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Swiggy Looks Beyond Food Delivery To Reduce Cash Burn

Swiggy Looks Beyond Food Delivery To Reduce Cash Burn

Swiggy is reportedly planning to generate 30% of its overall revenue from beyond its food delivery service

We are not pitting ourselves against anyone else's cash burn, says Swiggy CEO Majety

Swiggy will continue to run experiments with its food delivery business

Besides being a key player in the food delivery space, Swiggy has recently forayed into grocery delivery, concierge services and cloud kitchens, among others. Bengaluru-based foodtech giant is now reportedly planning to generate 30% of its overall revenue from beyond its food delivery service in coming years.

According to an ET report, Swiggy’s cofounder and CEO Sriharsha Majety said that these businesses will cater to its existing customers by providing them in more forms than only food.

Further, at a time when the market and investors are turning cautious, Majety said that although Swiggy will be scaling these new operations, the company will still continue to run experiments with its food delivery business.

Will The Cash Burn Continue?

In the past year, intense competition with homegrown food delivery setup, Zomato, led to heavy discounting and cash burn for both these companies.

Both these foodtech giants were reported to spend around $30 Mn to $40 Mn on a monthly basis on discounts and promotions. However, for Majety’s company, a correction is underway as it looks to cut losses and seek profitability.

Even after the heavy losses, Zomato has also slashed down its cash burn by more than half. Additionally, it was able to focus on improving margins and lowering its cost of delivery. Moreover, other players in the segment backed by cab aggregators Ola and Uber have also piped down over the past six months.

Majety further said that Swiggy had a surge in spending during 2015, but it was able to quickly move to positive contribution in 2016. “We are not pitting ourselves against anyone else’s cash burn,” he added.

The CEO also talked about the overall trends in the food delivery ecosystem and said that for the food delivery category itself, Swiggy is witnessing a move towards profitability and will achieve better economics in the next one-two years.

Looking Beyond Food Delivery

Although Majety believes that the food delivery business will pick up pace for Swiggy, the company yet is diverging in other segments.

In one of the biggest expansion beyond food delivery, Swiggy, in September 2018, acquired hyperlocal delivery startup Supr Daily. With the acquisition, Swiggy was able to increase its delivery fleet to over 2.2 Lakhs and helped the company to utilise it to deliver for categories beyond food.

Further, within six months of the acquisition of Supr Daily, the food aggregator launched its own hyperlocal services with Swiggy Stores. With the launch of these delivery services, it also entered in competition with another Bengaluru-based hyperlocal service provider, Dunzo.

Additionally, the company has also started in investing in its cloud kitchens and other services such as Swiggy Go. “As Swiggy expands, its big focus areas will be spread across food delivery and cloud kitchens, where the company is investing INR 250 Cr, and the new businesses like Go, and Stores, in that order,” Majety was quoted as saying.

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