Largely speaking, the promised versus actual delivery time difference ranges between 1-2 minutes for Instamart and 2-5 minutes for food delivery, Swiggy disclosed during its Q3FY25 earnings call. This crucial metric is constantly tracked via compliance monitoring and third-party mystery ordering reports to understand Swiggy’s positioning relative to industry standards, claims the company.
Focus on customer acquisition
The company has also ramped up its efforts in customer acquisition, leading to rising performance and brand marketing costs, a trend expected to continue. Swiggy attributes this activity to the heightened competitive intensity in the current market. Further, Instamart CEO Amitesh Jha added that customer acquisition cost and retention variables remain independent of each other, with no impact on consumer behaviour. This was in response to a concern about Swiggy’s increasing customer incentives driving consumers toward a subsidy-seeking behaviour that could spell potential detriment for the brand in the long run. Investment in performance marketing aimed at boosting customer retention and increasing gross order values (GOVs) is expected to rise with new customer acquisitions.
Future planning and initiatives
Speaking of the budget announcement, the company expressed that the newly-announced tax relief for the segment earning up to Rs 12 lakh per annum would give an “impetus” to this section of users, who could potentially become Swiggy’s customers. The company is also eying the expansion of megapods to add more categories of products (other than food) to service customers willing to spend more. Swiggy expects new categories to grow faster than existing ones and plans to expand its product assortment with electronics, appliances, and general merchandise.
How does Swiggy fare in competition?
As pointed out during the call, its quick commerce venture Instamart’s contribution margin for the quarter dropped by Rs 14 per order as opposed to market rival Blinkit, which fell by Rs 4 per order, while also adding double the number of dark stores. For context, quick commerce’s contribution margin is calculated as adjusted revenue minus delivery charges, platform-funded discounts, fulfillment service costs, and other variable expenses. The Zomato-owned vertical added 216 stores in Q3FY25, while the Swiggy-led service added 96 dark stores in the corresponding period. The company further explained that the increased investments in new user acquisition (due to high competition) and expansion and replacement of dark stores have driven the contribution loss. Additionally, seasonal investments in store and delivery networks to handle peak event demand have further impacted margins.
Approach to expansion
Swiggy’s expansion follows two key metrics: densification in existing cities and expansion into new ones. The company also anticipates that its future growth from store addition may not include “necessarily entering newer areas”. This approach corresponds with Swiggy’s previous statement about nearing the number of cities it requires to operate in and anything beyond that being a “vanity metric”.
Bet on Bolt
As mentioned in Swiggy’s letter to shareholders, the company’s 10-minute food delivery initiative Bolt currently contributes 9% to its total food delivery volume, up from 5% as of November 2024. As the service expands, Swiggy expects greater innovation from restaurant delivery partners and for Bolt to deliver new use cases for consumers who desire faster delivery, claimed Swiggy Food Marketplace CEO Rohit Kapoor. Elaborating further on Bolt, the company clarified that Bolt’s shorter delivery last mile does not drive up the delivery cost. These announcements follow the company’s previous stance on Bolt’s model, which hinges on limited delivery distances and offering customers 30-40% of food items that restaurants can prepare within four minutes as already listed on their menus.
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