Swiggy CEO Sriharsha Majety Dismisses Rival E-Commerce Spending Tactics

Swiggy Plans to Restrict Spending, Focus on Profitability Amid India's Quick Commerce Battle

In a move to reassert its dominance in India's competitive quick commerce market, Swiggy Ltd., one of the country's top players, is pledging to restrain spending and prioritize profitability. This decision comes as rival companies, including Flipkart and Amazon.com Inc., intensify efforts to reduce delivery times and expand discounts, a strategy that Swiggy's management believes will ultimately lead to a shakeout in the industry.

India's Quick Commerce Sector

India is currently witnessing one of the most closely watched consumer-tech battles, with investors pouring billions into the sector. SoftBank Group Corp., Temasek Holdings Pte., and Middle Eastern sovereign funds have invested heavily in the market, betting on India's ability to support a quick-delivery model that has struggled in the US and Europe. The sector's growth has been fueled by India's dense cities, lower labor costs, and widespread digital payments.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Swiggy's Strategy

Swiggy's Instamart unit currently operates over 1,100 small warehouses across the country, feeding fleets of gig-workers who deliver groceries, electronics, and household items in minutes. While the company added just seven stores in the March quarter, its focus on profitability has yielded positive results. Instamart's unit economics have improved by five to six percentage points over the past four quarters, with the company attributing this improvement to its strategy of giving customers reasons to return that are harder to copy than mere discounts.

Private-Label Grocery Business

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

A key component of Swiggy's strategy is its nascent private-label grocery business, which focuses on fresher, harder-to-source products, including Indian cottage cheese with a shelf life of only a few days and fresh clotted cream typically unavailable in large retail chains. According to Majety, customers who buy these products show materially higher repeat purchases and retention.

Reassuring Investors

Swiggy, which raised about 100 billion rupees ($1 billion) in December, is trying to reassure investors after its shares fell more than 30% this year. The company's management is confident that its strategy of restraint and focus on profitability will ultimately yield positive results. With 150 billion rupees in the bank, Majety has dismissed concerns that the company may struggle to sustain losses and fund raising may become harder.