A war is brewing in India's food delivery and quick commerce space. Established food aggregators Zomato Ltd. and Swiggy Ltd. are mobilising funds and manpower to make sure theirs is the order that reaches the consumer first. Food deliveries in under 15 minutes is the promise; and competition from even the nimbler new entrants is rising.
Swiggy, following a long line of quick delivery announcements by rival players, has launched two applications in quick succession: Snacc for 15-minute food deliveries from the company's centralised kitchens; and Pyng, a professional services marketplace.
The company, on Thursday, also said that it plans to launch it's quick commerce service Instamart as a separate application.
Swiggy, following a long line of quick delivery announcements by rival players, has launched two applications in quick succession: Snacc for 15-minute food deliveries from the company's centralised kitchens; and Pyng, a professional services marketplace.
The company, on Thursday, also said that it plans to launch it's quick commerce service Instamart as a separate application.
Swiggy Pivots Away From Super App Strategy
Now, Swiggy already offers quick food delivery via Bolt, which remains a separate tab under the main Swiggy app. In fact, all of Swiggy's other offerings like Instamart, Dineout and Scenes are housed under the main app.
But the newly launched Snacc and Pyng apps, and an intended Instamart app, hint at an expanding strategy.
Speaking on the launch of the Snacc app, Aakash Agrawal, head of digital and new-age business at Anand Rathi Investment Banking, said, "If a food aggregator's competitor offers something like quick delivery of certain foods, which is something that customers clearly want, then that platform must offer the same too."
Pyng, meanwhile, is offering consultations and services from experts like career coaches, legal advisers, finance consultants, nutritionists, yoga instructors, life coaches and designers.
As of the September quarter, Swiggy's food delivery revenue was around Rs 1,577 crore, making up a total of 44% of the company's consolidated topline.
Zomato's food delivery revenue for the same period was Rs 2,012 crore, and contributed 42% to the total revenue.
But will one company offering multiple competing services end up cannibalising its own business?
"It’s not cannibalisation if orders stay on the platform, though it might affect some restaurant partners with similar offerings," Agrawal said.
He also said that quick deliveries are not cash burning operations for the companies, and that this will lead to increasing revenues for them.
Crowding In Quick Deliveries
Snacc will take on Zomato's new launch, Bistro, even as the quick-delivery space becomes crowded with new players. Bistro's launch followed hot on the heels of Zepto's launch of a separate app for its cafe offering, and Swiggy's Bolt announcement in October.
Swiggy and Zomato are not the only players in the heated space. Industry giants Amazon and Flipkart too have pivoted their slotted delivery models to quick commerce models.
"Competitive intensity has been increasing within quick commerce, with more than six players entering the industry in the past year," Bernstein said in a note while initiating coverage on Swiggy on Wednesday. "We see continued disruption by quick commerce players. With a current market size of $5 billion in gross merchandise value, by 2030, we think this can go upto $45 billion, constituting 4% of India’s total grocery market."
Reactionary One-Upmanship
New offerings by quick commerce players seem to be popping up more as reactionary measures than proactive steps.
Swiggy's Snacc was launched on Jan. 8 following Zomato's launch of Bistro on Dec. 12. Bistro was announced after early mover Zepto capitalised on its Cafe offering. All three ventures deliver food from their own kitchens.
Zomato recently launched its own 15-minute food delivery service in cities like Mumbai and Bengaluru on Jan. 7 to take on Swiggy’s Bolt, which was launched on Oct. 4. Other quick delivery competitors have also entered into the fray, with Magicpin launching MagicNow on Dec. 17 and Ola launching the Dash service earlier in December.
These developments come two years after Zomato quietly wound up its 'Instant' offering.
Zomato declined to comment on queries related to the latest developments, while emails sent to Swiggy and Zepto were unanswered.
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