admin
September 5, 2025
Pooja Yadav, Exchange4Media
4 September 2025
Quick commerce today is no longer just about delivering groceries in 10 minutes. It has emerged as one of India’s most coveted retail media channels, where brands are willing to pay a steep premium for visibility.
If FY25 was about building scale, FY26 is definitely shaping up to be about pricing power. With consumer adoption of 10–20-minute delivery apps surging, advertisers are competing for limited inventory, pushing ad rates up by 30–50% year-on-year.
“Ad rates on quick commerce platforms have surged by 30–40% year-onyear, especially during high-impact windows like festive seasons and major cricket events. This is fuelled by rising user engagement and proven performance outcomes. With more sophisticated ad formats and attribution models now in play, advertisers increasingly view the premium as justified,” added Uday Mohan, COO, Havas Media India & Havas Play.
Scale, Pricing & Soaring Ad Rates
While agencies point to surging demand, market data shows that platforms themselves are firming up monetisation models with steep onboarding thresholds.
As per market estimations, Swiggy Instamart offers tiered onboarding packages ranging from ₹4.5 lakh to ₹10 lakh, adjustable against advertising spends over a three-month period. Zepto reportedly asks new or small brands to commit anywhere between ₹2 lakh and ₹7 lakh per month on ads, depending on the category. Blinkit, on the other hand, charges ₹25,000 per SKU per state as a non-refundable onboarding fee, which is credited to the brand’s ad wallet.
This aggressive push comes against the backdrop of a sector that has grown at breakneck speed. According to CareEdge Analytics’ July 2025 data, India’s quick commerce market was valued at around ₹64,000 crore in FY25, growing at a staggering 142% CAGR during FY22–FY25 on the back of evolving consumer preferences, hyperlocal infrastructure, and a low base.
The momentum is expected to continue with strong double-digit growth over the next few years, as adoption deepens in Tier II & III cities, delivery networks expand, and instant fulfilment becomes mainstream.
At the same time, platforms are pivoting from pure hypergrowth to sustainable profitability—tapping into advertising, subscriptions, private labels and tech-led inventory optimization as key revenue levers. This shift is being enabled by India’s expanding digital backbone: with over 1.12 billion mobile connections and 806 million internet users (a 6.5% YoY rise), the country is projected to cross 900 million internet users by the end of 2025. Rising smartphone penetration in both urban and rural areas, aided by affordable data and policy support, has created one of the world’s largest online consumer pools, with 270 million e-shoppers in 2024, making India the second-largest e-retail market globally.
Unsurprisingly, advertisers are flocking to these platforms because that’s where their consumers are. Even though seller commissions contribute the bulk of revenues (68–74%), ad placements and brand boosts already account for 9–11%. Industry data shows that ad rates on quick commerce apps have climbed by 30–50% in just a year, with premiums doubling during high-impact windows like festivals and cricket tournaments. This steep inflation reflects both rising consumer traffic and the limited nature of in-app inventory, pushing brands to pay top dollar for guaranteed visibility at the point of purchase.
Bain’s ‘How India Shops Online 2025’ report also underscores this momentum: beauty, personal care, and snacking categories are already outpacing overall e-retail growth, and these are the very segments leaning most aggressively into quick commerce ads.
“Ad rates on quick commerce platforms have jumped by nearly 40–50% compared to last year. This spike reflects that premium brands are willing to pay for immediacy and guaranteed visibility, where ad placement directly links to instant purchase behaviour,” said Mandar Lande, founder of Waayu, a zero-commission food delivery app in India.
According to Aditya Aima, Managing Director, Growth Markets; Co-MD, India & MENA, AnyMind Group, ad rates on quick commerce platforms have not only risen but demand has intensified. “The surge is fuelled by three dynamics: sticky consumer behavior with high visit frequency, dense purchase intent compared to social or entertainment platforms, and the scarcity of ad real estate.”
Quick commerce becomes a strategic channel
For brands, quick commerce has moved far beyond being a fulfillment partner. It has become a strategic advertising channel, especially for those in fast-moving and competitive categories like beauty, wellness, snacks, and personal care. The platforms offer not just last-mile delivery but also front-of-shelf visibility in an increasingly cluttered digital environment.
According to Seshu Kumar Tirumala, Chief Buying and Merchandising Officer, bigbasket, “Brands are moving beyond purely search-centric strategies and increasingly adopting immersive display activations with formats like Spotlight Videos, Banners with Add-to-Cart (ATC), targeted banners, and ATC widgets. For established brands, most investments still flow into performance-led formats such as Sponsored/PLA ads, while a portion is reserved for top-funnel initiatives like storytelling, new launches, and high-visibility events. Emerging or smaller brands usually begin with awareness and consideration campaigns before shifting focus toward performance once they’ve built stronger customer connections.” Unlike marketplaces or social media, quick commerce blends data-led targeting, high engagement, and measurable ROI.
