Swiggy‘s updated prospectus, filed on Thursday for its initial public offering (IPO), reveals the Bengaluru-based company’s plans to continue investing heavily in its quick commerce vertical, Instamart.
Most͏͏ of͏͏ the͏͏ fresh͏͏ capital͏͏ raised͏͏ from͏͏ the͏͏ IPO—INR͏͏ 982͏͏ crore—is͏͏ expected͏͏ to͏͏ be͏͏ allocated͏͏ for͏͏ expanding͏͏ Instamart’s͏͏ dark͏͏ store͏͏ footprint.
Competitive͏͏ Pressures͏͏ Drive͏͏ Further͏͏ Investments:
In͏͏ May͏͏ 2023,͏͏ Sriharsha͏͏ Majety͏͏ stated͏͏ in͏͏ a͏͏ blog͏͏ post͏͏ that͏͏ the͏͏ company͏͏ had͏͏ moved͏͏ beyond͏͏ the͏͏ “peak͏͏ of͏͏ our͏͏ investments”͏͏ in͏͏ the͏͏ quick͏͏ commerce͏͏ sector.͏͏ The͏͏ decision͏͏ to͏͏ invest͏͏ further͏͏ in͏͏ Instamart͏͏ is͏͏ viewed͏͏ as͏͏ a͏͏ response͏͏ to͏͏ increasing͏͏ competitive͏͏ pressure͏͏ in͏͏ quick͏͏ commerce.
Swiggy’s͏͏ substantial͏͏ $700͏͏ million͏͏ fundraising͏͏ in͏͏ January͏͏ 2022͏͏ was͏͏ mainly͏͏ aimed͏͏ at͏͏ supporting͏͏ its͏͏ quick͏͏ commerce͏͏ growth͏͏ initiatives.
In͏͏ August,͏͏ Swiggy͏͏ appointed͏͏ Amitesh͏͏ Jha,͏͏ Flipkart’s͏͏ senior͏͏ vice͏͏ president,͏͏ as͏͏ the͏͏ chief͏͏ executive͏͏ officer͏͏ of͏͏ Instamart.
As͏͏ of͏͏ September͏͏ 10,͏͏ the͏͏ company͏͏ had͏͏ 605͏͏ active͏͏ dark͏͏ stores͏͏ in͏͏ the͏͏ country,͏͏ an͏͏ increase͏͏ from͏͏ 557͏͏ micro͏͏ warehouses͏͏ as͏͏ of͏͏ June͏͏ 30.
Continue͏͏ Exploring:͏͏ Swiggy Instamart expands͏͏ to͏͏ 42͏͏ cities,͏͏ eyes͏͏ growth͏͏ in͏͏ tier͏͏ 2͏͏ and͏͏ 3͏͏ markets
As͏͏ of͏͏ July,͏͏ brokerage͏͏ firm͏͏ UBS͏͏ estimated͏͏ Blinkit’s͏͏ quick͏͏ commerce͏͏ market͏͏ share͏͏ at͏͏ 40-45%,͏͏ followed͏͏ by͏͏ Swiggy͏͏ Instamart͏͏ at͏͏ 20-25%,͏͏ Zepto͏͏ at͏͏ 15-20%,͏͏ and͏͏ BB͏͏ Now͏͏ at͏͏ 10-15%.
For͏͏ the͏͏ current͏͏ financial͏͏ year,͏͏ Swiggy͏͏ Instamart͏͏ has͏͏ a͏͏ gross͏͏ order͏͏ value͏͏ (GOV)͏͏ run͏͏ rate͏͏ of͏͏ $1.3͏͏ billion,͏͏ while͏͏ Blinkit’s͏͏ run͏͏ rate͏͏ exceeds͏͏ $2͏͏ billion͏͏ and͏͏ Zepto’s͏͏ stands͏͏ at͏͏ $1.5͏͏ billion.
Performance͏͏ Metrics:͏͏ Instamart vs.͏͏ Blinkit
In͏͏ the͏͏ June͏͏ quarter,͏͏ Instamart͏͏ reported͏͏ a͏͏ gross͏͏ order͏͏ value͏͏ (GOV)͏͏ of͏͏ INR͏͏ 2,724͏͏ crore͏͏ and͏͏ revenue͏͏ of͏͏ INR͏͏ 403͏͏ crore,͏͏ resulting͏͏ in͏͏ a͏͏ take͏͏ rate͏͏ of͏͏ 14.8%.
