India’s IPO-bound Swiggy said on Wednesday that it is opening bigger warehouses and reducing delivery times as it bets that its quick commerce business, where groceries are delivered in 10 minutes, will overtake its main food delivery operations.
Indian companies including Swiggy and its main rival Zomato as well as billionaire Mukesh Ambani’s Reliance are betting big on quick commerce as they jostle to deliver everything from milk and cosmetics to iPhones within minutes, outpacing peers like Amazon on delivery times.
SoftBank-backed Swiggy will launch its $1.35 billion IPO on Nov. 6, becoming India’s second-biggest listing this year after Hyundai Motor India.
Swiggy has 538 warehouses to deliver its quick commerce orders, with an average size of 4,000 square feet, 42% bigger than last year, CFO Rahul Bothra said.
The company started operations in 2014 with food delivery, but Bothra said that quick commerce, which it rolled out in 2020, is now worth 40% of the size of its food delivery business.
“Quick commerce … is growing faster than food delivery,” said Bothra. “We do expect, sometime in the future that quick commerce will become larger than food delivery.”
Research firm Datum Intelligence expects quick commerce sales to hit $6 billion this year, up from just $100 million in 2020.
Bothra also said the average delivery time for Swiggy‘s quick commerce orders had fallen to 12-1/2 minutes from 17 minutes over the last year.
The company plans to use $140 million of its IPO proceeds to expand its warehouses, it said earlier.
Reuters reported on Wednesday that Reliance plans to leverage 3,000 stores to compete with quick commerce players.
The growth of the sector has alarmed mom-and-pop retailers. India’s biggest group of retail distributors has asked the antitrust authority to investigate quick commerce companies—Zomato’s Blinkit, Swiggy and Zepto—for alleged predatory pricing.
Reuters