Many brands pair Q-comm placements with collab ads on Meta, Google, and Criteo to build visibility while keeping consumers engaged across the funnel. This creates a sharper, closed-loop system where awareness, consideration, and conversion happen almost instantly. “D2C brands have been rapidly scaling up ad spends on quick commerce platforms, up to 40–50% year-on-year, with a significant share during the festive season. Among the key reasons are fast-growing adoption of Qcomm by consumers and better ROI than marketplaces,” said Shrikant Shenoy, AVP at Lodestar UM.
What sets this instant delivery model apart is its ability to compress the purchase journey. Marketplaces drive comparisons, and social platforms spark discovery, but Q-comm taps into impulse buying with SKU-level attribution.
“The quick delivery model encourages impulse purchases and immediate gratification shopping, which is particularly valuable for D2C brands. Qcomm platforms have lower competition density, and ad formats are more native and less cluttered than traditional e-commerce,” said Devangshu Dutta, founder of Third Eyesight.
“When someone opens Blinkit or Zepto, they’re usually in active purchase mode, not just browsing. For consumables, personal care, or lifestyle products, this is the sweet spot of marketing,” Dutta noted.
“Ad rates on quick commerce have gone up by more than 20% in the last year. If you want a prime slot, say a homepage banner in a big city, you might even be paying 50% more than last year. Because every brand wants it. When a Blinkit or Swiggy placement can move your product in minutes, not weeks, those ads aren’t just distribution, they are discovery,” said Mohit Singh, Head of Product at Zippee, a quick commerce logistics platform.
Meanwhile, pricing pressures are only going up. Ratnakar Bharti, VP, Media, Mudramax said, “Quick commerce isn’t just ‘fast delivery’ anymore, it has become high-intent retail media sitting right next to the ‘add to cart’ button, with sales that can be measured in real time. Quick commerce platforms say their ads business grew 5X in a year to about $200M ARR. At that kind of scale, inventory quality improves, targeting gets sharper, and the medium starts looking like the next big retail media play.”
“In a nutshell, expect meaningfully higher prices in peak weeks — often up to 2x — and a higher year-round floor price due to steeper minimums and fees. The trade-off is harder proof of sales at the exact SKU, which is why demand and prices are rising,” Bharti added.
“Brands pay a premium for Q-Comm because it drives sales at the point of purchase. What began as experimental spends has now become a steady line item in media plans, thanks to strong ROI and proven results,” added Jatin Kapoor, MD, AdsFlourish.
Beauty, beverages & snacking lead the charge
Notably, not all categories are leaning on quick commerce equally. Industry executives point out that beauty & personal care, beverages, snacking, and wellness are the biggest spenders, given their high repeatability, impulse-driven nature, and urban skew.
Beauty and personal care brands, for instance, are using Q-comm not just to drive trial packs and quick replenishment, but also to run festival-led campaigns targeting affluent millennials. Similarly, beverages and packaged snacks are thriving on the “in-the-moment” consumption occasions that these apps uniquely enable.
“The biggest spenders are beverages, beauty, packaged foods, and wellness. Those categories thrive on impulse and repeat consumption, which is exactly what quick commerce delivers best,” Singh added. As per many industry experts, wellness and lifestyle brands, too, are seeing outsized returns. From daily supplements to discreet personal care items, quick commerce is proving to be a low-friction purchase environment with high conversion rates.
“Quick commerce platforms have lower competition density, and ad formats are more native and less cluttered than traditional e-commerce,” explained Dutta.
Media buyers also note that Q-comm platforms are evolving fast, offering more contextual in-app placements and data-driven targeting. This is creating a level playing field for challenger brands that lack legacy shelf space in offline retail.
“Quick commerce advertising is inherently contextual. A beverage or snack brand running an IPL campaign is literally tapping into the consumer’s 15-minute window of intent, it’s that instant,” added Mohan.
With ad rates on quick commerce platforms climbing 30–50% year-on-year, it’s clear the medium is shifting from experimental budgets to a core retail media channel. However, with competition heating up, festive weeks commanding 2X pricing, and minimum spends rising, the question is: how long before quick commerce ads start resembling the crowded, high-cost landscape of traditional e-commerce marketplaces?
