One of India’s most well funded hyperlocal food delivery firms, Swiggy is reportedly hiring third-party logistics partners. The development comes as the company struggles to scale its business because of high delivery costs leading to cash burn.
Apparently, the company has partnered up with Shadowfax Technologies Pvt. Ltd to deliver some of its orders in Bengaluru and Delhi. Talks are also going on with Opinio (Moonshots Technologies Pvt. Ltd) to deliver in Bengaluru. Mumbai-headquartered Grab a Grub Services Pvt. Ltd was also on the list but the partnership didn’t initiate.
Until now, the Bundl Technologies Pvt. Ltd-owned firm serviced most of the orders with its own delivery fleet. According to Swiggy, this business model helped it retain complete control over delivery, allowing high quality services.
Zomato, Swiggy’s rival company has always hired third-party logistics firms for delivery. The firm had invested in Grab and partnered with e-commerce-focused logistics company Delhivery in September.
Swiggy’s current delivery system isn’t a fixed overall fleet. In fact, more than 60% of its delivery fleet comprises temporary employees. These personnel show up only during times of high demand such as lunch hours and dinner time. Swiggy is looking at testing the new business model in pilot before scaling up engagement with logistics companies. Experts believe that cost efficiency will be one of the key advantages of outsourcing delivery.
It is very hard to optimize utilization (of delivery fleet) on your own. One day your orders are lesser. So the companies which are doing it for a lot of players will be able to manage the utilization much better because they have to build limited buffer across multiple vendors; but if you are alone, you cannot even deal with a 10% variation in the order. So it is very critical from the cost-efficiency point of view. Scalability as well as cost are big factors,
Abhishek Goyal, co-founder of Tracxn, a start-up tracker told Livemint.