India quick commerce's profit quest looks quixotic

Swiggy

20/02/2026 03:22

The author is a Reuters Breakingviews columnist.  The opinions expressed are her own.

By Ujjaini  Dutta

BENGALURU, Feb 20 (Reuters Breakingviews) - Is quick commerce a viable business? India's $9.3 billion Swiggy SWIG.NS, backed by Prosus PRX.AS and SoftBank's Vision Fund, which offers deliveries of everything from onions to Bluetooth speakers in as little as 10 minutes, is under pressure to stem losses at its Instamart unit without sacrificing growth. But rivals are stepping up discounts to grab market share. As long as that persists, Swiggy and others may find both profit and growth elusive in the sector.

The $11.5 billion sector's common refrain is that companies have to sacrifice near-term profits to acquire users and scale. In the three months to December, Swiggy's quick commerce revenue jumped to 10.2 billion Indian rupees ($112.05 million), up a blistering 76% year-on-year; rival Eternal's ETEA.NS Blinkit surged nearly ninefold over the same period. Most of that growth is underpinned by heavy discounts to lure shoppers, better product mix as well as building out warehouses known as dark stores that serve as distribution centres.

But Swiggy boss Sriharsha Majety has set a goal for the business to achieve a key profitability metric it calls "contribution margin breakeven" - when revenue from each order covers its direct fulfilment costs - in the quarter ending June. Currently, revenue per order is 99 rupees ($1.09) and direct cost per order including discounts is 118 rupees ($1.30), according to calculations from Bernstein. In theory, cutting back on discounts will help, as will charging higher commissions from suppliers.

The problem is, competition from Walmart's WMT.O Flipkart, Blinkit and Zepto, which is readying an initial public offering, is intensifying, leaving Swiggy with little room to manoeuvre. Grocery sales, a category seen as most likely to secure repeat customers, account for a falling share of its overall gross order value. This stood at 68% as of December, down from 84% in March. Average monthly orders per Instamart user have fallen to 2.8 in the recent quarter, compared to 3.5 a year ago, according to Bernstein, although the average order value has increased 40%.

Scaling back on spending risks eroding Swiggy's market share or worse. Blinkit, for instance, has refrained from discounts and managed to squeeze out an adjusted EBITDA in the latest quarter. But that's probably unsustainable, as the business is forecast to be back in the red in three months to March, per analyst forecasts on Visible Alpha. Swiggy's quest for sustainable earnings in quick commerce may end in futility.

Follow Ujjaini Dutta on LinkedIn and X.

CONTEXT NEWS

India’s Swiggy on January 29 posted a consolidated loss of 10.65 billion Indian rupees for the quarter ended December 31, compared with 10.92 billion rupees in the previous quarter. Losses remained wider than the 7.99 billion rupees it reported a year earlier.

The company said it is confident of achieving contribution-margin break-even - when revenue from each order covers its direct fulfilment costs - by June. The contribution margin for its quick commerce arm stood at negative 2.5%.

Swiggy's order fulfilment costs outpace revenue per order https://www.reuters.com/graphics/BRV-BRV/akpeygqdbpr/chart.png

Groceries are declining share of Swiggy Instamart gross order value https://www.reuters.com/graphics/BRV-BRV/klvylezezpg/chart.png

(Editing by Robyn Mak; Production by Aditya Srivastav)

((For previous columns by the author, Reuters customers can click on DUTTA/ujjaini.dutta@thomsonreuters.com))