Davos 2024: Instamart can be larger than food delivery, says Swiggy boss Sriharsha Majety

Swiggy Instamart, the company’s quick-commerce arm, has the potential to be a bigger vertical for Swiggy even leaving behind the core food delivery business, group CEO Sriharsha Majety told Moneycontrol on the sidelines of the World Economic Forum at Davos.

Majety’s comments come at a time when rival Zomato has also underscored the importance of Blinkit, its quick-commerce vertical. Zomato founder and group CEO Deepinder Goyal has said Blinkit will drive more value for its shareholders than Zomato in 10 years. 

“Instamart’s contribution to overall revenue is increasing and it is the growth driver for the overall group,” Majety said.

“Penetration wise, Instamart could still be larger than food delivery. The number of consumers who want grocery or allied items delivered will be larger than the number of consumers who want restaurant food delivered to their doorstep.”

Underscoring the market opportunity, Majety added that anyone above the age of 13, who has the money to spend, wouldn't go through more than a few weeks without paying for quick-commerce services.

Blinkit and Instamart compete directly in the quick-commerce space with Y Combinator-backed Zepto and Tata’s Big Basket.

Majety said India was the only market where quick-commerce had broken out and also continued to grow.

Globally, there were a few breakout companies in 2021-22 but there weren’t as many firms as earlier. Rapid delivery players such as Jokr and Getir had not yielded desired results over the past year or so.

Watch: Swiggy's Sriharsha Majety On IPO, Instamart & Zomato | Davos 2024

Swiggy is stressing on the importance of Instamart at a time when India’s food delivery industry has slowed down faster than expected. Swiggy, like Zomato, cut costs in 2023 as it adjusted with the slowdown.

“Food delivery continues to grow but at a slower clip than what it would have in the past because of increased penetration over the years,” Majety said.

IPO prep underway

Majety added that preparations were on for Swiggy’s mega initial public offering (IPO) through which the Bengaluru-based company will likely look to raise $1 billion later this year.

Moneycontrol has reported that Swiggy is likely to have picked seven investment banks, including Kotak Mahindra Capital, Citi, JPMorgan, Bofa Securities and Jefferies, for the IPO processes.

“We’ve been preparing for our IPO. We’ve added independent directors to the board and there’s all kinds of preparations that are on,” Majety said.

In February 2023, the food and grocery delivery platform appointed Delhivery founder and CEO Sahil Barua, TAFE chairman and managing director Mallika Srinivasan and Shailesh Haribhakti & Associates chairman Shailesh Haribhakti as independent directors. 

In December, it inducted FMCG veteran Anand Kripalu to the board as an independent director and also named him as the chairperson.

Use of generative AI

At a time when food delivery has slowed, Swiggy has been carrying out experiments to help its restaurant partners.

It has also launched its in-house large language models (LLMs) that enable restaurants to manage their operations easily. Along with building its LLMs, it is also using generative AI to provide better search results.

“These capabilities have been developed in-house, giving us greater control over the product, faster iteration time, and the flexibility to adapt to changing market trends,” Swiggy said in a blog post earlier.