(Published in Exchange4Media)
admin
July 16, 2025
Prabhanu Kumar Das, Medianama
16 July 2025
E-commerce logistics platform Shiprocket announced the launch of Shunya.ai, a sovereign AI model developed in India to support the country’s Micro, Small and Medium Enterprises (MSMEs), on July 11. The company claims that it is India’s first multimodal AI stack, built in partnership with US-based Ultrasafe Inc.
This announcement comes at the heels of Shiprocket filing a confidential draft red herring prospectus (DHRP) with the Securities and Exchange Board of India (SEBI) in May 2025 for their Initial Public Offering (IPO). The company is expected to raise around Rs 2500 crore in its IPO.
What does the AI model offer?
As per Shiprocket’s website, Shunya.ai is built on a freemium model, with unlimited access priced at Rs 499 a month for MSMEs. It is directly integrated into the Shiprocket platform and offers AI agents across multiple languages. According to the company, the agents can perform the following tasks:
Shiprocket CEO Saahil Goel stated, “We’ve adapted Shunya.ai from the ground up for Indian languages, commerce workflows, and MSME needs. By embedding it directly into our platform, we’re giving over 1,50,000 sellers instant access to tools that are intelligent, local, and scalable, levelling the playing field for businesses across Bharat.” Notably, Larsen and Toubro’s AI cloud arm, Cloudfiniti is reportedly providing the underlying GPU infrastructure, ensuring that all data processing and storage remains within India.
This AI model does offer multiple benefits but it will not level the playing field against big players, as per Devangshu Dutta who is the founder of specialist consulting firm, Third Eyesight.
“While Shunya AI can help small businesses compete better, it won’t completely level the playing field. Large companies still have greater organisational capacity and capability to respond to the insights offered, including more data and bigger budgets. The real benefit for small businesses is improving how they work and serve customers within their current markets, rather than suddenly competing with giants,” Dutta said.
The E-Commerce AI Pivot
This is not the first time that an Indian e-commerce platform has unveiled a B2B AI service through its existing platform. Zepto recently launched Zepto Atom in May 2025, a real-time tool that offers consumer brands available on the platform minute-level updates, PIN-code level performance maps, and Zepto GPT, a Natural Language Processing (NLP) assistant trained on internal data that brands can query about their stock keeping units (SKUs) and performance data.
Zomato and its e-commerce arm Blinkit have also been growing their AI capabilities. Analytics India Magazine previously reported that the company’s generative AI team has grown from 3 to 20 engineers in the time-span of a year. Zomato introduced a personalised AI food assistant for users, and also uses AI in its backend to optimise delivery times and improve consumer support. Blinkit also released the Recipe Rover AI in May 2023, an AI assistant for recipes.
Other companies like Swiggy with ‘What to Eat’ AI, Myntra’s MyFashionGPT AI shopping assistant, and Amazon’s Rufus have also adopted AI assistants on their platform as a tool for the consumer.
The issue of merchant stickiness
Dutta asserts that this shift means platforms like Zepto and Shiprocket are changing from being service providers to becoming data intelligence companies. They are generating, or are in the process of generating revenue through transactional data that flows through the company.
“While this can create better insights and automation for merchants on these platforms, it also could make the merchants more dependent on the platforms. Once a merchant builds its operations around a platform’s specific AI tools and insights, it becomes much harder to switch to a competitor – creating stronger merchant stickiness. We already see this in infrastructure and core services such as banking and financial services, enterprise cloud services, building management etc. and the same is likely to happen in AI-enabled process management”, he said.
Why this matters
As Shiprocket is preparing for an IPO, Shunya.ai becomes another means to generate revenue for the company. This app can extend Shiprocket’s reach to local physical stores and MSMEs, by offering them the opportunity to provide the same experiences and support to the consumer that larger retailers and e-commerce platforms do, while automating delivery automation, cataloguing, and customer support.
Furthermore, the launch of this model is also part of the larger trend of AI integration and automation, both within e-commerce platforms for their consumers and within the back-end for optimisation.
Competition in these sectors and merchant stickiness may also become an issue, as businesses hosted on these e-commerce services may become reliant on specific AI tools and their outputs.
Questions of data privacy are also important when it comes to service companies moving towards data intelligence: How do these AI models gather and use data? The consent of end-consumers in these B2B models, data storage, and security are all issues that need to be studied as e-commerce and retails pivots towards AI.
Some Unanswered Questions
MediaNama has reached out to Shiprocket with the following questions and will update the article when we receive a response.
