Swiggy will soon be onboarding street food vendors on to its platform, as the food aggregator tied up with the Ministry of Housing and Urban Affairs (MoHUA) to run a pilot programme as part of the Prime Minister’s Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) Scheme. Swiggy and the MoHUA will run a pilot programme, onboarding 250 vendors across five cities — Ahmedabad, Chennai, Delhi, Indore and Varanasi.
The Ministry claimed the initiative will “radically transform” the business of street vendors in the country during the pandemic. Municipal corporations, the Food Safety and Standards Association of India (FSSAI) and GST officials will help vendors with PAN and FSSAI registrations. They will also be trained on digitising their menus, pricing, using Swiggy, and matters of hygiene. MoHUA and Swiggy will expand the initiative across the country in a phased manner based on the success of the pilot programme.
What’s PM SVANidhi? The scheme, launched on June 1, 2020, aims to provide working capital loans to street vendors affected by the Covid-19 lockdown. Around 50 lakh vendors in the country, who had been in business on or before March 24, 2020, are eligible for a Rs 10,000 working capital loan, repayable in monthly installments over a year. The loans are being provided at an interest rate of 7%. Around 7.5 lakh loans have been sanctioned, of which 2.4 lakh have been disbursed.
What about commissions?
Street food vendors beleaguered by the lockdown will likely welcome the ability to sell their products on e-commerce platforms. However, whether Swiggy will be appealing to them will depend on the details:
- Commissions: It is not clear kind of commissions vendors would be charged after being onboarded on to Swiggy’s platform. Commissions have been a contentious issue for food delivery aggregators such as Zomato and Swiggy, especially more so during the pandemic, when restaurants were experiencing much lower business than usual. Last month, for instance, the Navsari Hotel and Restaurant Association in Gujarat had accused the two companies of raising commission charges without their consent. The association, with over 122 restaurants according to an Indian Express report, decided to delist themselves from the apps. If similar commission rates exist for vendors, Swiggy might not be such a lucrative option for them after all.
- Who will foot the bill for digitisation: The official press release does not have much detail on whether vendors will be given any financial help that will accompany the digitisation process, such as acquiring a mobile phone, PAN and FSSAI registration costs and so on.
- Timeline: Currently, the pilot programme is limited to just 250 vendors, spread over 5 cities. It isn’t known where and when the expansion will happen.
We reached out to Swiggy for more information about the the pilot programme, its expansion and about the vendors’ commission rates. A Swiggy spokesperson declined to comment, saying it was too early to do so. The company has been quite silent on the subject, in spite of the fact that it is working directly with the central government. The Bengaluru-based company has not issued any blog or tweet from its official handles.
That Swiggy is working directly with the central government will likely improve the company’s image, while simultaneously legitimise itself by association. What remains to be seen, however, are the fruits of this association. We’ve previously seen e-commerce platform tie up with the Textile Ministry to offer handloom products.
This association with a Union Ministry also comes at a time when Swiggy has faced a number of problems in the recent past, many a direct result of the pandemic, and also a fallout with several of its delivery persons:
- Layoffs: Swiggy had to lay off 1,100 employees across all functions in May this year to cut costs. The company followed this up with another 350 employees in July. Earlier in April, it had reportedly laid off hundreds of staffers working in its cloud kitchens. Swiggy had then told MediaNama it would discontinue operations at a few kitchens.
- Protests by delivery executives: Swiggy’s disagreements with its delivery executive has been the company’s Achilles heel these past few months. The executives, who work with Swiggy on individual contracts and are not considered its employees, have protested against the company’s policies in many cities, including Hyderabad, Chennai and Delhi. They complain that Swiggy has reduced the payment-per-order, leading to a massive drop incomes. Additionally, they complain that Swiggy has been diverting orders from them to those working with third-party companies Rapido and Shadowfax. This, too, caused a direct drop in the number of orders they are assigned to in a day, they claimed. The executives have demanded for a hike in payments, along with more transparency from Swiggy.
- Swiggy delivery executives go on strike in Hyderabad, lash out against company for ‘diverting’ orders to third-parties
- COVID-19 pandemic: Swiggy to lay off 1,100 employees
- Restaurants want clarity on whether Zomato, Swiggy are e-commerce companies