Talks of potential consolidation in the online food delivery space involving Zomato and UberEats does not worry Swiggy co-founder and CEO Sriharsha Majety. In an exclusive interview with TOI, Majety said Swiggy, with a $3.3-billion valuation, will continue to have a dominant market share both in revenues and number of orders.
Swiggy said it crossed 500 million delivery orders in October, exceeding the target of 360 million a year set for 2020. But this growth has come at a cost as the company has reported a six-fold increase in losses at Rs 2,345 crore in FY19.
Majety, 33, says the company is moving towards improving its bottomline as discounts come down. He also says Swiggy will continue to invest in new growth areas like ‘Stores’ and parcel delivery service ‘Go’. Excerpts:
So 2019 has been a year of aggressive expansion for Swiggy and competition …
In the main business of food delivery, it has been pretty intense competition for the last two years. We have a very strong business and still have the industry’s highest repeat rates with the dominant position, even after fighting the competition. In terms of softer aspects, when a set of consumers are asked who do they think of when asked about food delivery, 90% say Swiggy.
When it comes to harder aspects, Swiggy is the clear market leader in food delivery — leading in orders and revenue. With close to 60% revenue share in the online food delivery market, we are bigger than the rest of the players combined.
Have discounts come down? What has been the impact of that on the number of orders?
Discounts have come down from the peak. We have seen a very small impact, but the impact has been higher around us. Even today, we will be more efficient on a per order basis than all our competitors for sure. I’m happy that we’ve gotten here by not letting go of some of the fundamentals — whether it is the customer experience or spending more efficiently.
Read: We’re not pitting ourselves against anyone else’s cash burn: Swiggy’s Sriharsha Majety
Swiggy’s monthly burn rate till Sept of about $47M still remains higher than Zomato’s $20M in Oct…
We are only a five-year-old business and we have just started investing in adjacencies where we see a real opportunity but don’t want to cut down on spending prematurely. Food delivery is obviously less competitive than it used to be. And that will mean that we can go on an even more accelerated path to making the business profitable.
Unit economics will improve much sooner. 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. We have the capital, the committed shareholder base, and an energised management team.
We also hear that Swiggy has started cutting burn over the last couple of months. Is that correct?
We need to become a lot more profitable. In fact, we were profitable on a per-order basis in 2017 pan India. Now obviously things are at a much higher scale so we’ll have to do different things. We have our task cut out and we’re all on that path, and the market is moving there.
It has been 8-9 months since Swiggy Stores (hyper-local deliveries from neighbourhood stores) was launched in Gurgaon. How is that coming, along with parcel delivery service Go?
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 be grow even faster as ‘Go’ is less complex than ‘Stores’. They are still a huge part of our entire capital allocation. Now whether or not we’ll deploy all of it depends on continued success.
Our pilot in Gurgaon was a big success, where we grew to 20% of our food business in five months. We have also started seeing great benefits to the food business there—as this is leading to Swiggy becoming more top-ofmind for food consumers.
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