Swiggy's India touch to help in race with rival Blinkit

Swiggy has gained approval for foreign ownership, enabling its quick-commerce unit Instamart to transition to an inventory-led model, potentially improving margins and control in the competitive Indian market. Instamart, which has been operating as a marketplace since August 2020, can now benefit from bulk-buying, data analytics sharing, and reduced wastage.

This change could add 80 basis points to Instamart's contribution margin, which measures revenue after variable costs. The model's adoption has proven successful for Eternal's Blinkit, turning the company positive in consecutive quarters. However, Swiggy remains unprofitable and aims to turn earnings per share positive by fiscal 2031.

The shift to inventory ownership will require higher working capital for purchases and stock management, according to brokerage Jefferies. Both Swiggy and Eternal are investing heavily in quick commerce, competing with industry giants like Amazon India, Walmart's Flipkart, and Reliance. Smaller players like Zepto are also striving to raise significant funds for growth.