Swiggy Hikes Instamart Fees, Eyes More Revenue

Swiggy, one of the major players in India’s quick commerce space, is planning a strategic overhaul of its grocery delivery service, Instamart. The company aims to enhance its revenue and operational efficiency by increasing delivery fees and expanding its network of dark stores. These moves are expected to strengthen its position in a competitive market while improving its profit margins.

Instamart Fee Hike and Take Rate Goals

Currently, Swiggy charges ₹30 for orders below ₹199 on Instamart, along with a cart fee of ₹15 and handling charges of ₹6.50. The company plans to increase these fees gradually, aiming to reduce the subsidy provided through promotional programs and subscriptions. The ultimate goal is to boost the take rate—the share of revenue Swiggy retains from transactions—from 15% to 20-22%.

This move mirrors similar practices by competitors in the grocery delivery market, where delivery fees range between ₹30 and ₹35, depending on the order value. Swiggy’s approach aligns with its efforts to ensure long-term sustainability and profitability in the grocery segment.

Expansion of Instamart’s Dark Stores and Infrastructure

Swiggy is also focusing on expanding its infrastructure to meet the growing demand for grocery delivery. The company plans to increase its dark store count from the current 600 to approximately 1,046 by March 2025. Moreover, it is upgrading its store sizes to accommodate a broader range of products. Smaller stores of 2,500-2,800 sq ft are being replaced by larger ones spanning 3,500-4,500 sq ft, which can hold up to 20,000 stock-keeping units (SKUs).

To further enhance its service, Swiggy is introducing “megapods” in major cities. These larger facilities, ranging from 8,000 to 10,000 sq ft, will house over 50,000 SKUs and aim to deliver groceries within 10 to 30 minutes.

Positive Q2 Performance and Revenue Growth

Swiggy recently announced robust financial performance for Q2FY25. Its revenue from operations rose by 30% year-on-year, reaching ₹3,601.45 crore compared to ₹2,763.33 crore in the same quarter last year. Additionally, the company has made progress in narrowing its losses, reporting a net loss of ₹625.5 crore, down 5% from ₹657 crore in Q2FY24.

The revenue boost is largely attributed to growth in both food and grocery delivery segments, demonstrating the company’s ability to adapt and thrive in a dynamic market.

Swiggy Share Performance

On December 5, 2024, Swiggy shares price experienced a significant rise, trading at ₹544.90, up by 5.23% as of 1:41 PM IST. The day began with an opening price of ₹519.70 and saw a high of ₹576.70 and a low of ₹511.00. This uptick reflects investor optimism, likely fueled by the company’s expansion plans and financial improvements.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.