In a possible deal involving its rapid commerce division under Instamart, Amazon India has reportedly approached Swiggy, which is preparing for an IPO, according to three people familiar with the situation. This news follows closely on the back of Swiggy’s secretly submitting draft documents with Sebi for an initial public offering (IPO) of INR 10,414 crore ($1.25 billion), one of the biggest for a modern digital company.
According to one of the sources mentioned earlier, “Amazon has swooped in with interest to either pick up a stake in the ongoing pre-IPO placement or a buyout proposal for Instamart… but there are multiple roadblocks at the moment.”
According to reports, there is currently no formal offer in place, and for the talks to progress further, the Seattle headquarters of Amazon will need to act quickly. According to these sources, the current offer structure is so complex that the preliminary conversations may not result in a transaction.
How Swiggy Is Placing Its Pricing Cards for This Deal?
Zomato, Swiggy’s main competitor, has a market valuation of about INR 1.9 lakh crore, therefore the former is probably going to undercut its rival by a significant margin. The fast food delivery services Swiggy and Zomato do not have their valuation. But in April, Goldman Sachs estimated that Zomato’s rapid commerce unit, Blinkit, was worth $13 billion.
The US eCommerce giant’s Indian division has reportedly been developing its rapid commerce program for months, which may explain why Amazon is interested in Swiggy’s Instamart. Since Amazon does not provide this service in any of its worldwide markets, they stated that launching a distinct sector for fast deliveries would necessitate global clearance.
To lower its shareholding of longtime backer Prosus, Swiggy has been selling secondary holdings in the private market for about $9 billion. This tech investor, who is South African and Dutch, now has 33% of the company and is reducing its holdings to less than 26% to avoid being considered a promoter when Swiggy goes public. Additionally, last week, the meal delivery service announced a $65 million ESOP buyback, providing liquidity to workers.
Why Similar Deals With Other Companies Didn’t Go Through?
It has been reported by several different media outlets that Flipkart attempted to get into a similar agreement with Swiggy; but, due to a mismatch in valuation between the two companies, no announcement was made. Swiggy had approached high-net-worth people and businesses such as WhiteOak, Motilal Oswal, Orchid Asia, Malabar, and Enam Group to sell its secondary stakes.
Business research firms 1Lattice and Datum Intelligence believe that the value of India’s eCommerce business increased by 18-20% in the first half of 2024, with food sales increasing by more than 38% due mostly to a dramatic surge in fast commerce. Quick commerce currently accounts for over 40% of all online grocery sales. Most notably, the top three saw a 230% increase in category growth from 2021 to 2023.
Swiggy, a trailblazer in food delivery and quick commerce, has strategically merged InsanelyGood with its Instamart grocery delivery service, marking a significant move before its anticipated Initial Public Offer (IPO).
The merger aims to increase investor confidence by improving efficiency and combining Swiggy’s food and grocery delivery services. This is particularly important in cities like Bangalore, where there’s high demand for fast service and fresh groceries delivered to doorsteps.
“InsanelyGood focuses on high quality assortment of groceries and has seen a tremendous amount of consumer love. Given the great traction, we plan on scaling this up to the entirety of Bangalore and will do this as a separate entry point on Swiggy Instamart,” said Swiggy Instamart Spokesperson in a statement.
Launched in August 2020, Swiggy Instamart is recognized as India’s leading quick commerce grocery service.
Currently, Swiggy Instamart operates in over 25 Indian cities, using advanced technology and a specialized delivery fleet to promptly deliver groceries and household essentials to customers’ doorsteps within minutes.
Swiggy’s integration of InsanelyGood into Instamart is part of its broader strategy to streamline operations and solidify its position in the rapidly expanding online grocery market.
With consumers increasingly favoring online ordering, especially for quick delivery of essential groceries, this move enhances Swiggy’s competitive edge in meeting evolving demands in the eCommerce and instant commerce sectors.
As per Statista, the Indian online food delivery market was USD 7.4 billion in 2023. The delivery market is expected to grow and reach USD 24 billion in 2026.
The projected revenue for the online food delivery market in India is estimated to reach USD 43.78 billion by 2024, with an anticipated annual growth rate (CAGR 2024-2028) of 16.95%. This trajectory is poised to elevate the market volume to USD 81.91 billion by 2028.
