instamart, restaurant search and booking offering DineOut, and hyperlocal porter service Genie. Zomato Gold, on the other hand, only covers food delivery and dining out, and does not cover Instamart’s quick commerce rival BlinkIt.
A Swiggy spokesperson confirmed the bundling with banking and telecom firms, but did not comment on differential pricing tiers.
“We have now launched Swiggy One Lite, a B2B offering, where we are working with several large brand partners in telecom and banking, among others, so that their customers can experience Swiggy with Swiggy One Lite. This will include benefits such as free deliveries on food and grocery orders and offers across Swiggy’s many services. Brands can bundle the Swiggy One Lite membership with their own products,” the Swiggy spokesperson said in an email.
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A battle for market share
Both platforms are fighting to increase their share of subscriptions, as they attract customers who make purchases in high volumes. In its report for the quarter ended June 30, Zomato said the Gold programme contributes over 30% of the total gross order value (GOV) for its food business, which stood at Rs 7,318 crore that quarter.
Bundling offerings is also a well-established way of boosting subscription figures in India, and is a tactic often employed by the likes of over the top (OTT) firms such as Disney Hotstar and Sony Liv. On July 26, Swiggy also launched a co-branded credit card with HDFC Bank.
Swiggy One costs Rs 1,299 for three months without any discounts, whereas Zomato Gold costs Rs 999 for the same duration. However, both firms offer deep targeted discounts to customers; ET found three-month subscriptions of Zomato Gold going for Rs 99 and Rs 249 to different customers, whereas three-month subscriptions of Swiggy One were available for Rs 39 and Rs 149. ET could not confirm the most widely available price points as the discounts are targeted at individual customers.
“Both (Gold and One) are cashburn operations as they’re being offered at deep discounts, but they are necessary in the fight for market share,” said one of the persons in the know quoted earlier. Anurag Panganamamula, vice president of revenue and growth at Swiggy, oversees Swiggy One and reports directly to co-founder and chief executive Sriharsha Majety, the person added.
This spend on propagating subscriptions also directly relates to the fight for overall market share between the two firms, with brokerage reports pegging Swiggy’s share at around 45%, giving Zomato an edge over its Bengaluru-based rival. A Jefferies note on Swiggy from June said that “muted (food) industry growth impacted Swiggy’s H2 CY22 GMV (gross merchandise value), which grew around 15% year-on-year (YoY) and around 10% HoH sequentially to $1.3 billion’’.
The note added that Zomato, too, had seen a similar trend, with 22% YoY and 8% HoH sequential GMV growth during the same period. “Swiggy focused on reactivating dormant users (among other things), although some of these (measures) were partially offset by industry weakness,” it added.
While Zomato is listed on the Indian bourses, news reports last week suggested Swiggy had initiated talks with bankers to assess its valuation before an expected 2024 initial public offering, after halting the process for months due to weakness in the markets. On August 28, US-based asset management firm Baron Capital Group marked up its valuation of Swiggy by 34% to $8.54 billion.
On June 27, Swiggy’s biggest shareholder, Prosus, said its share in Swiggy’s loss had shot up to $180 million in fiscal year 2023 (FY23) from $100 million in FY22. That translates to an aggregate loss of around $540 million for Swiggy for the fiscal year.