Food delivery platform Swiggy on Thursday said that it will invest $700 million into its instant grocery delivery service Instamart. This comes at a time when both investors and hyperlocal delivery start-ups are bullish on the grocery delivery segment. Launched in Gurgaon and Bengaluru in 2020, Swiggy’s Instamart service is now live across 18 cities, handling over 1 million orders per week.
Instamart competes with other heavily-funded start-ups like Google-backed Dunzo, Softbank-backed Grofers, Tata-owned BigBakset and Zepto, which entered the market recently. The 10-minute delivery service, also known as quick commerce, has been a new trend among hyperlocal delivery start-ups in the country which operate using an inventory model.
Although start-ups like BigBasket, Swiggy and Dunzo started as pure marketplace businesses in grocery delivery, all of them pivoted to an inventory model using their own dark stores lately.
Instant delivery service focuses on a limited set of 10,000-15,000 SKUs rather than focusing on the entire range of 30,000-40,000 products that large supermarkets usually stock.
Instead of the conventional marketplace model, which works as aggregators of nearby stores and supermarkets, services such as Instamart work on top of the inventory model using dark stores. Dark stores are delivery-only stores that allow start-ups to stock up on their own inventory through sourcing tie-ups with wholesalers and brands.
A lower stock count along with a network of dark stores allows Instamart to have larger control over their inventory and also help keep up the order fulfilment rates. The concept was first experimented in India by BigBasket, which currently operates hundreds of such stores across the country.
In the last few months, Swiggy Instamart has onboarded more than one seller-run dark store every day. By January 2022, it will make deliveries in 15 minutes by having the network of dark stores very close to the majority of its customers.
“At our current growth trajectory, Instamart is set to reach an annualised GMV run rate of $1 billion in the next three quarters. With our food delivery business trending at a $3-billion annualised GMV run rate, and Instamart’s super-charged growth, we’re very excited about our convenience mission coming to life in a very big way,” said Sriharsha Majety, CEO, Swiggy, in a statement.
The platform offers an assortment of products across categories like fresh fruits and vegetables, daily bread and eggs, cooking essentials, beverages, instant food and munchies, personal and baby care, home and cleaning, specially curated to suit the demand requirements of each location. It is available in Ahmedabad, Bengaluru, Chennai, Coimbatore, Chandigarh, Delhi, Gurgaon, Hyderabad, Indore, Jaipur, Kolkata, Kochi, Lucknow, Ludhiana, Mumbai, Noida, Pune and Vizag as early as 7 am and as late as 1 am.
Founded in 2014, Swiggy is India’s leading on-demand food and grocery delivery platform which already aggregates 1,85,000 restaurant partners and stores in over 500 cities. Swigyy’s USP is its dedicated last-mile delivery fleet of delivery partners along with features like no minimum order value, live order tracking, and 24/7 customer support.
Swiggy is also currently in a fundraising mode and is expected to sweep up around $700 million in fresh capital at a valuation of $10 billion, according to recent reports. To date, the start-up has raised more than $3.5 billion in funding from investors such as Prosus Ventures, Softbank, DST Global, Falcon Edge and others.