As Swiggy gears up for its IPO, this consolidation highlights its ambition to lead the quick-service sector and reflects its agility in responding to evolving market trends.
In addition to Swiggy’s transformative offers such as the instant grocery delivery app Instamart, dining out experience with Swiggy app Dineout, and same-day package delivery Genie, it also allows sellers to build their storefronts, and upload product catalogs at Minis.
The food delivery firm consistently works and introduces smaller yet highly impactful features to enhance user convenience.
Features like voice search, the generative Artificial Intelligence (AI) feature, live activity on orders, smart push notifications, speech recognition, what to eat, personalized home page, and direct reply notification are some of the consistent upgrades Swiggy is doing to enrich customer experience.
These features are designed to streamline the entire experience of ordering food and other services through the Swiggy platform, catering to the diverse needs and preferences of its users.
“We understand that ordering food is not a transaction but an expression of one’s emotions, and a way to alleviate one’s mood,” Swiggy CEO of Food Marketplace Rohit Kapoor has said. “Many times people simply do not want to go through the process of browsing through multiple options and pondering over them. Wouldn’t it be nice to instead have sharp recommendations attuned to how they feel and what they crave? That’s exactly what we are trying to do with WhatToEat. It is for customers for whom food is a feeling or an emotion, and not merely a dish or a restaurant.”
This paves the way for assessing the impact of these strategic decisions on Swiggy’s growth path, demonstrating its capacity to adjust to shifting consumer preferences towards local retailers, effortless ordering, and online grocery shopping.
Swiggy experienced a substantial surge in operating revenue, soaring over 40% to Rs 8,264.4 crore in the 2022-23 fiscal year, up from Rs 5,704.9 crore in the year 2021-22, indicating a robust growth trajectory after it scaled up its quick commerce vertical.
The food delivery segment of Swiggy achieved profitability in 2023, with a strategic focus on sustainable growth, and further improvements are expected this year.
A fund overseen by US-based asset manager Baron Capital Group has upped the fair value of Swiggy, the food-delivery platform, to USD 12.1 billion. This represents a 13% surge from Swiggy’s prior valuation of USD 10.7 billion, noted during its last fundraising round in 2022.
Invesco has raised the valuation of Swiggy, the food and grocery delivery platform, by around 9% to USD 8.5 billion according to its filings with the US Securities and Exchange Commission as of October 31.
Investment and Expansion
Swiggy has received substantial funds worth USD 3.6 billion from 40 investors, including prominent names like Samsung Ventures, Tencent Holding, Wellington Management, Accel Northwest Venture Partners, and SAIF Partners, indicating robust investor confidence.
The company has been actively exploring the application of AI through initiatives such as Swiggy’s neural search. It would enable users to search using conversational and open-ended queries and receive recommendations tailored to their specific needs.
Swiggy’s foray into diverse sectors including grocery, clothing, and other essential items, coupled with the launch of Swiggy Mall offering home and kitchen items, electronics, and toys, demonstrates its forward-looking approach to expansion and diversification.
Swiggy’s valuation has doubled to USD 10.7 billion, underscoring its strong market position and growth prospects.
Swiggy’s Generative AI Journey: A Peek Into the Future
The Role of Instamart and InsanelyGood in Swiggy’s IPO
Strategic Merger and Expansion
Swiggy’s merger of InsanelyGood with Instamart is aimed at improving operational efficiency within its quick-commerce vertical.
This strategic move aligns with Swiggy’s goal of expanding top-notch grocery delivery services in Bangalore by leveraging Instamart’s infrastructure and customer base.
Operational Synergies
The integration of InsanelyGood into the Swiggy app, coupled with the commitment to swift fulfillment, underscores Swiggy’s dedication to delivering a seamless user experience and ensuring customer satisfaction. Moreover, the merger is anticipated to streamline costs and enrich the value proposition for both customers and investors.
Financial and Market Impact
The merger underscores Swiggy’s commitment to dominate the quick-commerce space while preparing for a successful IPO. Instamart’s robust growth in gross merchandise value (GMV) indicates promising prospects for further expansion and market dominance.
