With just over four months to go until the deadline, industry insiders have expressed doubts about the proposed 30% market share cap in the Unified Payments Interface (UPI) category, according to multiple media sources. Multiple newcomers to UPI have been informed, informally, that the limit is not going to be implemented. As a result, they have begun to reassess their growth and investment strategies, according to those briefed on the situation.
According to earlier media reports, new players in the UPI industry are holding off on making large expenditures until they have a better understanding of the market share rule. UPI payments are dominated by PhonePe and Google Pay.
Reportedly, the regulator is of the opinion that new entrants have not been able to reduce the dominance of the top two UPI services, therefore it is left with few choices regarding the implementation of the December 31st deadline.
In response to enquiries, neither NPCI nor the ministry of electronics and IT provided any information. Implementing this law (market cap) will require significant planning, according to several experts. It cannot be done in a day due to the disruptive nature of the process.
The Growth Trajectory
Both the government and NPCI are deeply committed to the expansion of UPI, which reached 14 billion monthly transactions in May. If people keep using the same two or three platforms, what options do we have? So many new entrants are able to set up shop, but they haven’t made a dent just yet.
In July, out of the 14.4 billion UPI transactions, more than 85% were processed through Walmart’s PhonePe and Google Pay. Google Wallet had 5.3 billion transactions, whereas PhonePe had 6.9 billion. With 1.1 billion UPI transactions, Paytm (One 97 Communications) came in third, and Cred (142 million payments) came in fourth.
The Reserve Bank of India (RBI) placed restrictions on Paytm Payments Bank in February, making arguments about the market share ceiling more prominent. Paytm is the third largest UPI operator. On February 5, a prominent media outlet said that Paytm’s problems will cause users and businesses to switch to the two most popular applications.
Why the Cap Cannot Be Implemented?
To prevent the UPI ecosystem from becoming overly dependent on only one or two platforms, NPCI first proposed a market share cap. In December 2022, NPCI delayed implementation for two years following multiple rounds of negotiations and requests from key corporations operating such apps.
Some industry executives and specialists in the field have voiced concerns that imposing a market share cap might cause systemic disruption and be technically challenging to achieve.
Conversely, NPCI has been facilitating the development of UPI solutions by numerous consumer internet platforms with huge user bases, enabling them to become third-party application providers.
Flipkart, the e-commerce platform that was once PhonePe’s parent company, Groww, Slice, and the Tata Neu superapp are all part of this group. Another company that has introduced its UPI offering through the plug-in channel is Swiggy, a food and grocery delivery firm that has partnered with banks. Similarly, Ola Consumer is in the process of planning a same system.
A renowned media house has reported that food tech company Swiggy, which is preparing for an initial public offering (IPO), has expanded its service fee policy to incorporate the gross order value (GST plus packaging fees) for restaurants located outside of metro areas. As a result of the change, its restaurant partners in those areas will earn a higher commission.
In the past, restaurants in bigger cities were already charged a service fee (also called a commission) based on the gross value of their operations, whereas smaller towns and cities had to figure it out using the net value.
How This Move Will Be Implemented?
The service fee will be applied to the gross value of each order by Swiggy starting August 14, in accordance with the merchant conditions. The business informed its restaurant partners in a letter that the service price owed to Swiggy will slightly rise due to this adjustment being implemented evenly across the platform.
The study states that around 1,000 eateries will be impacted by this regulation shift. “Contracts are usually tailored individually, but this latest update will be implemented for around 1,000 partners at this stage,” another media house reported in its recently published article.
It is usual protocol, according to a Swiggy representative, to communicate with a select set of partners after negotiations; this is because each partner has a customised business agreement that is tailored to their specific needs.
In contrast to Swiggy, which normally charges restaurants a commission of 17–25%, Zomato, an industry rival, charges payment gateway costs independently.
Disputes Arise Around Commission Uniformity
Swiggy has around 350,000 restaurants listed on its network. The move is to standardise prices on gross value orders across all of them. Nevertheless, numerous restaurant partners will be impacted, thus the adjustment has ignited a discussion.
Sustainable techniques that are good for delivery services and restaurants alike should be seriously considered. Gaining market share through raising discounts or commissions alone might not be sustainable.