The͏͏ take͏͏ rate͏͏ refers͏͏ to͏͏ the͏͏ percentage͏͏ of͏͏ revenue͏͏ a͏͏ company͏͏ earns͏͏ from͏͏ its͏͏ gross͏͏ order͏͏ value͏͏ (GOV).
Blinkit͏͏ reported͏͏ a͏͏ gross͏͏ order͏͏ value͏͏ (GOV)͏͏ of͏͏ INR͏͏ 4,923͏͏ crore͏͏ and͏͏ revenue͏͏ of͏͏ INR͏͏ 942͏͏ crore͏͏ during͏͏ the͏͏ June͏͏ quarter,͏͏ resulting͏͏ in͏͏ a͏͏ higher͏͏ take͏͏ rate͏͏ of͏͏ 19.1%.
As͏͏ of͏͏ the͏͏ first͏͏ quarter͏͏ of͏͏ FY25,͏͏ Swiggy͏͏ Instamart’s͏͏ average͏͏ order͏͏ value͏͏ (AOV)͏͏ was͏͏ lower͏͏ than͏͏ Blinkit’s.͏͏ Swiggy͏͏ reported͏͏ a͏͏ year-on-year͏͏ (YoY)͏͏ increase͏͏ of͏͏ 10%͏͏ in͏͏ Instamart’s͏͏ AOV,͏͏ reaching͏͏ INR͏͏ 487,͏͏ while͏͏ Blinkit’s͏͏ AOV͏͏ for͏͏ the͏͏ same͏͏ period͏͏ was͏͏ INR͏͏ 625.
In͏͏ the͏͏ food͏͏ delivery͏͏ segment,͏͏ the͏͏ largest͏͏ revenue-generating͏͏ vertical͏͏ for͏͏ both͏͏ companies,͏͏ Swiggy͏͏ trails͏͏ behind͏͏ Zomato,͏͏ which͏͏ reported͏͏ a͏͏ gross͏͏ order͏͏ value͏͏ (GOV)͏͏ of͏͏ INR͏͏ 6,808͏͏ crore.
Continue͏͏ Exploring:͏͏ Swiggy files͏͏ updated͏͏ DRHP͏͏ with͏͏ SEBI͏͏ for͏͏ INR͏͏ 3,750͏͏ Cr͏͏ IPO
Its͏͏ listed͏͏ rival,͏͏ on͏͏ the͏͏ other͏͏ hand,͏͏ recorded͏͏ a͏͏ gross͏͏ order͏͏ value͏͏ (GOV)͏͏ of͏͏ INR͏͏ 9,264͏͏ crore͏͏ from͏͏ food͏͏ delivery͏͏ during͏͏ the͏͏ April-June͏͏ period.
Although͏͏ Swiggy͏͏ achieved͏͏ a͏͏ higher͏͏ take͏͏ rate͏͏ of͏͏ 25.4%͏͏ in͏͏ this͏͏ segment͏͏ for͏͏ April-June,͏͏ compared͏͏ to͏͏ Zomato’s͏͏ 24.3%,͏͏ the͏͏ Bengaluru-based͏͏ company͏͏ reported͏͏ an͏͏ adjusted͏͏ EBITDA͏͏ of͏͏ INR͏͏ 57.8͏͏ crore,͏͏ while͏͏ Zomato’s͏͏ was͏͏ INR͏͏ 313͏͏ crore͏͏ for͏͏ the͏͏ same͏͏ period.
Zomato͏͏ also͏͏ boasts͏͏ a͏͏ larger͏͏ average͏͏ monthly͏͏ transacting͏͏ customer͏͏ base,͏͏ which͏͏ reached͏͏ 20.3͏͏ million͏͏ for͏͏ the͏͏ three͏͏ months͏͏ ending͏͏ in͏͏ June,͏͏ compared͏͏ to͏͏ Swiggy’s͏͏ 14.03͏͏ million.
