Swiggy's Expansion Journey: More Than Just Food Delivery

Since its inception as a food delivery service, Swiggy has never ceased to grow. Currently, it operates in more than 500 cities in India and delivers food and groceries to the residents every day. It has expanded beyond food delivery to services like Instamart and Swiggy Genie. The cloud kitchen and Swiggy Access are some other innovations the company has brought into the food delivery world.

There is a reason Swiggy loves everyday essentials and groceries as much as food delivery. This is a significant growth driver, and Instamart is living proof of this today. Now in 2023, it is clear why Swiggy placed its bet on everyday essentials and grocery delivery. However, things weren’t as smooth for Swiggy as it might appear. Post the Covid lockdown, things changed at a terrific pace, and delivery companies like Zomato and Swiggy had to take considerable measures like laying off.

In this blog, we look closely at Swiggy’s expansion beyond food delivery. The blog explores the profitability of its business arms and investigates the extensive business model of Swiggy.

Swiggy Started As An e-Commerce Logistic Startup, Bundl

“We thought that we will find that competitive advantage by being not just a pure software company or not just a pure offline company”, Sriharsha Majety, the co-founder and CEO of Swiggy, disclosed in an interview.

He elaborated that they started with Bundl, a business model of an e-commerce logistic company; however, Flipkart and eBay had occupied the segment. The co-founders developed a food delivery service to merge technology with logistics.

At that time, the food delivery industry saw significant upheaval, with businesses like TinyOwl and Foodpanda spreading to several locations. Moreover, Zomato was already recognised as a restaurant discovery platform by then.

Why Fast Moving Consumer Goods (FMCG)?

The e-commerce platforms and digital media have uplifted the fast-moving consumer goods (FMCG) market. Today, almost one out of every two online purchases is an FMCG. These are perishable or short-life consumer goods such as soft drinks, dairy products, meat, baked food, etc. The FMCG market in India is growing at a CAGR of 27.9% from 2021 to 2027, amounting to US$ 615.87 billion. Today it contributes around 10 percent of the total GDP of India.

The above figure exhibits the fast-growing trend of fast-moving consumer goods (FMCG). Therefore, it isn’t surprising that Swiggy decided to capitalise on the business opportunity groceries and everyday essentials had to offer.

Swiggy Establishes Instamart

Swiggy first started delivering soft drinks, beverages, baby care products, everyday essentials, etc., under the tabs of groceries. Later, it continued to grow the groceries business under the name Instamart. Swiggy Instamart was established in August 2020 with the aim of door-to-door delivery of groceries. The company invested USD 700 million on Instamart, spending around half of the immediate fundraising at that time.

Swiggy operated Instamart by tying up with various FMCG brands and shops and establishing dark shops. Dark shops are store locations established only for the purpose of online delivery and have no physical outlets.

Compared to FY21, Instamart's revenue from groceries and FMCG products increased four times to Rs 2,036 crore in FY2022, according to the filings with the Ministry of Corporate Affairs (MCA).

Cloud Kitchen Verticals - The Bowl Company, Breakfast Express, Goodness Kitchen, And Homely

In the years of the pandemic, when online food ordering was a surging trend, Swiggy invested highly in food delivery. Swiggy established cloud kitchens and brands like The Bowl Company and Swiggy Access in a chain of initiatives. The Bowl Company, Breakfast Express, Goodness Kitchen, And Homely are the cloud kitchen verticals of Swiggy. However, over the years, Swiggy and Zomato have ended up closing many cloud kitchen units as they failed to generate substantial profit from them.

Swiggy Access was established to help partner restaurants set up kitchens strategically to speed up food delivery. These ghost kitchens were also meant to increase the variety of food items available for delivery at a specific location. After functioning for more than five years, Swiggy Access was sold off to Kitchen@ in a share-swap deal.

Challenges Of A Food-Delivering Company

Swiggy had a high growth phase for some years during the pandemic, when the lockdown offered a boom to food and grocery delivery. However, it's been three years since the world opened, and the employees and consumers returned to offices and marketplaces, respectively. As a result, Swiggy and Zomato have sunk in recurring losses.

During the financial year 2021-22 (FY22), Swiggy's revenue from operations jumped 124% to Rs 5,704.90 crore. Its losses, however, more than doubled to Rs 3,628.90 crore from Rs 1,616.90 crore in FY21, according to regulatory filings compiled by Tofler. The critical challenges faced by food aggregator companies are -

1. Reducing the losses on delivery costs and discounts.

2. Optimally making use of the onboard drivers as most of the deliveries are only during the peak hours.

3. The falling average order value as people returned to offices and hangout locations.

It will be interesting to see what strategies Swiggy incorporates to reduce the losses. Swiggy is working on lowering the expenses, which is a wise move in the slow growth year of 2023. The company is also preparing for its IPO, which is the perfect time to buy Swiggy unlisted shares when the stock prices are low. As the company approaches IPO, Swiggy share price is expected to increase and bring large returns for its shareholders.

People Frequently Ask About Swiggy Unlisted Share

1. Is Swiggy listed or unlisted?

Swiggy is an unlisted company that is private with respect to its shares. It means Swiggy is not listed on the stock exchanges like BSE or NSE.

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Swiggy is not listed in Indian stock exchanges such as the National Stock Exchange of India (NSE). However, Swiggy unlisted share are available for purchase in the grey market.

3. Can I invest in Swiggy?

Yes, it is possible to invest in Swiggy by purchasing its shares on Stockify. Stockify is India’s leading marketplace for trading unlisted shares.

4. How do I buy unlisted shares?

You need to contact a stock broker to buy unlisted shares that facilitate their trading. Register on Stockify, and make your investment in unlisted stocks today.

5. Is it reasonable to buy unlisted shares?

Unlisted Shares hold the opportunity for significant returns on investments. Therefore, to make multi-bagger returns, you should consider purchasing unlisted stocks.