(Published in Medianama)
admin
July 10, 2025
Alka Jain, Outlook Business
10 July 2025
Just when Blinkit, Instamart and Zepto were slowing down in their quick commerce game, Amazon’s entry may spur them towards a more aggressive race. The ecommerce giant has begun offering deliveries in as little as ten minutes in Delhi after Bengaluru, under the name ‘Amazon Now’.
“We are excited with the initial customer response and positive feedback, especially from Prime members. Based on this, we are now expanding the service over the next few months addressing immediate customer needs while maintaining Amazon’s standards for safety, quality and reliability,” the company said in an official statement.
Till now, the company was moving at its own pace with the idea that Indian consumers would wait a day or two for their deliveries. But the game has changed now—convenience is king here. Online shoppers want everything from milk to mobile chargers within a few minutes at their doorsteps.
And the big three of the quick commerce market—Blinkit, Instamart, Zepto—have cracked the consumer code perfectly. This trend has nudged Amazon and Flipkart to enter the 10-minute delivery segment. It started as an experiment in the larger ecommerce sector but has now become a necessity for online retailers.
Kathryn McLay, chief executive of Walmart International—an American multinational retail corporation—revealed that quick commerce now accounts for 20% of India’s ecommerce market and is growing at a rate of 50% annually. According to a Morgan Stanley report, the market is expected to reach $57bn by 2030.
Hence, Amazon could not afford to stay on the sidelines. The company has already pumped $11bn into Indian market since 2013 and recently announced another $233mn to upgrade its infrastructure and speed up deliveries. In addition, it has also opened five fulfilment centres across the country.
Despite continued investment, there are doubts if Amazon can disrupt the quick commerce game. Industry experts state that the ecommerce major’s late entry could upend the fragile unit economics of the space. It can even reignite discount wars and increase burn rate (a company spending its cash reserve while going through loss) for the incumbents, once the ecommerce giants begin to exert pressure and begin to capture market share.
Open Market, Thin Margins
Given the growth momentum and market size, quick commerce start-up Kiko.live cofounder Alok Chawla believes that there is definitely headroom to accommodate another player in the quick commerce market. However, margins may remain negative for a couple of years due to high business and delivery costs.
As per data, the average order value of ₹350–₹400 yields a gross margin of approximately 20% but high fulfilment and delivery costs (₹50–₹60 per order) significantly reduce overall profitability, often cancelling out most of the gains.
“Indian customers will not be willing to pay high shipping charges for convenience. But the market will continue to grow due to cart subsidies and shipping discounts. On top of this, profitability also remains quite some time away,” he says.
Even a survey by Grant Thornton Bharat, a professional services firm, shows that 81% of Indian quick commerce users cite discounts and offers as one of the main reasons they shop on platforms like Blinkit and Instamart.
But the fact is Amazon has extremely deep pockets, which means, the trio will once again have to get into aggressive discounting to protect their turf, said Chawla, indicating the possibility of higher cash burn quarters ahead.
In February, reports revealed that Indian quick commerce companies, including new entrants, were burning cash to the tune of ₹1,300–₹1,500 crore on a monthly basis. But a few months later, Aadit Palicha, chief executive of Zepto, a fast-growing 10-minute delivery platform, claimed that the company had slashed its operating cash burn by 50% in the previous quarter.
Still, the path to profitability remains shaky. Though Amazon can get an advantage of its existing huge customer base that is habitual of making online purchases including those in similar categories.
The real challenge lies beneath the surface because ecommerce and quick commerce operate on fundamentally different engines.
E-Comm vs Q-Comm: A Different Game
It may seem like a simple extension of what Amazon already does: deliver products. But in practice, the logistics, timelines and cost structures behind traditional ecommerce and quick commerce are different, said Somdutta Singh, founder and chief executive of Assiduus Global, a cross-border ecommerce accelerator that helps brands scale on global marketplaces through end-to-end solutions.
She explains the difference using a hypothetical situation: let’s say you order a phone case in Mumbai, which is picked from a nearby fulfilment centre. It will be added to a pre-routed delivery run with 30-50 other stops. This batching on the basis of route optimisation, keeps last-mile costs low, somewhere around ₹40–₹80.
But if you order the same item in a smaller town like Alleppey, it may first travel mid-mile from a hub in Cochin, then be handed off to a local partner like India Post. This increases the delivery time but keeps costs manageable through scale and planned routing.
This setup suits well in ecommerce business, which is built for reach and variety, not for speed. However, quick commerce runs on a completely different playbook because speed becomes priority here.
For instance, you order a pack of chips and a cold drink via Zepto in Andheri. These items are already stocked in a dark store within one to two kilometers of your home. The moment you place the order; someone picks it off the shelf. A rider is dispatched almost immediately and heads directly to your address.