Brand value, order numbers, and other indicators are usually considered during individual contract negotiations between meal delivery platforms and restaurant partners.
There is constant debate over the commission that meal delivery companies like Zomato and Swiggy charge because of the substantial effect it has on restaurants’ bottom lines.
Easing the Payment Services
The newly integrated Unified Payments Interface (UPI) Plug-in service was introduced by Swiggy on Wednesday. This service is powered by the National Payments Corporation of India (NPCI) and Juspay.
This functionality, which is marketed as Swiggy UPI, enables clients to make payments more quickly from within the app, thereby lowering the amount of time it takes to complete a transaction from more than 15 seconds to only five seconds.
A restaurant’s success in today’s highly competitive meal delivery market depends on its ability to stand apart. To help its restaurant partners increase their visibility and client interaction, Swiggy, India’s leading on-demand convenience platform, has introduced a range of off-app marketing tools. Helping restaurants increase their visibility on social media sites like Facebook, Instagram, and WhatsApp is the goal of this offering, which is available to partners across India.
Through the use of influencer marketing, social media ads (Facebook and Instagram), and WhatsApp marketing, Swiggy’s new marketing offerings enable restaurant partners to enhance their online visibility. In order to increase traffic to their menu pages on Swiggy, restaurants can team up with prominent local food influencers and target Swiggy users with ads on Facebook and Instagram. You can obtain a better return on your ad spend with these strategies combined with hyper-local and behavioral targeting; they boost brand awareness and consumer engagement.
To survive in today’s competitive restaurant industry, players need more than simply delicious food. Through the integration of influencer marketing, social media, and WhatsApp with the capacity to recruit new users through the Swiggy platform, our new suite of marketing services assists brands in expanding their consumer base. According to Ajit Panigarhi, Swiggy’s AVP of Restaurant Marketing and Growth, “With this, we bring the combined power of social media and Swiggy even to the smallest of the restaurant partners to solve for restaurant growth.”
The New Marketing Service Will Act as a Catalyst for Restaurant Partners
Swiggy brings reliable influencers through verified agencies to developing brands, simplifying influencer marketing. Content generation and branding are managed by these agencies to reach highly relevant local Instagram users.
Better Instagram and Facebook advertisements allow restaurant partners to reach Swiggy customers and drive high-intent people to their menu pages.
Restaurants can now send Swiggy clients branded WhatsApp messages and app push notifications. During festivals and special events, this direct and personalized approach helps businesses stand out.
Building a Strong Restaurant Partner Ecosystem
As part of its mission to build an effective Restaurant Partner Ecosystem, Swiggy is launching this program to help businesses overcome the obstacles they encounter. An effort called “Staffing Support” was previously introduced by Swiggy to assist partners in hiring skilled workforce at their establishments. In addition, the company has also introduced licensing support to assist restaurants in obtaining or renewing licenses, including FSSAI, GST, and trademarks. Restaurants can now generate personalized marketing links for their campaigns using Swiggy’s new SmartLinks function, which increases engagement and traffic.
Across India, this program is presently operational. The Swiggy Owner app has an icon for Restaurant Services where interested restaurant partners can access this service.
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.
Only two states, West Bengal and Odisha, allow alcohol home delivery, but media sources say six states may launch a pilot project after assessing it.
According to reports, Swiggy, BigBasket, Blinkit, and Zomato may soon deliver beer, wine, and liqueurs. Industry executives informed the media that New Delhi, Karnataka, Haryana, Punjab, Tamil Nadu, Kerela, and Goa are considering experimental projects. The media reported that executives indicated authorities are weighing the move’s merits and downsides.
Maharashtra, Jharkhand, Chhattisgarh, and Assam allowed liquor delivery during Covid-19 lockdowns with limits. Retail executives in West Bengal and Odisha reported a 20-30% sales rise from online delivery.
Expansion’s Driver: Consumer Interest and State Evaluations in Alcohol Home Delivery
With the help of the social media network LocalCircles, ISAWI surveyed 33,000 people in eight different cities in May 2021 about spirits delivery. Customers in Hyderabad, Bengaluru, Delhi, and Chennai expressed an interest in home delivery services, with 81% citing safety, brand availability, and convenience as reasons to back up their response.
