“Blinkit enjoys a pretty strong flywheel that has been compounding over the years. That is the reason why they’ve been able to build a more resilient business,” Majety said on the company’s earnings call, responding to an analyst’s question.
He said Swiggy’s priority is a stable business with “the clearest line of sight to Ebitda zero,” and that it would not use its cash reserves to open new fronts simply because the money is available. “I think our first job is to build a stable, resilient business that has the clearest line of sight to EBITDA zero. The optionalities come after that,” he said on the call following the announcement of the company’s September quarter results.
Majety said skipping that groundwork would be the bigger missed opportunity. Swiggy needs to grow to roughly twice its current size and improve contribution margins, he said, adding that the company must “double down” on its existing areas to prove execution and focus.
In his letter to shareholders, Majety signalled where Swiggy intends to compete. “As speed and price become table stakes, we believe differentiated assortment will decide the winners.”
The company reported a 36% year-on-year increase in operating revenue to Rs 7,571 crore for July-September, while its net loss narrowed 16% to Rs 922 crore from Rs 1,092 crore in the year-ago period.
The company’s food delivery gross order value (GOV) increased 17.7% year-on-year to Rs 10,054 crore, up 5.9% from the previous month. Instamart’s GOV increased 31.4% year-on-year to Rs 9,230 crore in the September quarter, while net order value (NOV) rose 33% to Rs 6,553 crore. It added 69 dark stores during the quarter, expanding its network to 1,240 stores, as higher growth pushed more facilities to maximum capacity utilisation.
In the letter, Majety also explained that the company will begin transitioning to an inventory model from the current marketplace model in the middle of the ongoing third quarter of this financial year. This could improve its quick commerce arm Instamart’s contribution margin by around 80 basis points once fully implemented.