There is no mid-mile movement, no routing logic and no batching. Each trip is a solo run. Delivery often happens within 10 to 15 minutes. This kind of speed relies on a dense network of local stores and a steady flow of short-range riders. But it also means higher costs.
“With no bundling of orders and lower average cart sizes, usually ₹250 to ₹300, the delivery cost per order can shoot up to ₹60 to ₹120. That is a heavy operational burden. Unlike traditional ecommerce, where cost efficiency scales with distance and order volume, quick commerce is constrained by geography and time pressure,” she explains.
So, it becomes more than just a category expansion for e-commerce platforms like Amazon and Flipkart. It marks a pivot in their “logistics thinking” and signals a broader shift in entry strategies. What once worked must now be retooled for hyperlocal and real-time operations.
Speed over Scale Not Easy
There are multiple challenges ahead for Amazon to make its presence felt and stay competitive in the quick commerce space. Firstly, it must build an operations and logistics layer that enables sub-15-minute deliveries, along with a technology stack to support it, according to Mit Desai, practice member at Praxis Global Alliance, a management consulting firm.
Second, it needs to build a dark store network to succeed in the space which is crucial to meet the 10-15 minutes delivery promise. Experts believe that a hybrid model will be the most successful in India—a mix of micro warehouses, partner stores and dark stores.
Desai states that Amazon’s existing capabilities can give it a base to build on, but it would also have to account for complexities and differences that come with the quick commerce business.
“For Amazon, the challenge will be operations. Can they build 700+ dark stores? Can they go hyperlocal? Can they navigate the chaos of Gurugram rain, Bengaluru traffic or the lanes of Dadar?” wonders Madhav Kasturia, founder and chief executive of Zippee, a quick commerce fulfilment start-up focused on hyperlocal deliveries and dark store management.
Another challenge can be repeat, loyal customers. As of now, customers check prices across platforms, and order where prices are the lowest. So, Amazon will have to spend heavily on discounts to gain market share. Chawla says retention will remain a problem because Zepto’s growth has also slowed down after a reduction in discounting burn.
However, Singh highlights that Amazon may not roll out everything in one shot. “We will likely see small-scale pilots, co-branded dark stores, local partnerships, new rider networks, tested in top cities before any nationwide push. They will also reveal whether it is viable to retrofit scale-driven e-commerce infrastructure into something that runs well in a hyperlocal loop,” she added.
Profitability Remains a Concern
While the quick commerce space is becoming increasingly dynamic with new entrants, the core question remains: is it a sustainable business model? The path to profitability is still fraught with operational complexity, margin constraints and uncertainty in consumer behaviour.
“Margins in quick commerce were never pretty to begin with,” says Kasturia. Yet he remains optimistic about the market because India’s grocery market is still largely untapped online.
As per data, India’s grocery and essentials market is over $600bn, of which online commerce is just three to four percent. Even quick commerce is sitting at ₹7,000–₹9,000 crore gross merchandise value today. So, the market isn’t crowded. It’s just early.
“We are barely scratching the surface,” he says, arguing that whoever wins customer behaviour, will lead the game. For example, in tier 1 cities, users no longer compare prices—they compare time.
For Amazon, this is both an opportunity and a constraint. Experts believe that the ecommerce giant can stand out by focusing on trust, hygiene and reliability—areas where existing players sometimes falter.
Kasturia says that the platform should not even chase everything, rather focus on profitable categories like fruits, dairy and personal care. “Build strong private labels. Nail density before geography and don’t discount blindly,” he adds.
The key is to build for reorders, not virality. That’s when customer acquisition cost (CAC) drops, margins compound and a player stops bleeding money per order. And to reduce the cost of dark stores, Chawla suggests an alternative route.
“Riding to neighbourhood stores for long-tail stock keeping unit can cut real estate and wastage costs,” he says, adding that it can decentralise inventory without owning all of it.
To follow this playbook, Devangshu Dutta, founder of Third Eyesight, a management consulting and services firm, says that every player needs to invest hundreds of crores before the model begins to show surplus cash. It will demand multiple, interlocked shifts—in pricing strategy, tech backbone, category mix, and even brand positioning.
Amazon’s entry doesn’t merely add another contender in the 10-minute delivery race—it rewrites the playbook for every player. The real question now is: can the frontrunners hold their turf, or will Amazon’s scale and deep pockets tip the balance of power?
admin
July 1, 2025
Sankalp Phartiyal, Bloomberg
1 July 2025
Just last week, Amazon.com Inc.’s India unit announced the launch of five new fulfillment centers to speed up e-commerce deliveries across the South Asian country’s smaller towns and cities. The online shopping giant’s statement included the words fast, faster and fastest nine times. That’s because delivery speed has never mattered more in India than it does now.