In order to weigh the pros and cons of online alcohol delivery, state officials are currently surveying e-commerce platforms and spirits producers.
Industry Support: Upside of Alcohol Home Delivery
Breweries and the industry as a whole have been quite supportive. Beverage and wine producers have indicated a lot of interest in home delivery of their products, according to industry experts. This includes United Breweries’ Kingfisher brand and Budweiser owner AB InBev. Because beer consumption is very consistent with food purchasing patterns, this trend is very attractive, especially to city dwellers.
Industry Challenges: Obstacles of Online Alcohol Delivery
Due to various political backlashes, perception issues, and pressure from physical retail bodies, delivery platforms continue to face obstacles when trying to execute online alcohol delivery plans.
According to HipBar creator Prasanna Natarajan, who spoke to a media house, the company’s services were halted due to “certain local lobby pressures” after they had begun operations in Karnataka in 2021. A complaint had even been launched at the Supreme Court by the company.
He went on to say that the regulations governing business in various areas vary substantially, making it difficult to establish businesses throughout large portions of the country. There’s concern about the potential consequences of underage buyers or instances of domestic violence resulting from careless drinking. Natarajan had informed the media that there is a fear that duties will be avoided and that the government will lose the three rupees in levies it receives for every rupee a manufacturer generates. This is because the government stands to lose this revenue.
There are, without a doubt, challenges to face. Businesses and consumers alike are excited about this pilot initiative that is taking place across multiple states in India. If this initiative is fruitful, it may serve as a model for similar endeavours in other sectors.
Zomato and Swiggy, two of the largest food delivery companies in the world, shocked consumers in important cities like Bengaluru and Delhi by increasing their platform costs by 20%, to Rs 6. Both sites gradually raised their order fees from Rs 2 to Rs 6 over several months.
Delivery companies rely on platform fees to boost their take rates, which dictate how much money they make from each order. Zomato and Swiggy have been exploring the possibility of using platform fees to increase their total revenues and profits because they have formed a pair of monopolies. Compared to the Rs 3 that many users were paying at the time, Swiggy’s January platform charge of Rs 10 was significantly higher. During checkout, users were shown the higher fee of Rs 10, however, they were only charged Rs 5 after a discount. This was just to tease them.
In several important cities, such as the National Capital Region, Bengaluru, Mumbai, Hyderabad, and Lucknow, Zomato raised its platform cost from Rs 4 to Rs 5 for each order in April.
These companies are attempting to boost their business revenue in several ways. One is by charging greater platform fees; another is by increasing their ad revenue. Platforms, especially those involved in food delivery, are struggling to raise the commissions they charge restaurants without displeasing them, thus this becomes important.
Moving Away From Earlier Statement
The increase contradicts Swiggy‘s previous claims that it had no intentions to significantly raise the platform price. Analysts believe that both businesses will keep raising rates until they see customer pushback and a decline in order volumes.
At this time, the platform charge is only applicable to Swiggy’s and Zomato’s food delivery services; neither company has expanded it to cover their quick commerce businesses, Instamart and Blinkit. But in March 2023, a rival in the fast delivery industry named Zepto introduced a platform fee. With a daily order volume of approximately 5.5 lakhs, Zepto’s Rs 2 platform fee brings in an extra Rs 11 lakh in revenue. Zepto doesn’t have a meal delivery service like Zomato or Swiggy; it focuses solely on fast commerce.
Cut Back Expenses
There may be a way to cut down on operational expenses associated with delivery services by using the platform charge. Expenses like these pay for things like delivery workers, app infrastructure, and fast customer service. Without significantly diminishing the quality of their primary offerings, Zomato and Swiggy may be attempting to strike a compromise between these operational costs by raising the platform fee.
It May Lead to a Change in Market Dynamics
As customers seek out more cheap solutions, newer or smaller platforms may see an increase in subscribers, leading to more competition in the meal delivery sector. As a result of the charge increase, eateries may have to adjust their prices to absorb the added costs without driving away consumers. To attract budget-conscious consumers, they may either raise menu prices gradually or provide more deals and discounts. The overall cost and service arrangement of the food delivery industry can be affected by these changes in the long run.
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.
