The Story of Swiggy v. Zomato in Value Curves

Visa Kannan
Saison Thinking
Published in
6 min readAug 30, 2022


In April-2015, Swiggy, the category-creator in the Indian food delivery segment, raised a Series A round. In June-2015, Zomato started allowing customers to place orders on its platform. Until June-2015, Zomato’s revenues had come in the form of ad-revenues from restaurants listed on its platform.

In Aug-2017, Zomato hit the milestone of 3mn orders a month. However, there was a key difference between Swiggy and Zomato at this time. While Swiggy delivered almost all of its orders on its own, Zomato share of own-deliveries was ~7% (i.e., a bulk of the orders were delivered by the restaurants themselves). Zomato founder Deepinder Goyal was of the belief that food delivery is best left to the restaurants and run more profitably by them. In an interview at the time, he had this to say:

Currently, around 93 per cent of our orders are fulfilled by restaurants and only about 7 per cent is facilitated by Zomato through third-party delivery companies…We don’t think that doing food delivery only for a logistics business is a sustainable or profitable option. Restaurants doing self delivery like they have been for the last few decades will work best, because they are able to utilise their delivery boys for other errands in non-peak delivery hours. Or then, third-party players who do food delivery as well as other logistics during non-peak hours, is sustainable.

Today, of course Zomato’s own delivery partners, instantly recognisable on India’s streets in their trademark red t-shirts, deliver >95% of the orders placed on the Zomato platform.

I spoke to early employees of Swiggy to understand what their reaction to this point of view was. Did it give them pause? Did they wonder if the path they were pursuing was wrong? What I gathered was that, on the contrary, they were fairly excited that this would mean Zomato would ignore them for longer and they could execute faster without competition. To them, the “incumbent’s curse” was playing out in real time.

Chart out your value curve versus the incumbents

For Swiggy, the biggest insight and the unmet user demand in the food delivery space in 2015 was: the lack of reliability in the existing delivery methods. Owning the last mile service was the only way to bring reliability and that was what Swiggy realised and did differently.

If one were to draw the value curve for Zomato and Swiggy during that time, it would look somewhat like this:

Value Curves for Zomato and Swiggy in 2015

Let’s deep dive on these aspects:

  • Choice: Most restaurants in India offer delivery services to their catchment areas. Swiggy helped expand those services by: (i) increasing the radius for delivery; and (ii) bringing their delivery services to the few eateries that did not offer delivery (e.g. Corner House in Bengaluru). The improvement on this axis was certainly there but not big enough for this to be the main driver of growth or differentiation versus incumbents.
  • Minimum Order Value (MOV): Restaurants offering self-delivery have differing thresholds for doing deliveries depending on their economics and often these thresholds were quite high (INR 1000, where food delivery average order value is INR 300). Swiggy upended that by standardising the order threshold across the platform and bringing it down, first to 0, and now to INR 199.
  • Speed: Restaurants were doing self-delivery of orders either placed on the phone, or on platforms such as Zomato and foodpanda. Restaurants were capable of delivering their orders in their catchment areas in 30–45 mins. So this speed axis, in itself, was not a huge improvement that Swiggy brought in.
  • Reliability: The real problem with restaurants was that while they were capable of delivering in 30–45 mins, there was a lack of standardisation of experience from a customer standpoint and every experience was unique. Sometimes the food would come in 30 minutes, sometimes in an hour, at times not at all. The real magic happened when Swiggy combined speed with reliability. Every experience on Swiggy was the same. Every order was delivered in 35–40 mins. This, coupled with the fact that a customer could track exactly where in the process their order was, made Swiggy a delta 4 experience from a customer standpoint.

The reason a value curve is important versus just a table is because the value curve will tell you the extent of the spike in your service/product and whether it creates that delta 4 experience, which will make a customer switch.

Delta experience determines the size of the market

In 2019, the value of the food consumption business in India (at home + restaurants) was USD 670bn. Of this, the restaurant business was USD 65bn (~10%), of which USD 4.2bn was the food delivery business. As of the last round, Swiggy was valued at approximately USD 10bn and Zomato at its peak was at USD ~14bn (now trading at a market cap of USD 6.6bn).

2 decacorns in a market sized at USD 65bn. So what’s going on? What investors are really betting on is the expansion of the restaurant delivery business to replace at-home cooking habits. Of course, there are other macro factors which will impact this change (e.g., reduced dependence of millennials on home-cooked food, increasing disposable income and spending etc.), but that has to be supported by a service that provides an experience which is meaningfully different.

The internal belief at Swiggy was always that the TAM for delivery services could be expanded with the “right” operating model. They knew they had hit upon the right model when their retention numbers were 2x of competitors and order frequency was at 4 (which was more than competitors and also more than that of the grocery competitors i.e., bigbasket and Grofers). These were both signs that a delta 4 experience was being created versus existing alternatives.

On this topic, its helpful to juxtapose food delivery with the next-day grocery delivery business in India. Grocery is a USD 600bn market and has produced 2 start-ups: bigbasket and Grofers, each of which breached the USD 1bn valuation mark, but are no where near the benchmarks set by Zomato and Swiggy. The grocery market is 10 times larger than the restaurant business, why then these differing outcomes? I think, it has something to do with the value curve. Take a look below:

Let’s deep dive:

  • Assortment: The online players offer a wider range of products versus the local kirana but grocery is very much an 80/20 business. The local shops stock the most important SKUs and customers would still find what they need locally.
  • Minimum Order Value (MOV): Local stores typically offer delivery services for 0 minimum order in their catchment areas, especially for regular customers. On this axis, the online players do not provide better experience.
  • Speed: Local stores are faster because they typically deliver on the same day within 3–4 hours. In the alternative, the customer can always walk and get what they want since they’re physically close enough. On this axis as well the online players did not improve experience with their next-day offering.
  • Reliability: Unlike in food delivery, where lunch and dinner cannot wait, the local grocer can deliver anytime in a 1–5 hour time frame and the customer will not complain. Online players improved reliability significantly by sticking to their delivery slots, but the delta versus the local store was not as stark as in the food delivery case.
  • Price: Objectively, bigbasket and Grofers offered significantly better prices. But the really interesting thing is that customers perceive their local stores as having better prices. One way we explained this at Grofers was that perhaps customers compare on a product-type level (e.g. daal (lentil) is cheaper at the local kirana, but the quality is not the same as what the online players stocked).

A look at this grocery value curve makes it fairly clear that on certain aspects the next-day delivery players offered better value, on other aspects the experience was not superior to that of the local store. In other words, the experience delta was not enough to get people to switch and increase the size of the online grocery market.

It is vital for all businesses to not just consider the absolute value they offer customers but also the relative value/advantage versus existing solutions on parameters that matter to customers. Thinking about value curves in the context of the Zomato/Swiggy story was an interesting exercise for me, I would love to know what other sectors would be interesting to look at. Do reach out in the comments and let me know.



Visa Kannan
Saison Thinking

Tech investor @ SaisonCapital | eCommerce priors @Grofers @Lazada | 中文学生