How do food delivery companies like Swiggy, Zomato survive even after giving huge discounts to their users?
Let us first understand the revenue generation model of these companies:
- The partnering restaurants are charged for each order they fulfill through these websites, the charges ranging from 10-30% (30% is very rare). This charge depends upon the location and popularity of the restaurant.
For example, let us consider three restaurants X, Y, Z offering 10%, 20%, 30% commission on the business they get from the online delivery services. If 6000,5000 and 4000 is the total revenue generated by Swiggy for restaurants X, Y and Z respectively. Then the income generated for Swiggy is 600+500+1200 = 2300.
- Income generated through delivery charges paid by the customers. Usually it ranges from Rs 10 to Rs. 30.
Zomato receives on an average 3.5 million orders per month and considering Rs 20 as the average delivery charges per order, Zomato earns a revenue of about (3.5 million*20) 70 million rupees every month through the delivery charges paid by the customers.
- By providing premium features like promotion of a specific item of a specific restaurant by sending app notifications, mails or text messages to the customers.
- One upcoming model of revenue generation is by providing premium subscription to customers. By paying a fixed amount for a definite period, customers are provided with privilege services like free delivery, buy 1 get 1 free offers. Zomato provides ‘Zomato Gold’, while Swiggy has a free delivery subscription ‘Super’ in this category.
Now how are they able to give huge discounts and why do they have to?
- As mentioned above, restaurants join the network of these companies by agreeing to pay some commission for each order.
These companies forgo the commission to be received from the restaurants in the form of discounts offered to their customers. They do this in order to build their brand name and to capture the customers in the market hoping to have their loyalty. This strategy of building the brand name and capturing the market share helps the company in long run. How? By capturing large market share, they can earn huge profits even with lower rates of commission.
The discounting strategy of Zomato has led to spike in the number of new users to 2.4 million in September’18 from 0.19 million in January’18.
Discounting strategy creates high customer loyalty, hence a reasonably high amount can be spent to capture customers, as the investment recovery is apparently quick.
- Funding from VC’s provide sufficient capital to these companies to survive in the market even without making any profits for some time (can be for few years) until they build their brand name and capture a larger part of the market.
Zomato has raised a total funding of $ 635.8 million in 11 rounds of VC funding.
Swiggy has raised a total funding of $ 465.5 million in 8 rounds of VC funding. In FY18, Zomato recorded a loss of 106 crores. So even with constant losses around this figure, Zomato can survive for about 6 years without making any profits.
- They can also use their network and manpower build at the cost of such discounts to venture into other businesses such as logistics services, etc.
Ever wondered how an entrepreneur manages his entire day, shuffling between meetings, employees and clients. He has to work to make things work for himself and his company. An entrepreneur’s day is more or less the same irrespective of the domain that one is working in. Entrepreneurs have to wear a lot of different hats as they progress through their day. They are known to be early risers. The first thought that most entrepreneurs have as soon as they get up is their business. They’ll be checking emails and missed calls while still laying on the bed. Once the priority emails have been replied to, they wear the hat of a family person. It’s the usual morning for them, going to the gym, spending time with the family and getting ready to start a new day at work.
On reaching the office, entrepreneurs spend the first two hours basically connecting and communicating with the world. It usually consists of replying to emails, calls with prospective clients, etc. This is followed by lunch either with the team or with prospective clients. Team lunches are means for entrepreneurs to understand the concerns of their employees. The next few hours of the afternoon are usually spent on board meetings with teams to keep up with their progress and give a direction to go further.
The evenings are lighter, consisting of walks with employees, which helps with brainstorming outside the confines of the office. Most of the creative ideas come out of these talks, as people feel less intimidated in a friendlier surrounding, and this helps them to think better. After most of the workforce has left for the day, entrepreneurs take the late evenings to deliberate on big deals that need his expert views.
Once at home, an entrepreneur is back to be a family person, having dinner with the family. However, this happens only if there are no prior dinner commitments with clients. Even if an entrepreneur might end his day with a good book or pursuing some hobby, his company would always be at the back of his mind.
Everything being said, running a company is much more than a job, and an entrepreneur’s day cannot be defined or planned.
The first thing that comes in our mind when we think of Marwaris is business. Their success at business leaves us with multiple qualities to learn. Let us drill down into the basic qualities which made Marwaris successful at their businesses and what we as Future Entrepreneurs must inculcate from them.
- Frugality – Marwaris have long learnt the art of ‘Using Money to Build Money’ and the most important thing required to use money is to first save them. Marwaris don’t spend, they invest. Future entrepreneurs need to find all the opportunities to save as money saved is money earned and will be useful somewhere down the line. Respect every penny.
- Adaptability– Businesses require us to adapt as per the nature of the consumer and ones who have mastered this art are Marwaris. Since time immemorial they have been settling at different locations and dealing with multilingual people. But whatever was required to fulfill the business requirement was taken care of. Marwaris speak fluent Marathi at Mumbai and fluent Tamil at Chennai just to improve business. This is something that future entrepreneurs need to inculcate in a time where technologies and processes change in a blink of an eye.
- Integrity– Marwaris are very famous for their honesty and trustworthiness as most of the business that they deal into is based on the trust with dealers or other channels. In-spite of residing at multiple locations other than their native, Marwaris are very much rooted to the customs and traditions that they believe in. Marwaris back each other like soldiers and this enables them to deal in large cash. This gives a learning that networking should be focused on building trust.
- Futuristic approach– Marwaris are always ready with a futuristic approach about the domain that would be healthy to enter into. Starting from small time accountants to business owners to money lenders, they have worked in all the domains and now when the future is expected in education the generation has started shifting to IITs, IIMs, etc. This future oriented approach helps in managing different aspects.