At the beginning of the new year, the two most prominent participants in the food delivery industry raised the platform fees by INR 1, which is equivalent to a 33 percent increase from INR 3 to INR 4. According to the predictions made by the media, the prices of consumer services would increase. This prediction was pretty much spot on thanks to Zomato and Swiggy, and it started on New Year’s Eve, which is the busiest day of the year for both of these companies.
Platform fees are not restricted to food delivery apps; Myntra, the top fashion eCommerce platform in India, is presently charging a platform fee of ₹20 for each order that is placed on its app. These fees are a component of the methods that the corporations employ to enhance their profitability and maintain their business models. The implementation of such fees, on the other hand, might vary, and some businesses may experiment with greater prices in the future or alter them based on the demand for specific services.
The most dedicated Zomato and Swiggy customers had to make some choices at the start of the new year. Should they decide to reduce their reliance on these platforms or keep paying ever-increasing platform fees to stay on top of them?
Starting on January 1, Zomato raised the platform fee from INR 3 to INR 4 per order in select areas. Unverified rumors circulated that on New Year’s Eve, Zomato briefly increased their platform fees to as much as INR 9 per order in several countries.
The price increases were justified by Zomato as “business calls” made after considering several variables. Coincidentally, Zomato’s order volume shot up to higher than the volume over the last six years combined, and the platform fees surged the day after New Year’s Eve.
The innovative approach and unwavering commitment to satisfying customers’ demands have contributed to Zepto’s steady rise to prominence, positioning it as the third-largest rival in the fast commerce space. Zepto is challenging industry heavyweights such as Swiggy Instamart and Blinkit, which is owned by Zomato, with a reputation for itself and a market share of over 20%. During its rise to prominence, Zepto has been known for its thoughtful approach to implementing platform fees, as well as its focus on user experience and operational performance.
In an attempt to boost income and operational efficiency, Zepto has decided to implement platform fees for a small number of users, which is different from the fee-free grocery order strategy of competitors Blinkit and Swiggy Instamart. Zepto’s plan, which starts at Rs 2 per order, follows the same model as established industries like eCommerce and restaurant delivery. Zepto emphasizes in its strategy introduction its commitment to sustainable growth and profitability over the long term and its willingness to try new things to stay ahead of the competition.
Size of the Online Food Delivery Market Across India From 2020 to 2023, With Estimates Until 2026
Aiming for Financial Gain
In addition to Zomato and Swiggy, other popular food delivery services like Uber, BigBasket, Myntra, and Dunzo impose extra charges (convenience charges, handling fees, and more) on top of the real delivery prices, which are typically discounted. Ola Prime Plus and Namma Yatri’s subscription plans for driver-partners are examples of new models that have emerged as a result of the revenue drive.
The fashion eCommerce behemoth Myntra, which is owned by Flipkart, started charging a fee for returns, which is one of its main selling points. The goal here is to correct unit economics.
According to Prosus, Swiggy’s principal investor, the company’s loss increased to $545 million in 2022 from $300 million the previous year, while Swiggy has not yet disclosed its financial results for FY23.
Platform fees are opening the way for the company to show a clear path to profitability in the next few months, which is necessary for its 2024 IPO. Platforms like Swiggy and Zomato will compensate to some degree by charging customers directly, even if discounts will still be around.
How much these fees are, how open they are, and how much value they give to everyone involved in the delivery process will determine if they are ethical.
The openness of these fees is also very important. Any fees and their purpose should be made plain to both customers and eateries. In an ethical system, food delivery fees would be reasonable, helping to sustain the industry while not unfairly harming any one participant.
India’s leading digital commerce entity Flipkart is working to venture into the fast-paced world of quick commerce to meet the burgeoning demand for rapid delivery of everyday essentials.
Flipkart has recently unveiled its latest initiative of same-day delivery service now available in 20 major Indian cities.
This strategic move underscores Flipkart’s unwavering dedication to elevating customer satisfaction, and convenience and to revolutionize the eCommerce landscape.
“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,” Walmart-backed Flipkart said in a statement.