Homegrown firms such as Eternal Ltd.’s Blinkit, Swiggy Ltd.’s Instamart and Zepto are now delivering everything from pricey herbal skincare to Bluetooth speakers in just 10 minutes, making Amazon’s overnight shipping look comparatively lethargic. With one of the world’s fastest-growing major economies and a swelling middle class that’s looking for instant gratification, India is growing ever more important — and demanding.
It’s no surprise that the as-yet-unprofitable Amazon India is investing another $233 million to boost its delivery network and infrastructure in the country this year. It’s already committed more than $11 billion in India, the bulk of which has gone toward building online retail from the ground up. Its upstart rivals, also in the red, are driving a behavioral shift and are quickly building up their order volumes to the point where they’ll be able to strike distribution deals with consumer brands at an Amazon-like scale. That’s the mood music I’m hearing from local investors and it’s why Amazon is actively trying to counteract these nascent fast-commerce players.
Take me as an example of changing habits. Last week, I found myself bereft of shaving supplies on the morning of a day that featured an important meeting. I ordered a razor, brush and shaving cream via Swiggy and they were with me within 10 minutes. That sort of convenience is (probably) why I neglected
to restock my bathroom cabinet in advance — I simply don’t need to spend time planning small purchases anymore.
What does this mean for Amazon? Well, beyond everyday conveniences, Amazon and Walmart Inc.’s Flipkart may also lose out on higher-ticket purchases such as smartphones and other consumer electronics. Why wait in line or for days for the latest iPhone if an army of scooter riders is ready to drop it off at your doorstep almost instantly? And, specific to Amazon, how compelling will Prime delivery be if there are superior alternatives?
The Seattle-based online retailer was once driven out of China by regulations promoting domestic names, “which had deep and patient capital, and strong capabilities,” said Devangshu Dutta, head of retail consultancy firm Third Eyesight. “Because of this, it becomes that much more important for Amazon to succeed in India, as it’s now the world’s largest market by users. The consumption numbers will also grow with time.”
It’s no overstatement to say that quick commerce could redefine online shopping for Indians, setting a precedent unique to the country. We’ve already seen that happen with UPI, the state-backed peer-to-peer digital payments system that’s outshined credit cards. The company that best adapts to and serves the demands of India’s growing online consumer base will command a share of a rapidly growing e-commerce arena that’s today worth $60 billion in gross merchandise value, according to Bain & Co.
Amazon’s already shifting gears in a highly visible way. Last month, it launched “Now,” a 10-minute delivery service, in some parts of the southern tech hub of Bangalore. That marks its experimental foray into quick commerce. The company is also taking baby steps to plug the money bleed, now charging all
online shoppers 5 rupees ($0.06) in marketplace fees. That’s negligible per transaction, but need I remind you that India is the world’s most populous country and hundreds of millions shop on Amazon?
Even while operating from a position of considerable strength, Amazon sees the rise of its more quick-witted rivals and the shift in consumer behavior, and it’s taking action. To avert those young companies building a comparable retail empire to its own, Amazon will have to show it still has the agility to outrace all comers.
–With assistance from Brunella Tipismana Urbano.
To view this story in Bloomberg click here:
https://blinks.bloomberg.com/news/stories/SYPVYEDWLU68
admin
May 25, 2025
Gargi Sarkar, Inc42
25 May 2025
SUMMARY: Swiggy and Zomato are scaling back non-core bets such as 10-minute food delivery, private labels, and event logistics to sharpen focus on core businesses and improve profitability. Both companies are betting on platform fees and selective verticals like quick commerce and ticketing, but analysts warn that financial discipline, not endless expansion, is key to long-term sustainability. The foodtech duo is stuck in a balancing act of rationalising what works and doesn’t. However, going ahead, this rationalisation game is only going to get more pronounced as they will strive to shield their core bread and butter businesses
For foodtech giants Swiggy and Zomato (now Eternal), the last few years have been about engaging in a battle for expansion, so much so that it has become difficult to tell them apart.
From quick commerce and cloud kitchens to intercity food delivery and even selling tickets for events and concerts, the two companies appear to be aping each other’s every move to be everything everywhere all at once.
However, what began as a bold bet to dominate every possible vertical falling under the ambit of food, lifestyle and entertainment is now undergoing a major course correction.
