Swiggy to scale up food delivery initiatives as Q2 revenue grows

“Through constant innovation and sharper segmentation, from our ‘High Protein’ and ‘No Sugar Added’ categories to ‘Tables’ and ‘Food on Train’ in tech parks, we ensure every consumer finds an option that suits their needs. Additionally, initiatives like ‘Bolt’, which focuses on speed, and ’99 Store’, which focuses on affordability, make food delivery as seamless and accessible as possible,” said Kapoor.

In the quarter, Swiggy’s food delivery arm, its second-largest business in terms of revenue, recorded the fastest growth in the last two years by adding one million new users, Kapoor said.

Gross order value (GOV) in the segment increased ₹8,542 crore in September quarter ₹7,191 crore within the guided range in the previous year period. Average monthly transacting user base increased 17% to 17.2 million from 14.7 million in the previous year.

Swiggy has launched many pilot initiatives in recent years aimed at gradually increasing average order value (AOV) and accelerating new customer acquisition. It launched ‘NoSugarAdded’ earlier this month, targeting health-conscious customers. In August, DeskEats went live in more than 7,000 corporate premises across the country, allowing office customers to access dining options at 2 lakh partner restaurants.

Affordable price factor

The Bengaluru-based company plans to keep affordability at the core of its new initiatives. In July, he opened 99 Store, which offers quick-prepared meals. ₹99. “Affordability of meals will likely be the biggest key for the food delivery category, and it is incumbent upon market creators like us to try multiple approaches and see what can succeed, even if it means disrupting the status quo. We believe our ability to scale a new offering if it fits the product and business market is superior because we have a fully established and scaled technology and operational stack,” the company said in its September quarter letter to shareholders.

Its 99 Stores are currently available in 500+ cities and currently contribute to a high single-digit percentage of Swiggy’s food orders.

This comes at a time when competitive intensity is increasing in the food delivery segment, with new players like Rapido’s Ownly and smaller venture capital-funded startups like Swish emerging in recent months. The general consumption for online food ordering has also softened, revealing concerns that the market will reach saturation.

Both Eternal and Swiggy have taken major steps to keep up with the competition by reducing subscription fees or lowering the minimum order value. However, subsidized deliveries were offset by an increase in the platform fee.

“Despite recent talk of platform fee increases leading to increased costs, total cost of service for users as a percentage of average order value has remained consistent over the past three years. Growth in monthly transacting users rose to 17.2% year-on-year, and double-digit annual order growth was the highest in two years,” added Kapoor.

Swiggy added in its shareholders’ letter that growth remains its “overarching priority” and will remain on track to achieve guided steady-state margin of 5% of gross order value.

Paying attention to profitability

“Swiggy maintained its food delivery growth at 18.8% YoY, broadly in line with Zomato’s (Swiggy had outperformed Zomato in the last two quarters). However, the number of users rose 22.2% YoY in the quarter to 17.2 million. Swiggy’s innovation in food delivery stands out among Bolt (700+ cities) and Toing (value app) and 99 Store. Elara Securities It is key to economic growth,” analyst Karan Taurani said.

Swiggy on Thursday reported another unprofitable quarter this financial year, hit by rising spending on its express commerce arm Instamart, underlining the difficult road to profitability in the express delivery sector. Net loss increased ₹1,092 crore against ₹626 crore and operating income was declared in the previous year period ₹5,561 crore, up 54.4% year on year, ₹Average estimate of surveyed analysts is ₹5,280 crore Bloomberg.

The company is considering rising so far ₹10,000 crore through a qualified institutional placement (QIP) and other permissible avenues to strengthen its balance sheet and maintain flexibility in India’s highly competitive gig trading market. This comes almost a year after the rise of listed rival Eternal Ltd ₹8,500 crore through QIP and less than two weeks after Zepto raised $450 million in private equity from the California Public Employees’ Retirement System (CalPERS).