This new initiative of same-day delivery will be for customers across cities including Ahmedabad, Bangalore, Bhubaneshwar, Coimbatore, Chennai, Delhi, Guwahati, Hyderabad, Indore, Jaipur, Kolkata, Ludhiana, Lucknow, Mumbai, Nagpur, Pune, Patna, Raipur, Siliguri and Vijayawada.
It would cover products like mobiles, essential items, electronics, home appliances, fashion, books, and lifestyle goods. The customers will get their products delivered before midnight if they place their orders by 1 pm without any extra charge.
Flipkart’s introduction of same-day delivery service represents a significant advancement in the Indian eCommerce market.
“We have invested in cutting-edge technologies, leveraged data analytics, and harnessed insights on demand patterns to ensure that we are well-equipped to anticipate and fulfill demand the very same day. I must acknowledge the hard work and dedication of our teams who have tirelessly contributed to making this vision a reality,” said Hemant Badri, Senior Vice President, Head of Supply Chain, Customer Experience & ReCommerce Business, Flipkart Group.
In the past year, quick commerce has surged into a billion-dollar industry with platforms like Blinkit, Zepto, and Swiggy Instamart poised to exceed USD 1 billion in revenue in the financial year 2023-24.
The surge in quick commerce has captured Flipkart’s interest, prompting the eCommerce giant to enhance its emphasis on the grocery sector.
As quick commerce constitutes approximately 40% of online grocery delivery, it is increasingly fueling growth. Flipkart’s renewed focus on grocery aligns with a broader transition away from conventional eCommerce models centered on sales and discounts.
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%
It’s essential to acknowledge how its rivals have also expanded into quick commerce to meet evolving customer demands.
Here’s how some of Flipkart’s competitors have ventured into quick commerce:
Amazon India
Amazon has been a key player in the Indian eCommerce sector, and it has also delved into quick commerce to enhance its delivery capabilities. The company offers Amazon Prime Now, which provides ultra-fast delivery of essentials, groceries, electronics, and more within a few hours.
Reliance Retail
Reliance Retail, through its digital arm JioMart, has been rapidly expanding its presence in the e-commerce space. Leveraging Reliance’s extensive network of physical stores and warehouses, JioMart offers quick delivery of groceries, household essentials, and other daily items.
BigBasket
As a leading online grocery platform in India, BigBasket has capitalized on the growing demand for quick delivery of essential items. The company offers express delivery services for groceries and household essentials, ensuring that customers receive their orders within a few hours. BigBasket has the quick commerce feature BB Now too to get groceries delivered in 15-30 minutes.
Blinkit
Grofers now 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 orders within a few minutes, making grocery shopping seamless.
Blinkit has begun selling home appliances, puja essentials, Eid special offerings like prayer mats, thobe kurte, ‘sehri’ and ‘iftar’ needs, ‘Holi’ needs, sweets, colors, thandai, bakery items, meats, seafood, cosmetics, mobiles and accessories, electronics, baby care products and much more.
Swiggy and Zomato
While primarily known for their food delivery services, Swiggy and Zomato have also entered the quick commerce space by offering delivery of groceries, medicines, and other essential items.
Zepto
Zepto is also the name of a quick commerce platform that enables businesses to offer fast delivery services for groceries, bakery products, kitchen essentials, paan corner (betel leaf), tobacco, health and hygiene, toiletries, clothing, and other essentials. Zepto provides tools and infrastructure to facilitate within minutes delivery of goods to customers’ doorsteps.
Dunzo
Dunzo has become synonymous with hyperlocal delivery, with its Daily service taking it a step further by guaranteeing delivery within 19 minutes. From groceries to medicines to food from nearby localities to letters to clothes from the nearest boutique, Dunzo Daily fulfills all your daily needs with lightning speed.
While Flipkart maintains a strong foothold in the market, achieving revenue growth poses a continual challenge. With the emergence of competitors such as Zepto and Blinkit, there is a critical need for Flipkart to establish itself within the quick commerce sector.
As per media reports, Flipkart is also weighing options to expand into quick commerce with the introduction of dark stores. Dark stores are like mini warehouses designed for online orders.
Flipkart is also planning to buy Dunzo Daily. Despite having raised approximately USD 500 million in funding, Dunzo has struggled to secure additional investment and meet its staff payroll.
The hyperlocal delivery company has lost ground to newer competitors like Zepto, Swiggy, and Zomato’s Blinkit, leading to a drop in its market position.
