Swiggy vs Zomato: The Battle of Super-App vs Separate Apps in India's Hyperlocal Commerce Space

Swiggy and Zomato have established themselves as leaders in India’s hyperlocal commerce sector, both striving to meet growing consumer demand for quick and convenient access to food, groceries, and other essential services. While both companies share a similar goal, their strategies diverge significantly when it comes to app design and service integration. Swiggy’s super-app model brings all services under one platform, whereas Zomato operates separate apps for food delivery, quick commerce, and, soon, dining and event reservations. This distinction in their approach influences how customers experience their platforms, as well as each company’s financial performance and market outlook. As Swiggy prepares to launch its IPO, this blog delves into the contrasting strategies and what they mean for India’s competitive hyperlocal market.

The Super-App Strategy: Swiggy’s All-in-One Approach

Swiggy’s super-app model is a significant shift within the Indian market, though it is a concept that’s seen success in regions like China, where WeChat and Alipay offer multiple services on a single platform. By bundling food delivery, quick commerce (Instamart), and dining out (Dineout) in one app, Swiggy aims to deliver a seamless and convenient experience that keeps users engaged across various services without needing to switch platforms. The super-app approach offers Swiggy key advantages, especially in terms of customer acquisition and cross-selling.

Advantages of the Super-App Model:

1. Lower Customer Acquisition Costs: By using a single app to house multiple services, Swiggy can reduce costs associated with acquiring new customers. Since users are already on the app, they’re more likely to explore and try different offerings, whether that’s grocery delivery or table reservations.

2. Enhanced User Retention and Engagement: The super-app model encourages users to remain within the ecosystem, as they can meet multiple needs on a single platform. This enhances user retention and reduces the likelihood of app abandonment.

3. Cross-Selling Opportunities:Swiggy can easily promote its other services to existing customers. For example, a user ordering food might receive a discount offer for grocery shopping on Instamart, driving cross-platform engagement.

Challenges of the Super-App Model:

Despite its benefits, the super-app approach can create challenges, particularly in terms of user experience. Consolidating several services into one app can make navigation more complex, potentially overwhelming users with multiple tabs, features, and notifications. A poor experience in one service area, such as delays in food delivery, could also impact users’ perception of the entire app, leading to decreased usage across all services.

Zomato’s Approach: Separate Apps for Different Services

In contrast, Zomato has chosen a modular approach by developing separate apps for its various services. Currently, Zomato operates individual apps for food delivery (Zomato), quick commerce (Blinkit), and has plans to introduce a third app, District, focused on dining reservations and event bookings. This decision reflects Zomato’s focus on maintaining streamlined user experiences tailored to each service type.

Advantages of the Separate Apps Model:

1. Streamlined User Experience: By offering dedicated apps for each service, Zomato can deliver a more focused, intuitive experience that caters specifically to the user’s intent. For example, a user looking solely for food delivery won’t be confronted with unrelated grocery options or additional tabs.

2. Specialized Service Branding: Operating separate apps enables Zomato to brand and market each service independently. This can appeal to users who are interested in a particular type of service, making it easier for Zomato to capture different segments of the market.

3. Performance and Technical Optimization: With separate apps, Zomato can optimize each platform’s performance to suit its specific function. This approach reduces the risk of system overloads and app crashes that can occur when too many services are combined in one application.

Challenges of the Separate Apps Model:

The drawback to Zomato’s separate apps approach is that it requires more resources for customer acquisition. Zomato needs to invest in promoting each app individually, potentially doubling the cost of reaching customers who might otherwise use multiple services within a single app.

Financial Metrics: How Do the Numbers Stack Up?

On paper, both approaches seem viable, but a closer look at financial performance highlights key differences. Zomato’s fiscal year 2024 reports reveal strong results, with total sales reaching ₹12,114 crore and a net profit of ₹351 crore, positioning it as a profitable player. In contrast, Swiggy’s total sales amounted to ₹11,634 crore, but it posted a significant net loss of ₹2,350 crore, indicating challenges in profitability despite its super-app strategy.

In the first quarter of FY25, Zomato continued to outperform Swiggy in several areas:

• Gross Order Value (GOV): Zomato recorded a GOV of ₹15,455 crore, compared to Swiggy’s ₹10,189 crore.

• Monthly Transacting Users (MTU): Zomato’s MTU count stood at 27.9 million, outpacing Swiggy’s 19.27 million.

• Active Dark Stores: Zomato operated 639 active dark stores compared to Swiggy’s 557, highlighting its larger logistical footprint.

These numbers suggest that while Swiggy’s super-app model may offer convenience, Zomato’s focused approach has allowed it to maintain a more profitable and scalable operation.

Swiggy’s IPO: A New Chapter

Swiggy’s upcoming IPO has generated significant interest among investors, as it marks the second major public offering in India’s hyperlocal commerce sector, following Zomato. The IPO, open from November 6 to November 8, has a price band set at ₹371 to ₹390 per share, with proceeds aimed at repaying loans, expanding quick commerce operations, and enhancing technological infrastructure. This public issue could provide Swiggy with the capital needed to pursue further growth, potentially allowing it to address profitability challenges and bolster its super-app capabilities.

The Future: Super-App vs. Separate Apps in a Shifting Market

India’s hyperlocal commerce market continues to evolve, and the competition between Swiggy’s super-app and Zomato’s separate app models offers a glimpse into the Industry’s future direction. As consumer behavior and preferences change, both companies may need to adapt their strategies accordingly. Zomato’s approach could provide a more personalized experience, while Swiggy’s super-app might continue to attract users seeking all-in-one convenience.

Each strategy has its own set of strengths and drawbacks, and the “right” approach may ultimately depend on how well these companies can leverage their unique models to meet the needs of their target audiences.

Conclusion: The Path Forward for Swiggy and Zomato

The rivalry between Swiggy and Zomato is a defining feature of India’s hyperlocal commerce landscape. Swiggy’s super-app offers the convenience of bundled services, while Zomato’s separate apps provide specialized experiences. With Swiggy’s IPO underway, the competition is likely to intensify, pushing both companies to innovate and refine their offerings. As they continue to navigate this fast-paced market, only time will reveal which approach holds the key to long-term success in India’s dynamic hyperlocal commerce sector.