Explained: Swiggy’s $700 million investment in grocery delivery service Instamart

Swiggy has announced it will make a $700 million investment into Instamart. What is Swiggy Instamart, and why is Swiggy makring this investment?

Food-tech platform Swiggy announced it will make a $700 million investment into its quick-commerce vertical Instamart. This announcement has come at a time when the segment is witnessing a flurry of new entrants and investments by existing companies.

What is Swiggy Instamart?

Swiggy Instamart is the platform’s quick-commerce vertical where it promises to deliver groceries and related items in a shorter period of time compared to conventional online grocers. This is made possible through a ‘dark store’ model, where third-party run micro-warehouses are set up across the city to enable shorter delivery times.

Why is Swiggy making the investment?

Swiggy said that in the last few months, Instamart has on-boarded more than one seller-run dark store every day. By January 2022, it will make deliveries in 15 minutes by having the network of dark stores very close to the majority of its customers. “At our current growth trajectory, Instamart is set to reach an annualised GMV (gross merchandise value) run rate of $1 billion in the next three quarters. With our food delivery business trending at a $3 billion annualised GMV run rate, and Instamart’s super-charged growth, we’re very excited about our convenience mission coming to life in a very big way,” said Sriharsha Majety, CEO, Swiggy.

Who are some of the other players in the quick commerce segment?

In addition to Swiggy Instamart, online grocers BigBasket and Grofers have also entered the quick delivery segment. In addition, several other new startups, including Mumbai-based Zepto has entered with the q-commerce model, promising deliveries within 10 minutes. Google-backed delivery platform Dunzo has also entered this segment in some markets.

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