Flipkart, valued at over USD 32 billion, is considering buying Dunzo, known for its local delivery skills. This move could be smart, but talks might take a while because Dunzo has ties to Reliance Retail, its main investor owning a 26% share.
Flipkart wants to be careful about what it buys, especially considering Dunzo’s connections, according to an article published by Business Insights Now on February 23.
The prospects of quick commerce, including Flipkart’s role, are exceptionally promising, driven by evolving consumer preferences, technological advancements, and market dynamics.
Flipkart, along with other quick commerce platforms, will capitalize on increasing smartphone penetration, internet connectivity, and digital payment systems to broaden its reach across diverse demographics and geographic regions.
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.
Meanwhile, the quick commerce market in India is anticipated to reach a revenue of USD 3.3 billion in 2024, with a projected compound annual growth rate (CAGR 2024-2028) of 27.42%. This growth trajectory is expected to propel the market volume to USD 8.8 billion by 2028.
Revenue of Quick Commerce Market in India
Conclusion
In summary, Flipkart’s expansion of its same-day delivery service epitomizes its dedication to setting new benchmarks of excellence in the eCommerce arena.
With a focus on speed, convenience, and customer satisfaction, Flipkart reaffirms its position as a trailblazer in India’s digital commerce revolution.
As the quick commerce market continues to evolve and expand, Flipkart’s strategic initiatives and dedication to customer satisfaction will shape its trajectory in the years to come.
The future holds endless possibilities, and Flipkart stands ready to embrace the opportunities that lie ahead, driving forward the evolution of online retail.
“Many believe Amazon and Walmart-owned Flipkart will continue to dominate the future of Indian eCommerce. In my humble opinion, I would not bet against the hometown teams at Zepto and Zomato,” said a LinkedIn post by Paul Hudson, Founder and CIO, of Glade Brook Capital.
Glade Brook Capital, which supported Zepto in Mumbai last year, also invested in Zomato’s parent company, Blinkit, back in 2019.
FAQs
In how many cities will Flipkart provide the same-day delivery service?
Flipkart will provide same-day delivery service in 20 major Indian cities including Ahmedabad, Bangalore, Bhubaneshwar, Coimbatore, Chennai, Delhi, Guwahati, Hyderabad, Indore, Jaipur, Kolkata, Ludhiana, Lucknow, Mumbai, Nagpur, Pune, Patna, Raipur, Siliguri and Vijayawada.
What will be the revenue of the quick commerce market in India in 2024?
The quick commerce market in India is anticipated to reach a revenue of USD 3.3 billion in 2024, with a projected compound annual growth rate (CAGR 2024-2028) of 27.42%. This growth trajectory is expected to propel the market volume to USD 8.8 billion by 2028.
Who are the competitors of Flipkart in the field of quick commerce?
The competitors of Flipkart in quick commerce include Dunzo, Amazon India, Reliance Retail, BigBasket, Blinkit, Zepto, Zomato, and Swiggy.
In recent years, India has witnessed a remarkable surge in startups achieving the prestigious “unicorn” status. These privately held startup companies, valued at over $1 billion, signify the vibrant growth of India’s startup ecosystem. While the United States and China lead globally in the number of unicorns, India has secured a spot in the top three countries, showcasing the rapid development of its startup landscape.
Several Indian startups have attained unicorn status unprecedentedly, earning the title of fastest unicorn. This growth can be attributed to factors such as increasing smartphone and internet penetration, urbanization, rising disposable incomes, and substantial funding opportunities supported by government initiatives like Startup India and Digital India.
This article analyzes some rapidly evolving Indian firms that have quickly earned association in the elite unicorn club. These fastest unicorns’ unique ideas have gained funding and validation from top global investors. They are also driving a revolution in India’s major industries.
Bhavish Aggarwal and Krishnamurthy Venugopala Tenneti
India’s Unicorn Companies – Krutrim
Launched in December 2023, Krutrim Ai Designs was founded by Bhavish Aggarwal and Krishnamurthy Venugopala Tenneti. Krutrim is a large language model (LLM) that comes in two versions: the base Krutrim model, which comprehends 22 Indian languages and can generate content in 10 languages, and the more advanced Krutrim Pro.
