Swiggy’s food delivery business has turned profitable in nine years since its inception. This is after factoring in all corporate costs; excluding employee stock option costs. "This is a milestone for food delivery globally, as Swiggy has become one of the very few global food delivery platforms to achieve profitability in less than 9 years since its inception" Sriharsha Majety, CEO and Co-founder at Swiggy said.
As of March 2023, Swiggy’s food delivery business has turned profitable, while Instamart is on track to hit contribution neutrality in the next few weeks.
Swiggy commenced operations in 2014 with food delivery as its first foray. Nine years ago, on-demand food delivery was a new experience for Indians and with 10-12 players trying to create a mark in the industry, the business model was largely termed as economically unviable. Last year, Swiggy acquired Dineout, now leading in the dining out category with over 21,000+ restaurant partners across 34 cities.
The company gains customer favour and strong traction in Tier 2 and 3 markets. Swiggy's largest competitor is Zomato with estimated 55 percent market share. Limited distinction between Zomato and Swiggy’s offerings – both having food delivery, dine-in and quick commerce are a concern for growth in this duopolistic industry. However, strengths of Swiggy lie in a strong network, continuous operating leverage and increased pricing power. The government-backed Open Network for Digital Commerce or ONDC is the new player.
Swiggy invested in the quick commerce business with Instamart. Sriharsha Majety, CEO and Co-founder at Swiggy said "we are on track to hit contribution neutrality for this 3-year-old business in the next few weeks".
Competitor, Zomato acquired Blinkit (erstwhile: Grofers) in August 2022, whose potential user base is larger than Zomato's food delivery business. However, the risk to quick commerce business is its incremental cash burn. The key to make quick commerce work is to prioritize dense locations and order value, instead of covering an entire city.
Swiggy, over a period of time, has increased its offerings across food, grocery, hyper-local commerce and concierge services. The company says it shall aim at underserved geographic and consumer segments and focus on outpacing the industry growth.
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