For starters, both are reconsidering their blitzkrieg, and while at it, they are gracefully stepping away from non-core bets, diluting underperforming or experimental units to focus on core operations to drive profitability.
For context: Zomato, which once saw the future of food logistics in ultra-fast deliveries, gave up on its 15-minute food delivery service, Quick, four months after its launch in January. It has also pulled the plug on its home-made meal service, Zomato Everyday. Tailored for office-goers and budget-conscious consumers, the service was floated in January 2025.
Swiggy, too, has made similar retreats. It suspended Swiggy Genie, its courier and pick-up-and-drop service that had gained popularity during the pandemic. The company also gave up on its private label food business by entering a strategic agreement with Kouzina, a chain of virtual restaurants, granting it exclusive rights to operate Swiggy’s digital-first food brands.
So, what has triggered this metaphorical fission in strategy?
One possible reason could be the growing realisation that profitability hinges on diversifying smartly rather than untamed expansion.
A market analyst, who did not wish to be named, pointed out that the duo’s attempt to rule their customers’ wallets for everything from food to groceries and entertainment to lifestyle has been quite ambitious. “The course correction was overdue,” the analyst said.
He believes that foodtechs are now forced to burn the visceral fat in the form of non-core businesses because those have been slowing them down, also eating into the revenues of core businesses and impacting operational efficiencies.
“Moreover, the more the segments, the higher the chances of operational hiccups. Managing logistics, customer experience, and quality control across a wide array of verticals inevitably leads to fragmentation and strain on core operations,” he added.
State Of Eternal Affairs: Zomato’s Diversification Saga
Eternal’s push to transform Zomato into a broader lifestyle platform in 2024 was not only about ambition but also a strategic response to a slowing core business — food delivery, according to industry observers.
Also, a glance at the table below reveals how the company has seen a marginal QoQ increase in its monthly transacting users.
In terms of monthly transacting customers, Zomato’s food delivery growth began strong with a 6.84% QoQ jump in Q1, but momentum quickly slowed, and Q2 saw only a 1.97% sequential rise, followed by a slight decline of 0.97% in Q3. This dip signalled stagnation, and although Q4 showed a mild recovery (1.95%), overall FY25 growth of the company’s monthly transacting users (food delivery) was modest at just 2.96%
Interestingly, Eternal founder and CEO Deepinder Goyal, too, acknowledged a slowdown in the company’s food delivery business while announcing the company’s Q4 FY25 results. He said the slowdown was due to rising competition from quick commerce platforms and weak discretionary spending. Goyal added that services like Zepto Cafe, Swiggy Snacc, and Blinkit Bistro, too, were eating into demand for restaurant deliveries.
In terms of Zomato’s food delivery numbers, average monthly transacting numbers grew to 20.9 Mn in Q4 FY25 from 20.5 Mn in Q4 FY24. Net order value (NOV) growth also remained subdued at 14% YoY versus the 20% YoY growth guidance.
Hence, the company was under pressure to unlock new revenue streams. Blinkit’s success became the reference point, and the company started envisioning similar success stories with other verticals too, a former Zomato employee said.
This was when the company got engulfed in the wave of diversification, paving the path for Zomato’s yet another bold move (besides Blinkit) — the INR 2,078 Cr acquisition of Paytm’s movies and events ticketing business, Insider, in August last year.
The acquisition that was planned with the launch of the ‘District’ app meant but one thing — declaration of war against BookMyShow, the lone behemoth in the realm of the entertainment ticketing segment. Even the company knew the path wouldn’t be all rainbows and sunshine.
In its Q4 FY24 earnings call, the management acknowledged that while the gross order value (GOV) of the going-out vertical continues to grow at over 100% YoY, the business still operates at an adjusted EBITDA loss of -2 to -2.5% of net order value (NOV).
Besides, given that the transition of users from Paytm’s ticketing business and Zomato’s dining out platform to the District app requires sustained investment, the company doesn’t expect the business to turn profitable in the near term.
But Zomato expects losses to eventually see stability at current levels.
“However, even with plateauing losses, the company will have to keep spending on creating supply. This means: curating new event experiences, forging partnerships and acquiring new users for the District app… and all of this translates into one thing — prolonged burn,” the market analyst added.
Moving on, Zomato’s ambition to become a lifestyle super app didn’t just manifest into flashy verticals like events, entertainment, and ticketing — it also showed up in its renewed aggression in food delivery, the very space where it first made its name.
Therefore, Zomato began piloting a 15-minute food delivery service in select parts of Mumbai and Bengaluru early this year.
