Food delivery services in India aren’t new, in-fact India boasts the oldest food delivery service still in use i.e., the 133-year-old Dabbawallas service from Mumbai. However, the true potential of this industry wasn’t realised until the inception of online app-based food delivery services like Zomato and Swiggy.
Despite Zomato having a head start in the food delivery game, Swiggy when it was finally released in 2014 quickly gained a substantial momentum of its own within the market. The Bengaluru based company was originally known as Bundl and served as a facilitator of courier services and shipping within India, it was however halted and rebranded as Swiggy after almost 3 years of its use.
At the time of its inception the entire food delivery sector was in noticeable turmoil as several notable startups such as Foodpanda, TinyOwl and Ola Café were seen struggling in the highly competitive market. Swiggy however persisted through this phase and was set for success, earning a shocking revenue of $123 million in 2016 just a year and a half after it first hit the market. This growth didn’t stop
there, instead they continued to grow exponentially with their growing more than ten-fold by 2022 to a massive $10.7 billion.
According to a 2021 report by Statista, a survey conducted in order to determine the most popular food delivery applications across India, showed that at least 70% of the users participating in the survey had used Swiggy for their food delivery services, which made them the market leader along with Zomato at
75% while most of the other food delivery services were seen struggling (Uber eats earned the third spot at just 6%.) Swiggy was also able to achieve remarkable milestones such as having 20 million active monthly users as of August 2021, more than 185,000 restaurant partners as of January 2022, and
delivering approximately 9050 orders PER MINUTE on New years Eve 2021.
Even during Covid lockdowns, while Swiggy struggled a bit during the early stages, they quickly recovered after introducing key safety practices like no contact delivery, increased delivery partner hygiene, and best safety standards tags for restaurants to reinstate consumer confidence. They also started to pivot their business model beyond just food delivery by launching services like Swiggy insta mart that provided almost instant delivery of daily essentials such as groceries, hygiene necessities and other day to day house hold items within 30-45 minutes of the orders. However, during the past 2 years Swiggy has seen a growth in losses despite a rise in its revenue.
Possible Reasons for the valuation:
During the Financial year 2022, Swiggy reported a loss of Rs 3629 crore which was more than double the loss of Rs 1617 recorded in the previous fiscal year of 2021. The company also reported a similar growth in its expenses as the amount was recorded shotting up from Rs 4139 last year to Rs 9574. Although the company succeeded in earning an increased revenue of Rs 5705 in FY 2022 from Rs 2457 in FY 2021, the increased losses and mounting costs didn’t help inspire confidence within the investors of the firm. Amid the tough macro-economic conditions being observed world-wide, most investors have developed a cautious sentiment and are re-evaluating the worth of all their investments. This most likely is the reason why the US based investment management firm Invesco has yet again decided to slash down the valuation of its holding in Swiggy.
Earlier this year they cut the valuation from $10.7 billion which at the time made Swiggy one of India’s most valuable start- ups to $8 million. This month they further dropped this valuation to just $5.5 billion which is close to half of its original valuation. This isn’t an isolated incident in the recent times as Black Rock one of BYJU’s top investors also slashed the valuation of their holding in the startup by half to
about $11.5 billion quite recently.