What does PEAK convenience look like?
The answer is simple — having all the necessities and luxuries of life delivered to you instantly at a press of a button!
Now, the modern startups have really taken the CONVENIENCE agenda to heart.
That's especially true for Swiggy. Just look at their products:
- Siwggy's food delivery service
- Quick grocery delivery service (Instamart)
- On-demand delivery service (Swiggy Genie)
So, Swiggy is determined to provide an unparalleled instant delivery experience.
But after a dream run of highs, one after another, Swiggy finally has hit a slump:
- revenue took a HIT in FY21; dropped by 27%, and
- now it's facing a delivery person shortage
With all of Swiggy's businesses relying on its delivery fleet, it was time to offload under-performers. And just like that, Swiggy decided to shut down its Genie!
Curious to know what happened? Let's explore why this Genie was put back into the bottle.
Firstly, what exactly is Swiggy Genie?
Swiggy Genie is your personal delivery service that you can use however you like!
You can use Genie to:
- perform quick pick-ups and drop-offs
- quickly send something to a friend
- buy something from a local store
- Or if you are a business, you can use Genie to perform customer deliveries
But, why exactly did Swiggy buildd an instant delivery service?
Well, the story goes something like this — back in 2020, when the lockdowns began in India on 26th March, within a span of 10 days, food-delivery orders for both Swiggy and Zomato dropped by 70-80%!
The situation flipped so suddenly, that Swiggy was left overstaffed with its 250,000 fleet of delivery persons having nothing to do.
With restaurants closed, putting efforts to pump up food delivery orders was not an option. So, Swiggy turned to a different route!
Swiggy Go, an instant delivery service was already in operation in Bangalore since 2019. And, with lockdowns in place and people stuck in their homes, 2020 was the perfect time to roll out this service to the other cities.
Swiggy repackaged it as Swiggy Genie and launched it on April 9th in 30 different cities.
So, what's going on with Swiggy Genie now?
Seems like a great start for Genie, right? It began out of necessity and with Swiggy's top-notch logistics & existing delivery partners, Genie was an instant success.
So, out of nowhere, why did Swiggy randomly announce that they were closing Genie in 3 major cities — Mumbai, Bangalore, and Hyderabad?
Well, as the pandemic slowed down, food delivery orders started moving back up to the usual numbers. Swiggy's delivery persons fleet was now heavily needed across food delivery, grocery delivery and Genie. What was a surplus earlier, now suddenly turned into a shortage!
But, how bad are these numbers? Is the shortage so much that Swiggy has to shut down its operations?
Well, we did some quick math to get a sense.
How bad is the delivery person shortage? Show me the numbers!
- On average, Swiggy receives 1.5M orders/day.
- Now at peak times, the load is increased by 50%.
- So during peak days, Swiggy needs to be prepared to deliver 2.25M orders/day!
- Now, if we assume:
- 45 min delivery/order
- and, a 6 hr shift
- If we consider a 70% availability of riders, Swiggy's total rider pool should be 2.25*0.75/(6*0.7) = ~400,000 riders.
Currently, Swiggy has only 270,000 riders! That's 67.5% of what's needed on peak days!
Naturally, Swiggy put the Genie back into the bottle
So, Swiggy doesn't have enough delivery persons to meet the incredible demand. If we look at Swiggy's FY21 revenue split - majority of its revenue comes from:
- Restaurant service incomes (61.3%)
- Sales of FMCG products (20%)
That's Swiggy's food delivery and grocery delivery (Instamart) business.
Given the load of all these deliveries falls on the shoulders of the same limited fleet, Swiggy was bound to offload Genie.
Plus, during the pandemic, due to a lack of opportunities, many workers were turning to become delivery agents. But, now that things have become normal, delivery partners are dissatisfied with the limited margins and are fleeing the sector!
But, Swiggy is not entirely ready to give up on Genie yet. It makes sense because ultimately, Swiggy wants to buildd a one-app hyper-local delivery brand.
So, a mere 8 days after closing operations, Swiggy has reinstated Genie in metros. But, users can only access Genie's services during a set time and for a limited delivery distance!
Now speaking generally, the delivery person shortage is just one of the many problems Swiggy faces.
On top of everything, Swiggy needs to:
- Reduce its expenses
- Find ways to keep growing in this hyper-competitive space
- And, finally, find a way to become profitable
All very tough problems to figure out. But, we'll be most curious to see if this Genie ends up fulfilling Swiggy's wishes 😉