Rivalry in foodtech space in India is at its peak. Zomato, Swiggy, foodpanda, and UberEats have been competing fiercely to dominate larger pie of online ordering. All four are chasing growth by subsidising customers as well as restaurants heavily and hence bleeding profusely.
In the quest of chasing growth, Zomato and Swiggy have been exploring new verticals such as farm to fork and microdelivery. The duo also entered high margin vertical – cloud kitchen – Zomato Infrastructure Services (ZIS) and Swiggy Access.
While Zomato had wind up ZIS, Swiggy has been bullish about cloud kitchen and expects 25 per cent of its revenue from it. The Naspers-backed company had recently appointed Vishal Bhatia as CEO to scale up Swiggy Access.
Meanwhile, developing private labels – The The Bowl Company and Homely under cloud kitchen vertical haven’t been a major focus for Swiggy. But, now it seems that the foodtech major has chalked out aggressive expansion plan for pushing its in-house brand.
As of now, The The Bowl Company and Homely have been confined to Bengaluru. However, the company is taking it to other cities including Mumbai, Hyderabad, and Delhi (NCR).
“Swiggy is placing ads to several newspapers for hiring chefs and kitchen workforce across aforementioned cities. These hirings are meant to scale up its private labels,” said two sources aware with the company’s plan.
So far, the volume of private labels isn’t significant for Swiggy. “According to the current plan, Swiggy wants to drive 10-15 per cent of overall volume from private labels by the end of this FY. Besides The Bowl Company and Homely, it will also launch a couple of new brands,” added sources.
Unlike aggregating menu of third-party restaurants, the private label offers handsome margin in the range of 30 to 40 per cent. “Decision to ramp up private labels is largely planned with the view of improving bottom line simultaneously while driving scale,” explained sources.
Entrackr has sent detail queries to Swiggy over email. However, we did not elicit an immediate response from the company. We will update the post as responses come in.
“Besides taking private label brands to top four cities, Swiggy will also establish them in tier II and III cities the next fiscal,” said sources.
Scaling up private labels makes sense for Swiggy as it solves two key elements. It weeds out supply challenge in areas of a particular city where options aren’t much for consumers, private labels also offer margin that can’t be ever matched through aggregation and even cloud kitchen models.