Developed entirely in India, Krutrim aims to align with Indian cultural nuances and cost structures to support the advancement of AI in the country. In a remarkable feat, Krutrim swiftly secured $50 million in funding, catapulting its valuation to an impressive $1 billion. This rapid ascent not only marks Krutrim as India’s first unicorn of 2024 but also positions it as the fastest startup in the country to achieve this milestone, accomplishing it within just one month of launching its large language model.
Mensa Brands is a technology-led investment platform that helps founders of digital-first brands grow their businesses using data, technology, and team expertise. It is an Indian startup that acquires direct-to-consumer brands and helps them scale within the home market and overseas. Mensa Brands currently houses 12 brands, 80% of which are run by women, and operate in three categories- apparel, beauty and personal care, and home.
Mensa became a unicorn, with a valuation of more than one billion dollars, just six months after it was founded. Ananth Narayanan launched it in May 2021; by November 2021, it was a unicorn. It raised $135 million in a Series B fundraising round headed by Falcon Edge’s Alpha Wave Ventures, valued at $1.2 billion.
GlobalBees
Company
GlobalBees
Founded
2021
Founders
Nitin Agarwal and Supam Maheshwari
India’s Unicorn Companies – GlobalBees
GlobalBees, founded in 2021 by Nitin Agarwal and Supam Maheshwari, brings digitally native brands into its fold, spanning various categories like beauty, personal care, home and kitchen, food and nutrition, and sports and lifestyle. These brands typically generate revenue ranging from $1 million to $20 million. GlobalBees assists these firms in expanding their reach by partnering with them and facilitating sales through marketplaces and other channels, both within India and internationally.
In December 2021, GlobalBees achieved unicorn status after successfully raising $110 million in its Series B funding round. The round was spearheaded by Premji Invest, the investment firm led by Wipro’s Azim Premji, with participation from existing investors, including Steadview Capital, Lightspeed, SoftBank, and FirstCry. With this infusion of funds, GlobalBees aimed to strengthen its product portfolio, drive further innovation, enhance the customer experience, recruit top talent, and scale its operations.
Ola Electric is an electric vehicle (EV) company dedicated to shaping a brighter, safer, and more sustainable future. Its vision is to establish India as the global hub for EVs by fostering an ecosystem of innovative products, services, and technologies. Ola Electric offers the Ola S1 electric scooter in variants like the Ola S1 Air, Ola S1X, Ola S1, and S1 Pro.
The company’s manufacturing facility, sprawled across a 500-acre, fully automated complex in Pochampalli town, Krishnagiri district, Tamil Nadu, is set to become the world’s largest two-wheeler factory. With an impressive annual production capacity of 10 million units, it aims to revolutionize the EV industry globally.
Ola Electric achieved unicorn status within just two years of its founding, having raised $250 million from SoftBank in a Series B funding round. This investment valued Ola Electric at over $1 billion, solidifying its position as a key player in the EV market. Additionally, Bhavish Aggarwal, the company’s founder, announced plans to establish the Battery Innovation Center (BIC) in Bangalore. This facility, considered Asia’s largest Cell R&D facility, signifies Ola Electric’s commitment to driving innovation and advancing EV technology.
Udaan
Company
Udaan
Founded
2016
Founders
Sujeet Kumar, Amod Malviya, and Vaibhav Gupta
India’s Unicorn Companies – Udaan
Udaan, established in late 2016 by former Flipkart executives Sujeet Kumar, Amod Malviya, and Vaibhav Gupta, is a unique B2B marketplace connecting manufacturers and wholesalers with retailers online. Unlike many startups, Udaan operates without a CEO by choice, setting it apart in the industry.
The platform simplifies the onboarding process for merchants, requiring minimal information, and provides effective catalog tools for product presentation. This creates a dynamic, two-way channel for trade, enhancing the overall user experience. Additionally, Udaan offers various services, such as credit financing and logistics, to facilitate connections between manufacturers and retailers. Notably, Udaan’s logistics service, Udaan Express, handles 65% of the company’s orders, further streamlining operations.
