Swiggy Instamart: Swiggy Instamart at an inflection point amid rising competition: CEO Sriharsha Majety.

Swiggy’s quick-commerce arm, Instamart, is navigating an inflection point as it faces rising competition and rapidly expanding market dynamics. With quick-commerce players like Blinkit and Zepto vying for dominance, Swiggy is doubling down on strategic investments to maintain its lead and capitalise on evolving consumer shopping patterns, according to CEO Sriharsha Majety in its September quarter earnings presentation.

The platform has significantly expanded its dark store network, focusing on larger, more efficient facilities that now stock nearly three times the SKUs compared to last year. In Q2 alone, Swiggy added 52 new stores, bringing its total dark store footprint to approximately 2 million square feet, marking a 54% year-on-year growth.

Majety acknowledged the need for agility, emphasising that Swiggy must “modulate investments towards the long-term health of the business for sustainable GOV growth.”

Zepto last month raised another $350 million taking its cash-pile to $1.4 billion while Zomato–which runs Blinkit–completed raising $1 billion via a QIP.

Swiggy Instamart reported a gross order value (GOV) of Rs 3,382 crore for Q2FY25, representing a 24.1% quarter-on-quarter increase, driven by a 21% rise in order volumes and a 10% boost in orders per dark store. The number of active dark stores increased by 9%, totaling 609 stores as of September 2024.

Average order value (AOV) rose to Rs 499 per order, a 7.3% increase in H1FY25. Instamart’s footprint now spans 44 cities, and Swiggy plans to double its store count and dark store area by March 2025. The 24% growth in GOV is the fastest pace since Q1FY23, Majety said. Contribution margins have also improved significantly, moving from -7.5% in Q1FY24 to -1.9% in Q2FY25.

“Despite significant growth investments and rising competitive intensity, our contribution margin continues to expand,” Majety noted, adding that adjusted Ebitda margins are also trending positively. Amid intense competition, Swiggy’s national average delivery time is now at 13 minutes, down from 17 minutes a year ago. Majety highlighted that the company has also achieved “industry-best levels” in item availability and delivery reliability, further enhancing customer experience.

Going ahead, Swiggy plans to focus on driving user acquisition, increasing order frequency, and boosting wallet share. Majety outlined that these efforts will be supported by hyper-local initiatives, geographical store expansion, and strategic marketing spends aimed at strengthening the brand’s position in the quick-commerce space.