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Quick commerce is a cash-guzzler, but Swiggy is unfazed

Arun Jain, 05/02/2025

Bengaluru: Growth investments being made into Swiggy’s quick commerce arm Instamart will mature over time as the firm works on reducing delivery costs and increasing advertising revenue, according to chief financial officer Rahul Bothra.

The firm’s average order value in the October-December quarter was ₹534, up 14% year-on-year, while the cost of fulfilling a delivery is now the lowest it has ever been, Bothra told Mint in an interview on Wednesday. Swiggy’s advertising revenue surged 65% to ₹751 crore in the December quarter.

“These structural levers, as well as the maturity of these newly opened stores, will help us to get to the contribution margin break-even by the third quarter of FY26,” Bothra said.

Swiggy’s losses widened to ₹799 crore in October-December from ₹574 crore in the year-ago period, dragged by heightened investments in Instamart to keep up with intensifying competition in the quick commerce space. Its operating revenue surged to ₹3,993 crore from ₹3,048 crore in the previous year.

The listed food-tech company aims to double the area of its dark-store footprint to 4 million sq. ft by March 2025 and expects the maximum number of store additions in the fourth quarter.

“We added 96 stores in the December quarter. In January alone, we have added 86 stores, and we will add even more in the subsequent months. This is already part of our pipeline,” the executive noted.

Competition in quick commerce is heating up, prompting players to bulk up investments in expanding dark stores and hiring more personnel to keep delivery timelines short. Last month, Zomato said it will continue to floor the accelerator on its Blinkit expansion, burning cash to reach 2,000 dark stores a year ahead of target even as the quick-commerce business pulled down its third-quarter profit.

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Zomato’s profit after tax plummeted 57% year-on-year to ₹59 crore in the December quarter, weighed by Blinkit’s ₹103 crore loss.

There’s also been activity in the instant food delivery segment in recent weeks. Months after launching its 10-minute delivery offering Bolt, Swiggy rolled out a new app ‘Snacc’ for 15-minute delivery of snacks and beverages. In January, quick-commerce app Zepto Cafe was said to have crossed 50,000 orders per day within four weeks of launch, while Zomato-owned Blinkit unveiled ‘Bistro’ for 10-minute food delivery.

Swiggy said it has started seeing early success in the space. Bolt has scaled to 425 cities, contributing to 9% of Swiggy’s food delivery volumes today—up from 5% in November 2024. “We are the first player to create this proposition at scale for our ~15 Mn users, thereby offering a platform for our restaurant partners to meaningfully participate in this market segment,” the company said in its letter to shareholders on Wednesday.

“The magic really is how we overall manage the market sizes, menu curation along with the restaurant partners, to ensure that the overall market sizes don’t go materially south because of the nature of the ordering,” Bothra said. “It’s a combination of new users and new use cases, as well as the economics playing out with some headwinds and some tailwinds.”

App strategy

Last month, Swiggy rolled out three new standalone smartphone apps, starting the year by testing the strategy of introducing separate apps while maintaining a single unified app for all services.

The firm launched a separate app for its grocery delivery service Instamart and is set to roll out Pyng–a professional services marketplace—and a 15-minute food delivery app called Snacc in select pin codes of Bengaluru.

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“Globally, there are multiple instances where even a super-app has a use-case sitting outside it. In our case, Dineout was acquired and integrated into our unified app; while continuing to operate as a standalone app too. We have also experimented with Swiggy Daily and InsanelyGood as standalone-only apps in the past. At the same time, we have also launched Swiggy Scenes on the unified app in December,” the firm said in the shareholders’ letter.

However, the National Restaurant Association of India opposed “private labelling” by e-commerce platforms Zomato and Swiggy accusing them of monopolising the market and violating marketplace neutrality.

Swiggy’s Bothra clarified that Snacc has partnered with brands like Blue Tokai Coffee and The Whole Truth to deliver snacks and beverages within 15 minutes.

“We will work with the existing ecosystem to curate specific needs for the 10 to 15-minute delivery ecosystem,” he said. “We will be working with partners and some of them are already live.”

Companies Blinkitfood techInstamartInvestmentsquick commerceRahul Bothraswiggyzomato

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