2024-10-31 05:15:18 :
Swiggy co-founder and CEO Sriharsha Majety said in an interview that customer experience, not capital, will ultimately drive the fortunes of the fast commerce platform as the company counts down the days. $11,300-crore initial public offering (IPO) on November 6.
The comments come against the backdrop of billions of dollars invested by top fast commerce platforms in recent months to increase hyperlocal e-commerce and grocery delivery.
To be sure, to strengthen its customer services, Swiggy is also piloting fast food delivery services and pharmaceutical delivery partnerships, besides regular grocery delivery services offered by its fast commerce arm Instamart.
Swiggy plan allocation $Instamart’s IPO proceeds were Rs 1,179 crore, according to a red herring prospectus released on Monday. The number has been modified to $982 crore in the draft prospectus.
Competitors are also strengthening their capabilities. On October 22, Zomato’s board of directors approved a financing $Rs 8,500 crore was raised through a qualified institutional placement (QIP), mainly to cope with increasing competition in the fast-moving business sector. Another competitor, Zepto, has raised more than $1 billion in funding in the past six months alone.
Majety said the increased competition was not unexpected. “Grocery and retail are big categories, and big categories tend to attract competition; the same goes for food delivery,” he said. “There is enough room in these categories to accommodate multiple participants.”
“With the fresh fundraising, we will have over $1 billion. The food delivery business is already generating cash, so we will have another lever to reinvest,” Swiggy Chief Financial Officer Rahul Bothra said. “Some of this is defensive financing as well, and competitors are raising defensive capital as well. We already have a strong balance sheet and we will work to strengthen it.”
Sviji’s journey
Swiggy’s IPO will open for subscription on November 6, nearly a decade after it was founded in Bengaluru by BITS Pilani and IIM Kolkata alumnus Majety and BITS Pilani graduate Nandan Reddy.
Before launching Swiggy, Majety and Reddy founded logistics company Bundl Technologies in 2011, which was later renamed to now Swiggy after entering the food tech industry. IIT Kharagpur alumnus Rahul Jaimini also joined them and helped build the software and interface.
“I think we have only known the world for ten years. I think Swiggy was also born in a very competitive market. When we did this, we were probably the eighth or ninth player to come along,” Majetti said .
Swiggy entered the food delivery space in 2013, when companies like Foodpanda, DeliveryHero and Tinyowl already had a significant market share. Over the years, most of them exited the market, leaving only Swiggy and Zomato as the strongest contenders.
“Every category is very competitive and I believe that’s going to continue. Whenever we compete in exciting categories, we’re always going to have a lot of competition. So, it’s all part of the game,” Majety said.
Fast but informative
Several companies, including Blinkit, Nexus Venture Partners-backed Zepto and Tata-owned BigBasket, are scrambling to capitalize on the growing opportunity in fast trade, raising funds and aggressively expanding.
According to a report by financial services firm Chryseum, Zomato-owned Blinkit holds 39% market share, followed by Swiggy Instamart (37%) and Zepto (20%).
Large e-commerce players such as Flipkart and listed companies Reliance Retail and Tata Neu are also reportedly looking to invest in fast commerce as consumers are fascinated by instant delivery of small groceries as well as larger items such as home appliances and electronics.
large initial public offering
Swiggy has so far raised $3.2 billion in private capital from prominent investors such as Prosus, Accel, Norwest Venture Partners and Elevation Capital, which are set to earn multiple times their investment as the food delivery and quick commerce platform goes public .
Swiggy won’t limit its investment in Instamart to $CFO Bothra noted that the company has an investment of Rs 1,179 crore and is willing to invest more as the segment grows.
“The growth of dark stores will be a derivative of the strategy and growth we’ve seen. But we’re not going to plant a flag just because we have capital. We already have a very broad network and the broadest geographic footprint compared to our competitors, “Botra said.
Majety said Instamart, launched in 2020, is Swiggy’s fastest-growing vertical now and will continue to be the company’s key growth driver in the coming years.
Bothra said the company was working to expand urban coverage and reduce delivery speeds, with average delivery times falling from 17 minutes to 12.5 minutes in the past 12 months due to a denser store network.
This Bengaluru-based hyperlocal company is looking for investments $755 crore to expand its dark store network, taking the number of dark stores to 741 covering an area of nearly 2.6 million square feet. The company had 581 dark stores at the end of the June quarter.
For context, Zomato-owned Blinkit operated 639 stores during the same period and added nearly 112 stores in the next quarter.
valuation game
Consumer startup Swiggy is targeting a valuation of $1.13-11.5 billion in its upcoming initial public offering (IPO), down from its original asking price of $12-15 billion. it plans to raise $11,300 crore, the amount of new shares issued is $4,499 Crores with a price range of Rs. $371-390.
“There was a recent listing and investors told us to price it fairly,” said finance chief Botra.
Shares of Hyundai Motor India struggled to gain ground last week $1,865 to $1,960 yuan per share, causing its opening price to be lower than the listing price, reminding companies to pay attention to fair pricing.
Hyundai Motor India share price closes at $NSE shares were trading at $1,820 on Wednesday, still below the IPO price.
“For us, pricing is about ensuring this is a journey to broaden our stakeholder base. We absolutely want participation from key long-term investors to support our vision. Through conversations, we found a price that we believe is a fair discovery , can bring investors we like into captable,” Majety added.
new opportunities
Swiggy has also seen gaps in some of its recently launched pilot projects including Bolt, a 10-minute food delivery service and a 10-minute medicine delivery service in partnership with PharmEasy.
“A lot of it is around where consumers, categories and geographies can connect themselves to the models we’ve built. A lot of experimentation will continue. If consumers want something, we’ll see if there’s a way to do it To this point,” said Rohit Kapoor, CEO of Swiggy’s food delivery business, who joined the company in 2022 from Oyo.
Kapur said the Bolt was built on a common principle: Customers want something faster and cheaper.
“The lessons we learned from fast commercial logistics gave us the confidence to do work of this nature. I don’t think Bolt would have been born if we didn’t have fast trade,” Kapoor added.
According to Kapoor, Swiggy hopes to list the top restaurants on Bolt with high brand recall, which offer quick and ready-made snacks such as samosas and sweets, and account for 45% of the items sold under Bolt.
“We’re in a unique position, we have the expertise to do food delivery and grocery delivery. It’s not easy. It’s logistically quite challenging. But the early results from our pilot are good and we’re still working on it,” he said.
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