Quick commerce price war: Rivals offering steep discounts to capture market, says Swiggy CFO

At a time when its rivals have indicated further aggression in the buzzing quick commerce sector, Bengaluru-based Swiggy is taking a more calculated approach to expansion. The company said Friday that investments in its quick commerce unit Instamart have peaked, expecting losses to start unwinding.

In an interaction with ETtech, Swiggy’s CFO Rahul Bothra said that store expansion from hereon will be a derivative of growth for the company and not the other way round. He also detailed the rationale behind the company tweaking its guidance for quick commerce margin improvement. Edited excerpts:

Swiggy is talking about investments for Instamart peaking when rivals are aggressively chasing market share. Will you be slowing down on expansion?

Over the last six months, looking at the market opportunity, it was important for us to invest in the right choice of network – whether it was store expansion, densification or new cities. Last quarter, we added more users than we did cumulatively in the preceding six quarters. In terms of the number of stores, we have added more than (in) the last eight quarters cumulatively. After having laid out the network…we believe that store addition should be a derivative of growth and not necessarily the other way round. This doesn’t mean that we will aim to grow slower…we have made a choice of a network where we have these megapods, which are two-and-a-half times larger than dark stores and these can do 5,000-6,000 orders per day compared to 2,000-3,000 orders a day (done by smaller dark stores).

Also Read: Swiggy Instamart’s operating losses peaked in Q4, says Sriharsha Majety

You have talked about investments in Instamart peaking at 1,000 dark stores, whereas Blinkit has a target of 2,000 stores by December 2025. Do you believe you can gain market share at this level, or are you not playing for that?

Absolutely we are. Market share is a function of the overall investment and quality of growth. You can’t just look at it from one perspective. There’s another private rival which keeps highlighting certain numbers and certain definitions of the numbers, but it’s also about the quality of those numbers.

We believe some of the players in the market are offering significantly higher discounts, which is up to 40% of the gross order value (GOV). So, there's a lot of noise around market share figures.

We want to build the right business and right quality of business. We have shared data on our customer cohorts – how they mature, how they are spending since the time of their acquisition. Our focus is a lot over quality of growth, not just headline growth, which can be bought for the short period but may not sustain.

What do you mean by quality of growth?

Quality of growth depends on customer retention and spending per user. Acquired customers must stay engaged, shopping more frequently and with larger baskets. For example, in the first quarter, if 100 customers spent Rs 100, the retained 20-40 of them are now spending Rs 150 cumulatively. While some churn is expected, we’re seeing a “smile curve” emerge – indicating improved customer quality.

You have tweaked the breakeven for quick commerce. Does your corporate level adjusted Ebitda guidance also get flexible in line with that?

Absolutely, that’s right. The trajectory of the food delivery business and the investments in quick commerce…it so happens that they coincide. Whenever contribution breakeven happens in quick commerce business…food delivery and dining out will make enough for the corporate Ebitda to become breakeven.

In terms of flexibility, yes, we are seeking that additional flexibility. Every quarter, as we assess the category, the number of players, and the kind of competition that exists, it’s important to maintain that flexibility while keeping an eye on market growth.

How is competition impacting your breakeven guidance?

There are two key aspects. First is customer acquisition cost (CAC), which spiked last quarter because the competition spends a lot of marketing dollars on performance marketing, but it has begun to ease this quarter. Second are the incentives needed to acquire and retain customers – like minimum order values or free deliveries – which remain competitive. Some players offer free wallet cash that results in GOV being accrued without attracting quality users. We focus instead on building habits that drive long-term customer loyalty.

Do you think the quick commerce segment can be profitable in the medium to long term, particularly with newer entrants now increasing competitive intensity?

Fundamentally, the need for the category exists. The behavioural shift has taken place, and I don’t think consumers will revert to other channels. Now, the focus is on our ability to deliver in terms of network, efficiencies, and monetisation. It’s a work in progress – still early – but we’re seeing encouraging signs, such as the level of spending FMCG companies are willing to commit on the platform.

Advertising income from quick commerce in just three years is already close to what food delivery generated after eight years. We're seeing promising indicators in both monetisation potential and network cost optimisation.

For instance, our last-mile delivery costs are currently 40% lower than those of the food delivery business. While there are strong tailwinds, significant growth investments are still necessary – whether in customer acquisition or network expansion. This is where we’ve frontloaded our investments. So, while headline numbers may appear what they are, we believe that a strong consumer business is being built.

Also Read: Swiggy Instamart delivers 101% YoY growth in Q4 GOV


( Originally published on May 09, 2025 )