Recognized as one of the fastest companies to achieve unicorn status, Udaan attained this milestone in September 2018. This underscores its rapid growth and success within the B2B marketplace, solidifying its position as a leader in the industry.
On September 15th, 2021, Bengaluru-based Apna achieved unicorn status after securing $100 million in Series C funding led by Tiger Global, valuing the company at $1.1 billion. This remarkable milestone was reached just 21 months after its inception.
Apna provides a platform for job seekers to create profiles showcasing their skills, education, and work experience. Users can search for job opportunities, directly contact companies, schedule interviews, and ultimately secure employment. With India boasting over 300 million blue-collar workers, which is expected to rise annually by approximately 10%, platforms like Apna hold immense potential in this sector. Apna has a robust user base of 16 million individuals, with over 150,000 businesses utilizing the platform for recruitment. Impressively, apna facilitates more than 18 million job interviews every month, underscoring its significance in the Indian job market.
BharatPe is an Indian fintech firm formed in 2018. It offers a QR code-based payment solution software that enables offline businesses and shops to accept digital payments. It was created by Ashneer Grover and Shasvat Nakrani, both IIT Delhi alumni.
It enables retailers to accept payments from over 100 mobile apps with a single QR code that is automatically deposited to their bank account in real-time. The firm has experienced tremendous development, with a monthly transaction value of INR 1500 crores. It is the fourth largest player in the offline payments industry. It raised $370 million in a primary and secondary mix as part of a Series E investment round led by a new investor, New York-based Tiger Global Management. It propelled it to the list of Unicorn Companies.
Founded in 2014 by Sriharsha Majety, Nandan Reddy, and Rahul Jaimini, Swiggy is an Indian online food delivery platform. The founders, despite facing setbacks in previous ventures, pooled their expertise from IIT/IIM backgrounds and startup experience to launch Swiggy. The surge in India’s urban population and the rise of nuclear families where both partners work have fueled the demand for FoodTech services like on-demand delivery, cloud kitchens, and restaurant discovery.
Swiggy distinguished itself by prioritizing logistics and operating its delivery fleet instead of relying on restaurants or third-party services. This strategic move provided a significant competitive edge. Recently, Swiggy joined India’s unicorn club after securing $210 million in funding led by DST and Naspers, valuing the company at $1.2 billion. The funds were utilized to expand its supply chain network, venture into new markets, and bolster its engineering and technology teams.
Naveen Tewari, Abhay Singhal, Mohit Saxena, and Piyush Shah
India’s Unicorn Companies – Swiggy
Glance is an Indian artificial intelligence-based software company that delivers personalized content directly to smartphone lock screens. Its mission is to transform mobile shopping through a unique creator-led commerce strategy, leveraging influencers and celebrities to promote products directly to users on their phone’s lock screen. Co-founded in 2019 by Naveen Tewari, Abhay Singhal, Mohit Saxena, and Piyush Shah, Glance operates as a subsidiary of InMobi.
In an impressive feat, Glance achieved unicorn status within just 20 months by securing $145 million in primary investment from Google and existing investor Mithril Capital. This substantial funding valued Glance at over $1 billion, cementing its status as one of India’s fastest-growing startups at the time.
Glance acquired Roposo, a short-form video platform, to further enhance its offerings to integrate vernacular video content into its platform. The funding was also directed towards strengthening AI capabilities across Glance and Roposo, expanding the technology team, launching new services, enhancing the brand, and facilitating global expansion.
FAQs
Which are the key sectors driving the emergence of fast-growing unicorns?
Key sectors driving the emergence of fast-growing unicorns include financial services, software-as-a-service (SaaS), logistics, transportation, and education technology.
When did Mensa Brands become a unicorn?
Mensa Brands became a unicorn, with a valuation of more than one billion dollars, just six months after it was founded. It raised $135 million in a Series B fundraising round headed by Falcon Edge’s Alpha Wave Ventures, valued at $1.2 billion.
What is Apna?
Apna provides a platform for job seekers to create profiles showcasing their skills, education, and work experience. Users can search for job opportunities, directly contact companies, schedule interviews, and ultimately secure employment.
Which are rapidly evolving Indian unicorn firms?
Some rapidly evolving Indian firms that have quickly earned association in the elite unicorn club are as follows:
Piyush Mishra