In the financial year 2022-23, Swiggy clocked a gross merchandise value exceeding USD 2.6 billion in India, marking a growth compared to the previous year.
Prosus, the largest institutional investor in Swiggy, reported that in the initial half of the financial year 2023-24, Swiggy’s primary food delivery segment experienced a 17% growth, achieving a gross merchandise value of USD 1.43 billion.
Gross Merchandise Value of Swiggy From Financial Year 2019 to 2023
Founded in 2014, Bangalore-headquartered Swiggy operates across 500 cities in India.
Challenges and Opportunities Ahead
Workforce Reductions
Swiggy has undertaken cost-saving measures, including workforce reductions, amid challenging macroeconomic conditions. However, aggressive financial management has helped in reducing monthly cash burn, reflecting a prudent approach.
As per media reports, Swiggy may reduce approximately 400 positions, constituting nearly 7% of its workforce. This move is aimed at enhancing the food tech giant’s financial standing in preparation for an upcoming IPO later this year.
Financial Losses
Despite revenue growth, Swiggy reported a net loss in the fiscal year 2022-23, highlighting the financial challenges. Nevertheless, the company is focused on strategic partnerships and market expansions, innovation, technology upgradation, and democratization to increase its valuation pre-IPO and sustain its competitive position.
In its FY23 financial report, Swiggy announced that its food delivery division achieved profitability, attributed to its implementation of cost-efficient strategies.
“One of the major moves Swiggy might make is to partner and expand its food delivery team per geographic location. The less delivery time will help Swiggy to lower the food delivery charges that increase its sales,” an article ‘Swiggy’s Future Plans To Increase The Sale Ahead Of Its IPO’ by Stockify Fintech on professional networking site LinkedIn said.
Swiggy’s strategic merger of InsanelyGood with Instamart signifies a pivotal moment in its journey towards IPO.
The company’s commitment to adaptability, innovation, and market dominance sets a precedent for success in the competitive landscape of digital commerce.
Challenges notwithstanding, Swiggy’s clear vision for growth and sustainability positions it favorably for its upcoming IPO, promising a transformative impact on the quick-commerce and food delivery sectors.
As per reports, the company aims to raise approximately USD 1 billion (Rs 8,300 crore) through its IPO scheduled for this year. Swiggy plans to file its draft red herring prospectus with the Securities and Exchange Board of India (SEBI) for its upcoming initial public offering (IPO) within the next few weeks.
FAQs
What is Swiggy Instamart and how does it differ from InsanelyGood?
Swiggy Instamart is a quick-commerce grocery service launched in 2020, offering fast grocery delivery in over 25 cities in India. InsanelyGood, on the other hand, was a separate grocery delivery service that Swiggy merged with Instamart to enhance its offerings.
How does the merger of InsanelyGood with Instamart impact Swiggy’s overall strategy and market positioning?
The merger streamlines Swiggy’s operations and strengthens its position in the quick-commerce and grocery delivery sectors, enhancing efficiency and market reach.
What are the key factors driving Swiggy’s decision to streamline operations and enhance efficiency ahead of its IPO?
Swiggy aims to showcase robust financials and sustainable growth strategies to attract investors and maximize value for shareholders.
What financial milestones and performance indicators should investors consider when evaluating Swiggy’s potential for growth and profitability?
Investors should assess Swiggy’s revenue growth, profitability margins, gross merchandise value (GMV), customer acquisition, and retention metrics to gauge its growth potential and financial health.
What role does Swiggy’s IPO play in shaping the future of the food delivery and quick-commerce sectors in India?
Swiggy’s IPO will serve as a milestone event, signaling the maturation and potential consolidation of the food delivery and quick-commerce sectors in India, attracting investor interest, and driving further innovation and competition.
In Indian metro cities, the retail sector is changing fast with instant apps. Instant grocery delivery apps—Blinkit, Zepto, Swiggy Instamart, BBNow, and Dunzo Daily are leading this shift, making everyday shopping a breeze.
They are not just names; they represent the vanguard of quick commerce. These instant delivery apps are reshaping how consumers shop for everyday necessities.
Here’s a closer look at how these platforms are revolutionizing retail and what the future holds for this burgeoning industry.