But the company now finds the initiative extremely difficult to operationalise as it has failed to generate incremental demand.
“Customers do not necessarily want food fast, they just want it reliably. A 10-minute turnaround without full control over the supply chain leads to poor customer experiences, operational stress, and negligible upside. Instead of delighting users, it makes the company vulnerable to inconsistent quality and frequent delays,” a Zomato insider added.
Satish Meena, the founder of Datum Intelligence, opined that without controlling the entire supply chain, delivering food items within 10 to 15 minutes cannot be a profitable proposition.
Swiggy’s U-Turns
In 2024, also the year of its public listing, Swiggy aggressively expanded its service offerings, launching several new verticals to diversify beyond its core food delivery business.
Among the most prominent launches was Bolt, a 10-minute food delivery platform. Initially launched in Bengaluru, Chennai and Mumbai, Bolt quickly expanded to over 400 cities, with over 40,000 restaurants, including KFC, McDonald’s and Starbucks.
To complement Bolt, Swiggy introduced Snacc, a separate app for instant delivery of snacks, beverages, and small meals within 15 minutes.
Continuing to diversify its portfolio, Swiggy launched Pyng, an AI-powered platform that bridges users with verified experts like yoga teachers or chartered accountants.
With this, Swiggy marked its entry into the on-demand services marketplace, making professional services easier to access.
Apart from these customer-facing services, Swiggy also entered events via Scenes and the B2B space with Assure, to keep pace with Zomato.
Interestingly, Swiggy, too, has begun consolidating its operations. The company has shut down Genie, its hyperlocal courier business, which competed with Porter, Borzo and Uber.
According to a competitor, sourcing delivery riders specifically for packages is a challenge, particularly in cities like Bengaluru. For Swiggy, which was already managing fleets for food delivery and quick commerce through Instamart, sustaining a separate rider network for Genie only added to the complexity.
In another such move, Swiggy exited its private label food business by transferring exclusive rights for its digital-first brands, including The Bowl Company and Homely, to cloud kitchen operator Kouzina.
Balance Sheet Blues
Imperative to highlight that the rollbacks by Zomato and Swiggy are rooted in the growing pressures on their respective balance sheets.
After diversifying at a breakneck speed, they are now faced with the hard realities of cost structures that don’t always align with revenue potential.
In Q4 FY25, Zomato and Swiggy both reported robust top-line growth. Zomato’s revenue surged to INR 5,833 Cr, largely buoyed by its three core pillars — the food delivery business (INR 1,739 crore), Blinkit’s quick commerce arm (INR 769 Cr), and Hyperpure, its B2B supply chain vertical, which posted a 99% YoY growth in revenue to INR 1,840 Cr.
However, despite the momentum, the company’s net profit declined sharply to INR 39 Cr in the quarter, largely thanks to ongoing investments in Blinkit and newer bets like the ‘District’ lifestyle app.
Meanwhile, Swiggy clocked INR 4,410 Cr in revenue in Q4, up 45% YoY, but saw its net loss nearly double to INR 1,081 Cr. The widening losses were fuelled by surging operational expenses.
“All of this explains the strategic pullbacks witnessed lately, Swiggy exiting Genie and private labels, Zomato pulling the plug on services like Quick and Legends. The rationalisation marks a reset, indicating that while growth via diversification was necessary, financial discipline and profitability are in the spotlight,” the market analyst said.
Platform Fee To The Rescue… But For How Long?
While it won’t be easy for Zomato and Swiggy to suddenly change course, the future of these two foodtech giants is all about heading towards a more focussed set of revenue streams driven by value rather than FOMO.
In the process, both foodtech giants appear to have struck gold with the platform fee, which has grown from just INR 2 in 2023 to INR 10 today.
But the real question is: Can rising platform fee help the duo neutralise the impact of aggressive expansion? Or is rationalisation the only way forward?
Devangshu Dutta, the founder of Third Eyesight, thinks otherwise. He believes that the companies will not stop looking for new revenue streams, even as they will continue to amputate the ones that offer little value.
“All of these companies have to look for growth, which is a given. If their existing businesses are not delivering the kind of growth they need to justify their stock price or valuation, then they have to look at new avenues.”
According to him, we are bound to see a flurry of experiments, trials of different services and new verticals as these companies attempt to expand their addressable markets.
At the end of the day, the foodtech duo is stuck in a balancing act of rationalising what works and doesn’t. However, going ahead, this rationalisation game is only going to get more pronounced as they will strive to shield their core bread and butter businesses.
[Edited by Shishir Parasher]
(Published in Inc42)
