Despite a series of protests by restaurant partners in various places across the country this year, cofounder and CEO Sriharsha Majety is hopeful Swiggy, with a $3.3 Bn valuation, will continue to have a dominant market share both in revenues and number of food delivery orders.
Swiggy said it crossed 500 Mn delivery orders in October, exceeding the target of 360 Mn a year set for 2020. Talking about monthly burn rate till September of about $47Mn, the CEO said that it is only a five-year old business and it has just started investing in adjacencies where it sees real opportunity.
“With close to 60% revenue share in the online food delivery we are bigger than the rest of the players combined. Our food delivery and kitchens business have reached a certain size, so their needs for capital will reduce. But we will continue to invest in new areas of growth,” Majety said in an interview with TOI.
The food delivery platform’s parent company Bundl Technologies noted a 5X hike in its losses, amounting to INR 2,363 Cr in the fiscal year 2019, ending March 31 from INR 397 Cr in FY 18.
While both Swiggy and Zomato were reported to spend around $30 Mn to $40 Mn on a monthly basis on discounts and promotions, even after the heavy losses Zomato slashed down its cash burn by more than half. Additionally, it was able to focus on improving margins and lowering its cost of delivery.
Swiggy Plans To Scale Up New Operations
The Bengaluru-based foodtech giant had said last month that it is planning to generate 30% of its overall revenue from beyond its food delivery service in coming years. Majety had said that these businesses will cater to its existing customers by providing them in more forms than only food.
Further, Majety added that the company will still continue to run experiments with its food delivery business although it will be scaling up these new operations.
Swiggy has been expanding beyond food at a faster pace. In fact, Majety calls Pods and Swiggy Daily and Swiggy POP, among others, as current growth catalysts. Last year, the food delivery major launched Swiggy Stores that door delivers household items such as groceries, flowers among others. Last month, it launched Swiggy Go that offers instant pick up and drop service to ship packages anywhere across a city.
“If you’ve seen our journey, whenever we do something new, we just run it for a bit, get comfortable at the experience that we want and fundamentals that we like. Some businesses will grow even faster as ‘Go’ is less complex than ‘Stores’. They are still a huge part of our entire capital allocation,” Majety said.
The cofounder said that a successful pilot in Gurgaon led to Go matching up to 20% of the food business in five months. “We have started seeing great benefits to the food business there—as this is leading to Swiggy becoming more top-of-mind for food consumers.”