In today’s fast-paced world, consumers demand convenience at their fingertips, and instant apps deliver precisely that.
With a few taps on their smartphones, shoppers can browse through an array of products, from groceries to household essentials, and have them delivered to their doorstep within a few minutes.
This consumer-centric approach has propelled instant apps to the forefront of the retail landscape, leaving traditional brick-and-mortar stores scrambling to keep up.
Industry Disruption
The impact of instant apps on the retail industry cannot be overstated. These platforms have disrupted conventional retail models, prompting retailers to rethink their strategies or risk becoming obsolete.
Thanks to fast delivery and a wide range of products, consumers are rushing to instant apps, fueling a major shift towards e-commerce and quick commerce.
Blinkit delivered 10,000 single roses by 10 am on Valentine’s Day this year.
Zepto sold more than 200,000 roses during Valentine’s week.
Blinkit delivered 20K+ chocolates in less than 10 minutes as they peaked at 406 chocolates per minute.
Zepto saw a 4x jump in sales on Chocolate Day.
In 2023, during the India and Australia World Cup finals, Swiggy Instamart experienced a surge, with the app registering a peak of nine jersey orders per minute.
On New Year’s Eve, Zomato achieved a groundbreaking number of orders on its app, nearly matching the total orders from the same day across the previous six years, from 2015 to 2020. “8,422 orders were placed at 8:06 pm – that’s 140 orders every second,” Deepinder Goyal said in a post on X, formerly Twitter.
Over Rs 97 lakh in tips were given to delivery partners on December 31, with more than 3,20,000 delivery partners serving customers across Zomato and its quick commerce business, Blinkit.
On New Year’s Eve, Swiggy processed over 480,000 biryani orders, equivalent to 1,244 dish units ordered every minute.
On New Year’s Eve 2023, Indians placed a record-breaking 6.5 million online food delivery orders, marking an 18% increase compared to the previous year.
Record-High In Orders For Swiggy, Zepto, & Blinkit; Insights From CEO Aadit Palicha & Rohit Kapoor
Key Players
As of now, these apps are providing quick commerce to consumers in major Indian cities:
Blinkit
Swiggy Instamart
Zepto
Started operations in
January 2022
August 2020
April 2021
Revenue as of FY 2023 (in Rs crore)
724
3221
2024
Revenue as of FY 2022 (in Rs crore)
236
2036
142
Funds raised for quick commerce (in U.S.$ million) US$ 1 mn = Rs 8.2 cr
569
700
361
Current market share (in %)
40%
37-39%
20%
Blinkit
Formerly known as Grofers, Blinkit has rebranded itself to reflect its commitment to rapid delivery. With its extensive network of local partners and warehouses, Blinkit ensures that customers receive their orders within a matter of minutes, making grocery shopping a seamless experience. The company has begun selling home appliances, chargers, headphones, smartwatches, lighting solutions, batteries, electronic accessories, and more.
Zepto
Zepto has carved a niche for itself in the instant delivery space, offering a wide range of products, including groceries, electronics, fruits, vegetables, and personal care items. Leveraging advanced logistics technology, Zepto guarantees swift delivery, catering to the on-the-go lifestyle of metro dwellers.
Swiggy Instamart
Building upon the success of its food delivery platform, Swiggy has ventured into quick commerce with Instamart. Partnering with neighborhood stores, Swiggy Instamart promises delivery in under 30 minutes, ensuring that customers never run out of essentials.
BBNow
BigBasket, a household name in online grocery shopping, has launched BBNow to tap into the burgeoning demand for instant delivery. It guarantees delivery within 15-30 minutes, and in the event of a delay, offers a 5% cashback, subject to certain terms and conditions such as extreme traffic, peak hours, and unforeseen circumstances.
Dunzo Daily
Dunzo has become synonymous with hyperlocal delivery, and its Daily service takes this a step further by guaranteeing delivery within 19 minutes. From groceries to medicines to letters to clothes from tailors, Dunzo Daily fulfills all your daily needs with lightning speed.
Amazon Fresh
Amazon’s grocery delivery app, Amazon Fresh is not into 10-minute delivery but it takes grocery orders via the Amazon Fresh website or mobile app. The company aims to deliver goods at home within 2-4 hours of placing order.
