Swiggy’s Ecommerce Ambitions 


Swiggy is testing the waters in the ecommerce segment, and will take on the likes of Flipkart, Amazon, JioMart and TataNeu

Experiments have a way of becoming deadweights when it comes to tech startups. Take for instance the quick commerce experiment that began in 2020, which saw Swiggy, Zomato, Zepto, Dunzo and others jumping in with both feet.

But three years later, quick commerce players remain bullish about the future, but operationally speaking, there are a lot of challenges to be solved. And even while the quick commerce puzzle remains largely unsolved, Swiggy is looking to extend the model to become a ecommerce player at-large.

Reports this week suggest Swiggy is testing the waters in the ecommerce segment, and will take on the likes of Flipkart, Amazon, JioMart and TataNeu with one-hour delivery in select areas of Bengaluru under a new vertical called Maxx. Will Swiggy’s latest experiment compound the unit economics problem of quick commerce, or is this the solution?

We will look to answer that question this Sunday, but after these top stories from our newsroom:

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  • Reliance Retail’s Digital Growth: The digital and new commerce verticals of Reliance Retail contributed 18% to the total revenue in FY23 thanks to rapid expansion of Reliance’s merchant base, JioMart expansion and new launches by the tech giant

Swiggy On Ecommerce Trail

First, the basics of Swiggy Maxx: As we reported this week, Swiggy’s latest vertical offers products such as toys, electronics, gadgets, as well as home and kitchen essentials. The company plans to add products in categories like beauty and grooming, essential clothing, gardening, furnishing and decor, and health and fitness soon.

All in all, the company is looking to not only deliver groceries and instant gratification products, but pretty much anything one finds on Amazon, Flipkart, JioMart, TataNeu or even Meesho. Of course, Swiggy is banking on distribution to win this ecommerce game, and is likely to leverage its dark store network further.

A Swiggy spokesperson told Inc42, “Customers trust Swiggy for the speed and unparalleled convenience we have brought across categories such as food delivery and quick commerce. Maxx aims to be the destination for a wide variety of home and family shopping needs, delivered in 1 hour. We are currently running a pilot program in Bengaluru.”

Swiggy is offering free shipping for orders priced above INR 99, while it is offering a 30­%-60% discount across products.

Tapping The Convenience Economy

It’s curious that Swiggy chose to avoid the X-minutes delivery pitch that is so typical of quick commerce, and sources close to the company claim this experiment is just about filling the convenience gap in metros, when it comes to ecommerce deliveries, which typically take a day or two to be fulfilled.

In 2021, Swiggy cofounder Sriharsha Majety said quick commerce is a convenience category.  “Of course, if you suddenly need something, that’s when you start coming to the platform. And that behaviour happens even at offline retail, where there are a lot of top-ups that do happen on impulse needs and distress needs. And that’s going to be a huge part of our purchase,” Majety added at the time.

Now, Swiggy sees a gap in the convenience quotient for ecommerce shoppers too. The startup is banking on the delays in ecommerce deliveries in the past year to disrupt the space.

The rise in lending interest rates, growing inflation since 2022, and depreciation of rupee against the dollar have led to marketing slowdown for brands as well as seen during the festive season sales at the end of 2022. Ecommerce fatigue among some of the new-to-ecommerce users after two years of shopping online was also a reason why the festive sales did not see too much hype last year.

“There have been a lot of logistics hurdles in ecommerce deliveries that have impacted fulfilment. Plus, logistics players are also working with so many companies and not just marketplaces, so they are also stretched thin. We have an opportunity to get into this space,” a high-level Swiggy employee told Inc42 about Swiggy Maxx.

Of course, it’s not just Swiggy which is moving towards this space. As we reported last month, even Blinkit is moving towards deliveries of electronics and home appliances as well as other products through existing retailers.

Rejig At Swiggy At Critical Time

While the ecommerce opportunity is undoubtedly huge, it’s not yet clear how far Swiggy can take this pilot, given that it has a lot of operational challenges to tackle already with the recent business integration of Dineout and the exit of key leaders from Instamart as well as Swiggy.

Chief technology officer Dale Vaz stepped down from his position to take up an advisory role with Madhusudan Rao being named his replacement. Vaz’s departure was days after Karthik Gurumurthy, the head of Instamart, also stepped down from his position to take a sabbatical. Swiggy cofounder Phani Kishan Addepalli will be taking up the role of head of Instamart.

Plus the ecommerce space is fraught with major new competition in the form of JioMart and TataNeu, two behemoths that have gone into marketing overdrive amid the ongoing IPL.

When it comes to ecommerce, regulatory headwinds are also quite robust. Ecommerce players that have raised investments from foreign investors are not allowed to be in the inventory-centric model and have to stick to a marketplace approach.

Our source at Swiggy told us that just like dark stores which are operated by independent sellers, Maxx would also be a seller-led model.

“Swiggy only steps in to identify the locations for the dark stores and the stores are entirely managed by third-party sellers with Swiggy acting as the delivery middleman and aiding in the procurement of products,” the source quoted above added.

Will Swiggy’s Ecommerce Bet Pay Off?

Earlier this month, US-based investor Invesco marked down the valuation of the foodtech major by more than 25% to $8 Bn. This also complicates the situation for Swiggy for future fundraising, and it’s already mired in losses and heavy cash burn. 

Swiggy recorded a net loss of INR 3,628.9 Cr in the financial year 2021-22 (FY22), up more than 2X from INR 1,616.9 Cr in FY21. The company has also been in the line of fire for a slew of reasons, including the mass layoffs earlier this year.

The layoffs were part of a larger restructuring exercise at the company, which has seen Swiggy cut corners and consolidate operations. As part of this, Swiggy also sold its loss-making Swiggy Access cloud kitchen infrastructure business to Kitchens@ and shut down its meat marketplace verticals for non-performance.

Of course, one-hour ecommerce deliveries are also one way for Swiggy to maximise the returns on any investment in its delivery fleet as well as dark stores. As we saw this week, the problem of pay for gig workers is a major headache for quick commerce players that are simply not driving high average order values to meet the positive unit economics threshold.

Blinkit’s major problems when it comes to gig worker pay and subsequent shuttering of dark stores highlight just how complicated the instant delivery space is despite the bullishness of players.

Dunzo too has faced similar problems in scaling up dark stores while protecting the unit economics.

Quick commerce is already facing struggles when it comes to unit economics and operational efficiency. And if something as essential and high-frequency as groceries and household staples have not moved the needle for these players, there are some very pertinent questions for Swiggy and Blinkit to answer when it comes to a larger ecommerce play.

Will Swiggy’s ecommerce spin on the quick commerce model prove to be the panacea to these problems?

Sunday Roundup: Startup Funding, Tech Stocks & More

  • Funding Comes To A Crawl: For the third consecutive week, the Indian startup ecosystem has experienced a decline in the total funding raised, with a mere $66.8 Mn raised in the past week across 9 deals

  • Epharmacies Go To Govt: PharmEasy, Tata 1mg, Flipkart, Amazon India were among the epharmacies that met with health ministry officials this week to discuss the challenges faced in the wake of regulatory headwinds


  • Angel One Breach: Angel One reported a data breach this past week that compromised the personal data of many of its users, after the brokerage received emails claiming unauthorised access of client data

  • Edtech Startups Shivering: Edtech funding in the first three months of 2023 tanked a further 93% year-on-year and the future looks bleak for many of the startups in this sector

Narayana Murthy On ChatGPT: Claiming that the human mind is the most powerful imagination machine, Infosys cofounder spoke out this week on the potential of large language AI models

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