“Instead of helping restaurant partners grow their business, Swiggy trained its employees to arm-twist them to increase commissions every couple of months”
Swiggy has landed in trouble after a blog post, claimed to be authored by four of its current and former employees, alleged that the food ordering and delivery company fudged its financials and arm-twisted restaurant partners to increase its commissions every couple of months.
In a tumblr post titled Swiggy, a House of Cards, the foursome (two of who are still working while the other two quit/was fired recently), said that the Bangalore-based startup also lied to investors and media about its order volumes during the latest fundraise.
“In the sales team, one of our core jobs is to sign up restaurants for the Swiggy platform. This largely includes signing contracts that we know we are going to go back and renegotiate every few months. That is highly stressful, it eats into our conscience, and takes away a little piece of us every time we are made to do this. Most of these restaurant owners are small businessmen and they can’t see how they are being taken for a ride. And unfortunately, if we are to retain our jobs, we can’t tell them either,” the post reads.
According to the authors of the blog post, they were made to lie about the startup’s market share, as well as order volumes to restaurant owners. Instead of helping these restaurants grow their business, they were trained to arm-twist restaurants to increase commissions every couple of months. Some restaurants paid more than their net margins because Swiggy in some areas in Hyderabad and Bangalore has been able to become a significant portion of their revenues.
“At first it was 5%, then 10% and now nearly 25%. The management wants us to take this to an average of 30% in the future. While we all know that we are building a business, none of us thought it would be at the expense of the livelihood and dreams of others by arm twisting them to pay us for their mistake. What mistake? By trusting Swiggy in the first place,” they ask.
Another allegation is that the management wants the average commission rate to be 30% in 2022. That means that at least some of the restaurants will be paying 40% commission. “We know what averages mean. At 40%, restaurants will bleed to death. And most of these businesses which pay 40% will be the small guys, because the big guys will never pay anything more than 20%,” they go on.
They also allege some unethical practices at the company level. According to them, instead of growing restaurant partners’ businesses, Swiggy recently took the best business zone in Bangalore and started intentionally routing all the users to order from Bowl Company, its own private label kitchen. The Bowl Company is the top search result in all of Koramangala now. This just directly hits at the heart of restaurants Swiggy “partnered” with to grow its business in the first place.
“On top of this, the sales team is asked to tell our restaurant ‘partners’ that Bowl Company doesn’t compete with you. We have never lied so blatantly in my life. We don’t think we will ever be able to now become the people our parents wanted us to be. Ones with high moral grounds, and unquestionable values,” they allege.
The foursome also make some serious allegations that the top management at Swiggy lied to investors about its order volumes during the latest fundraise. “Our January 2017 order volumes were less than December 2016 volumes. Yes, we had a decline of order volumes in January. But we have seen the investor presentations, and they have shaved off the December numbers in the slides in order to show a linear growth curve across all months of our existence,” they say.
Swiggy denies allegations
Swiggy has however denied the allegations. In a Facebook post, the foodtech firm said: “The recent blog post from an anonymous source is targeted at maligning the reputation of Swiggy as an organisation. The article carries inaccurate facts regarding business and order numbers. It not only references employee departures from a year and a half back but also presents details on our partners out of context and with mischievous intent.”
Swiggy was started in 2015 by Nandan Reddy, Rahul Jaimini, and Sriharsha Majety. In May this year, the firm raised US$80 million in Series-E funding round led by Naspers. Previously, it raised US$15 million in a Series D from Bessemer Venture Partners, with participation from existing investors.
The post Blog claims Swiggy fudged financials, lied to VCs, followed unethical practices; foodtech startup denies allegations appeared first on e27.
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