Flipkart Plans Foray
In the fast-paced world of eCommerce, eCommerce giant Flipkart is gearing up to compete with established players like Swiggy’s Instamart, Zomato’s Blinkit, and Zepto.
As per industry insights, Flipkart is also building its infrastructure to expand into quick commerce with the introduction of dark stores.
Dark stores are essentially mini warehouses designed for online order fulfillment. They operate discreetly, away from regular consumers, and boast enhanced inventory storage capacity and streamlined operations.
Flipkart’s decision to venture into quick commerce stems from market dynamics. The firm is aiming for rapid deliveries within 10-15 minutes in major cities like Bengaluru, Delhi (NCR), and Hyderabad, as per reports.
“At Flipkart, customer-centricity is at the core of everything we do. We constantly work towards delivering a wide range of products to customers with speed. Over the past few months, we have made several investments to enhance our delivery capabilities, including adding same-day delivery in 20 cities. This covers mobiles, essential items, electronics, home appliances, fashion, books and lifestyle products. We are committed to meeting evolving customer expectations and delivering excellence in value, selection and speed, with more initiatives expected on this front in the coming months,” said Flipkart’s spokesperson on a query whether Flipkart is planning to enter the quick commerce business.
Recent statistics indicate a notable loss in Flipkart’s grocery sales to Blinkit and Instamart, attributed to their lightning-fast delivery services, often within 15 to 20 minutes. This reflects a broader consumer preference for convenience and speedy services, prompting Flipkart to adapt its strategy accordingly.
“The market is already moving this direction, with Zomato and Zepto expanding their product assortments, Amazon offering same day delivery in select Indian cities and Walmart-owned Flipkart recently announcing a similar move,” said Glade Brook Capital Founder and CIO Paul Hudson on March 6, 2024 in his LinkedIn post.
Glade Brook Capital is a US-based venture capital firm, which has invested in Zepto and Zomato.
By leveraging the efficiency of dark stores, Flipkart aims to regain market share and cater to evolving consumer preferences. The move signifies a strategic pivot aimed at aligning with market demands and providing swift, seamless delivery experiences to customers.
Future Market Estimations
The future for instant apps in Indian metro cities shines brightly.
According to Inc42 data, the quick commerce sector in India experienced a rapid surge in popularity between 2021 and 2023, raising USD 4.2 billion in funding.
According to industry projections, the quick commerce segment in India is expected to witness exponential growth, with estimates suggesting a market size of USD 5 billion by 2025.
This growth trajectory is fueled by the increasing penetration of smartphones, rising internet connectivity, and changing consumer preferences.
As technology progresses, these platforms will evolve into even more efficient and user-friendly solutions, providing personalized recommendations and seamless shopping experiences.
“Together with Swiggy Instamart (where Glade Brook is not an investor), Zepto and Zomato-owned Blinkit have led the growth of this sector, from start-up to millions of users and tens of thousands of crores (billions of US dollars) in revenue in less than 3 years,” Hudson said in his insightful article on professional networking site LinkedIn.
Advancements in logistics, Artificial Intelligence, and machine learning will play pivotal roles in streamlining operations, leading to quicker delivery times and heightened customer satisfaction.
“India’s quick commerce market is experiencing rapid growth due to increasing smartphone penetration and a young tech-savvy population. By 2028, it is anticipated that the number of users in the Quick Commerce market in India will reach 56.4 million users. The user penetration rate, which currently stands at 1.8% in 2024, is projected to rise to 3.8% by 2028,” as per the findings of data gathering online platform Statista.
Furthermore, the proliferation of smart devices, more and more innovation in the retail sector, refinement in apps, and the impending rollout of 5G technology will catalyze the expansion of instant apps’ reach.
With faster and more reliable internet connectivity, these platforms will extend their services to even the country’s most remote corners, democratizing access to essential goods.
As urbanization continues unabated and the demand for convenience escalates, the potential for instant apps to capture a significant market share is immense.
More Power to Consumers
The availability of goods through instant apps can be a game-changer for the retail sector. It not only changes how one shops but also gives power to consumers.
With instant apps, people can easily find what they need, no matter where they are.
This means big changes in how customers buy things. In Indian metro cities, the future of instant apps looks promising. They’ll keep getting better and reaching more people.