- Love of Autonomy– Marwaris engage is business as they prefer not being guided by others and churning out their own paths. This is one of the factors that can actually drive entrepreneurs. Marwaris are motivated to achieve and crave for heights and ‘settling’ is not an option.
- Thorough knowledge and hard work– Marwaris are great at numbers and never mess with calculations. That teaches future entrepreneurs to be thorough with the areas they venture out in.
- Right attitude– We will sign off at this point with a joke
Interviewer: How long will you have to work to buy BMW?
Doctor: I think I can buy one in 6 months of practice
MBA: I need about 9 months of work
Engineer: At least a year of work
Marwari: I think…about 5 years
Interviewer: Why so long?
Marwari: Well, it’s a big company!!
Ain’t these must to be a successful entrepreneur? So let’s not wait anymore and get in touch with a nearest Marwari and learn the art of business from them.
So, you got an idea for starting your own business? GOOD. Made plans on how to execute it? BETTER. Ready to compete in a world having multiple challengers with the same idea and unending technological advancements? PAUSE. And that’s where we, as budding entrepreneurs get stuck with. No doubt, the ideas that run in our minds and the plans we think of on how to execute them might be awesome in our perspective, but it’s just a one sided view. And that’s not enough in today’s world where a new idea comes up every second which could make an idea, or perhaps your idea, OBSOLETE. So, the question that arises is, how to tackle it? How to make your Business Idea last in this competitive world? And that’s where we need to innovate a Business Model.
In simpler terms, the need for Innovating a Business Model is to understand the possibilities of creating your business in that zone, targeting a specific set of customers, turning them into permanent customers, managing your finances and also expanding the business venture. All these things might seem like a big task for an entrepreneur in the initial stages, but these are the necessary criteria that every business must have in order to survive in this competitive world. Leave any of these points out of your business idea, and there might be back draws that would eventually make your company thirsty and hungry for survival.
What basics of business model must one develop to survive in the market?
Well, this depends of the type of business one wants to start. In the Technological Sector (where there is always something new coming up in the market) one needs to identify the issue first. Developing a new piece of tech or coming up with an idea to solve the issue is one of the biggest needs today. As we go with the saying ‘The Early Bird gets the Worm First’, similarly in this Tech-Savvy world, the first person who solves a problem or innovates something new gets a major chunk of the market in the initial days. And that is exactly what one needs; an opportunity to showcase themselves to the world. Rest all follows.
Similarly in today’s Marketing World, having a Business Model is a must. A Marketer must be able to predict the market way ahead before the demand of a service is created. This gives one enough time to prepare themselves, make a plan of how to execute their idea, manage their finances, and place it in front of the world before others catch up to the trend.
In the Financial Sector, where everything is Unpredictable, a business must plan out in advance all the issues that it could face in the near
future. It must consider all opportunities, whether they might exist or not in the future, for when the winter hits hard, it’s better to store all the grains and survive the season rather than be helpless and fade as a memory.
For an Entrepreneurship, it is important that he/she carves out a small market for their business first. This ensures the survival of the business and also gives an opportunity to flourish. Once the roots of the business are strong enough, then it is must that the entrepreneur must take risks to venture out in a much stronger and competitive market. One must remember, that no business can be successful, if it does not take the risk to venture in the deep seas to find the treasure!
So you’ve officially become torn between getting a job or starting your own business….
….What to do??
I’ve seen this conundrum play out hundreds of times. Let’s see why it’s awesome(or not) to own a business:
Running your own business is super glamorized because people see all the good stuff about it…..and to be honest, there ARE a lot of good things about it:
When you’re running the show, you get to do ANYYYYTTTHING you want! Do you want your “global headquarters” (aka you with a laptop) located on a beach in Costa Rica? Cool…..go!
You get to write off a ton of stuff on your taxes. You even get to save more money by being a business owner.
You get to be your own boss, call all the shots, decided what you want (and don’t want) to do everyday. It’s 100% up to you.
Many first time entrepreneurs go through this short-lived euphoria of setting up their business and it’s exciting and fun!
This is known as the “Playing Business” Phase. It’s where you get caught up in making business cards, making overly-complex business plans, thinking of incorporating an LLC, hashing out who’s gonna be your C.T.O. and C.F.O. and Chief Whateveryouwant Officer.
And by all means, you SHOULD enjoy aspects of this!
But it also doesn’t make you ONE DOLLAR.
Soon this “Playing Business” euphoria starts to wear off, and reality starts to set in. In whatever business you go into, there’s going to be a lot more unexpected expenses and hassles than are generally reported.
It’s great working on your passion or working for yourself…..but there WILL ALWAYS be sour patches in the journey. Lots of them. The most successful people I know have one thing in common: They simply work a ton. That’s it. And if you want to be successful, that’s what you have got to do. So gear up…..And transform your dreams into reality.
Pension Fund Regulatory and Development Authority (PFRDA) Bill
Background: Pension Fund Regulatory and Development Authority (PFRDA) Bill was established by the Government of India on 23rd August 2003 to promote old age income security by establishing, developing and regulating pension funds. Pension bill was introduced into the parliament in 2005 for the first time. After nearly a decade, both houses of parliament i.e. Loksabha (4th September) and Rajyasabha (6th September) have finally passed the pension bill which aims to create a regulator for pension sector and extend the coverage of pension benefit to more people.
Companies Bill 2012
The Companies Bill was laid before the Parliament in the month of December 2011 and was referred to the Parliamentary Standing Committee on Finance, headed by Mr. Yeshwant Sinha. The standing Committee submitted its report in June, 2012. Based on Standing Committee recommendations, the Companies Bill was amended and was introduced as Companies Bill 2012. The Bill was passed in Lok Sabha on 18 December 2012 and by Rajya Sabha on 8 August 2013.