Reference no: EM133189592

India's Foodtech Unicorn Swiggy All Set to Test International Markets

Homegrown food-tech startup Swiggy is busy hitting the news bulletin for all right reasons. Soon after joining the unicorn club and after acquiring Scootsy earlier this month, the Bengaluru-based company is now planning to test international waters. A source aware of the development told Entrepreneur India that, "The company is keen to take its food delivery services to the international market by next fiscal. Presently, the management is eyeing the Dubai and Jakarta market." With Swiggy planning its vertical expansion (hyperlocal services) since months, the move only seems right for the company to also grow horizontally and compete with Zomato not just in India but even in the Middle East and South Asian markets.

The Zomato Way

In September 2012, Zomato expanded its services to international market starting from Dubai and thereon moving onto Europe, Qatar, the Philippines, Sri Lanka, New Zealand, Turkey, Indonesia, North America among others. In the last five years, Zomato has grown multifold. In fact last year, the unicorn announced that it is a profitable company in all the 24 countries it operates in. While announcing the achievement in a blog post, Deepinder Goyal, Founder - CEO, Zomato said, "Our core advertising business in India, Southeast Asia, and the Middle East - the three key regions for us, is generating enough cash to cover for the millions of dollars of investments we are making into the rest of the regions, and our new businesses." Additionally, earlier this year, the food-tech company reported a top line of USD 74m in FY18 as against USD 51m in FY17 and food ordering business comprised 30 per cent of Zomato's revenues which was up from 18 per cent in FY17. The Alibaba-backed company also offers Zomato Treats (free dessert with a meal ordered from the platform) along with Zomato Gold, wherein partner restaurants offer 1+1 on food and 2+2 on drink. According to food tech company, Zomato Gold contributes about 12 per cent to its monthly revenue. While on the other side, Swiggy has followed Zomato to the subscription route as the former has launched its Swiggy Super service wherein the startup is offering free deliveries across all restaurants listed the platform for a small fee.

What is in Swiggy's Box?

Before launching its food delivery service in the international market, Swiggy is looking to foray into the domestic hyperlocal market. To support its plan, Swiggy acquired 48East for an undisclosed amount in Dec 2017 and Scootsy for USD 8 million earlier this month. It has an existing network of 40,000 restaurants and with Scootsy acquisition the numbers will only set to improve. What is interesting here is Swiggy has followed the acqui-hire (acquiring a company for the staff expertise) to launch its hyperlocal services. Whether the food-tech firm will follow the same method for its international expansion? Well, only time could tell. Furthermore, Swiggy recently raised USD 210 million in a round led by DST Global, Naspers along with a valuation $1.3 billion. According to reports, it is now planning to raise upto USD 500million at a valuation of about USD 2.5b.

Question : Plot a 2 by 2 matrix based on the complexity of implementation and benefits Swiggy would realize (risk vs reward) by entering developed and emerging nations. Mention three to four factors which are contributing to risk and which are contributing to reward. Chose five countries as a mix of developed and emerging nations and rate them on the factors from high to low (justify your rating in one sentence). Use this information to compute the overall weighted risk score and overall weighted reward score for each countries. Based on these scores plot the countries in the 2 by 2 matrix and decide which country is most suitable for Swiggy to enter.