As they improve with new technology, nationwide shopping will become quicker, simpler, and more tailored to each person’s needs and thoughts.
Despite their rapid growth, instant apps face several challenges and stiff competition in the market.
One of the primary hurdles is ensuring seamless logistics and efficient last-mile delivery.
The reliance on a network of delivery partners and the management of inventory in real-time pose significant operational challenges.
Additionally, competition among instant apps is intense, with players vying for market share through aggressive marketing strategies and innovative offerings.
Solutions and Innovation
To overcome these hurdles, instant apps are leveraging technology and innovation to streamline operations and enhance the user experience.
Advanced logistics algorithms optimize delivery routes, minimizing delivery times and maximizing efficiency.
Real-time inventory management systems ensure that products are readily available, reducing the likelihood of stockouts. Moreover, partnerships with local vendors and neighborhood stores expand the product assortment, catering to diverse consumer preferences.
Making Life Easy for Users
Instant apps have transformed the lives of users in myriad ways, offering unparalleled convenience and flexibility.
Busy professionals can now skip the hassle of visiting retail shops, grocery shopping, and household errands, they can just rely on instant apps to fulfill their daily needs within minutes.
Based on the region, the Southern part of India captured the major market share in the India Quick Commerce market. The Q-commerce companies are expanding their presence in metro & Tier 1 cities such as Hyderabad, Bangalore, Pune, Mumbai, Chennai, etc., in the Southern region.
Moreover, the major factors attributing its demand in these prime cities are the presence of the working population, large internet penetration as well as high awareness regarding the usage of technology.
“The individuals living in these cities are more tech-oriented & are more likely to refer to an online platform to purchase their day-to-day groceries due to their busy lifestyles, aging populations, and the prevalence of work from home. Hence, this leads to a lower preference to visit stores,” said a report ‘India Quick Commerce Market Research Report: Forecast (2023-2028)’ by MarkNTel Advisors.
Parents juggling work and family responsibilities find solace in the ability to order essentials at the touch of a button, saving precious time and energy.
Moreover, the seamless integration of payment gateways and user-friendly interfaces ensures a hassle-free shopping experience, further enhancing user satisfaction. These instant delivery apps are attractive as they provide coupon codes, discount offers, and cashback for using varied payment gateway options.
Transforming Shopping for Seniors and Mobility-Challenge
Instant apps are incredibly useful for senior citizens and people with disabilities who face challenges in visiting stores and standing in long queues. They can browse through a wide range of products and make purchases with just a few taps on their smartphones or tablets.
These apps are designed with accessibility features that cater to individuals with different disabilities. This includes features such as voice commands, screen readers, and adjustable font sizes, making it easier for them to navigate the app and complete transactions independently.
For individuals with mobility issues or chronic pain, visiting stores and standing in queues can be physically exhausting and uncomfortable. Instant apps alleviate this strain by allowing them to shop from home, avoiding the need to navigate crowded aisles or wait in long lines.
Instant apps often offer personalized recommendations based on past purchases and preferences. This tailored shopping experience can be beneficial for senior citizens and people with disabilities, ensuring that they find items that meet their specific needs and preferences without the hassle of browsing through crowded shelves.
Conclusion
The rise of instant apps in Indian metro cities marks a paradigm shift in the retail industry.
Blinkit, Zepto, Swiggy Instamart, BBNow, and Dunzo Daily are at the forefront of this revolution, offering consumers unparalleled convenience and efficiency. As these platforms continue to innovate and evolve, they will redefine the way we shop, setting new standards for convenience, speed, and customer satisfaction.
The future of retail is here and now.
FAQs
What is Quick Commerce?
Quick Commerce, also referred to as Q-commerce, is a type of eCommerce where the emphasis is on quick deliveries, typically in less than an hour.
What are the best Quick Commerce companies in India?
Swiggy, Dunzo Now, Blinkit, Big Basket, and Zepto are the major companies operating in the Indian Q-Commerce Market.
What is the projected user expansion in the Quick Commerce sector within the Indian market in the future?
By 2028, it is anticipated that the number of users in the Quick Commerce market in India will reach 56.4 million users.
Tripti Agarwal
