Swiggy’s food delivery service became profitable in March 2023, while Instamart is on course to achieve contribution neutrality in the next days.
Since its beginning nine years ago, Swiggy’s meal delivery service has been lucrative. With the exception of employee stock option charges, this is after accounting for all corporate expenses. As one of the few international food delivery platforms to attain profitability in less than 9 years since its founding, Swiggy has set a milestone for the industry, according to Sriharsha Majety, CEO and co-founder of Swiggy.
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.
In Tier 2 and Tier 3 markets, the firm has great client favor and traction. With an estimated 55% of the market, Zomato is Swiggy’s biggest rival. Concerns about expansion in this duopolistic business stem from the little differentiation between Zomato and Swiggy’s products, both of which provide meal delivery, dine-in, and rapid commerce. However, Swiggy’s network strength, ongoing operational leverage, and improved pricing power are its key strengths. The new participant is the government-backed Open Network for Digital Commerce, or ONDC.
Swiggy collaborated with Instamart to engage in the rapid commerce industry. “We are on track to hit contribution neutrality for this 3-year-old business in the next few weeks,” Swiggy’s CEO and co-founder Sriharsha Majety stated.
Competitor Zomato purchased Blinkit (previously: Grofers), whose user base is higher than Zomato’s meal delivery service, in August 2022. However, the risk associated with rapid commerce is its escalating financial burn. Instead of covering the entire city, the secret to successful swift commerce is to favor congested regions and order value.
Over time, Swiggy expanded its selection of food, groceries, hyper-local commerce, and concierge services. According to the firm, it would target underdeveloped customer and geographic markets and put its attention on growing faster than the competition.
