Your friendly neighbourhood kirana store has some more competition. Popular food-tech unicorn Swiggy has started delivering groceries, from both online and offline stores, to your doorstep through its new service, Swiggy Stores.The Bengaluru-headquartered firm promises to deliver home essentials such as grocery, fruit and vegetables, and healthcare products to a consumer’s doorstep in less than an hour. It currently has about 125,000active delivery partners. “Swiggy Stores extends the convenience of order-ing food from nearby restaurants to ordering anything from any store across your city,” Swiggy CEO Sriharsha Majety wrote in a blog after the launch of the service.
The Naspers-backed firm will be pit against the likes of home-grown online grocers BigBasket, Grofers, and Google-backed Dunzo, as alsoAmazon and Flipkart in the world’s sixth-largest grocery market. Analysts peg the size of the market to be between $400 billion and $600billion, and it is expected to cross $700 billion by 2022, according to a report by the University of Pennsylvania. Founded in 2014, Swiggy is now valued at $3.3 billion after a funding round of $1 billion in December, which was led by Naspers. According to experts, this is a nifty move forIndia’s most-valued food-tech firm, which delivers about 28 million food orders per month; it will get to leverage its manpower through the day and generate more revenues, but it will have its own challenges.
“Food deliveries tend to peak for one hour during lunch and in the evening between 7 p.m. and 9 p.m. Unlike the U.S., delivery boys in India don’t work part-time. They need monthly salaries. Hence, to make the full-time employment model work they need to work during the day. So it makes sense for Swiggy from a business perspective,” says K. Ganesh, serial entrepreneur, and promoter of BigBasket, FreshMenu, and Homelane, among others.
Swiggy Stores has started off in Gurugram for the time being. It will deliver products from over 3,500 stores, including meat startup Licious, food store Le Marche, and Zappfresh.com, among others. Swiggy touches thousands of households while delivering food and so it makes sense for them to add an aligned service like groceries, says Anil Joshi, founder and managing partner atUnicorn India Ventures.
Last month, Swiggy acquired Kint.io, aBengaluru-based artificial intelligence startup, for an undisclosed amount. Last year, it had acquired Scootsy, a Mumbai-based on-demand delivery firm, in an all-cash deal pegged at around ₹50crore. Its other acquisitions include gourmet food startup 48East and milk delivery service SuprDaily. All these will help Swiggy in its new venture.
However, it will have its own share of challenges. The hyperlocal sourcing model to service customer orders would simply not work. “Swiggy will need to set up sourcing and infrastructure to be able to deliver these daily essentials on demand. Immediate sourcing could be a challenge as will be storage, as some of these products are highly perishable,” Joshi says.
Understanding the availability of products in real time can be another challenge. “The tomato that you order, for example, may be left over as most people shop when fresh produce would come. Quality can be a variable,” says Ganesh.
The road for becoming a one-stop delivery app might look bumpy for Swiggy at this moment, but the cash-flush firm has enough fire in its belly to cook the recipe for success.
(This story was originally published in the January 2019 issue of the magazine)