Sriharsha Majety explains that the pace will be determined by its expansion of average order value (AOV), take-rates, the nature and quantum of competitive intensity
Highlighting that the Swiggy Instamart’s adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) losses, which surged to Rs 840 crore, have reached their peak in the late fourth quarter, Sriharsha Majety, the Co-founder of Swiggy has stated that the company is expecting to progressively unwind losses going ahead.
In a letter to shareholders, the Group Chief Executive Officer (CEO) highlighted that the pace will be determined by its expansion of average order value (AOV), take-rates, the nature and quantum of competitive intensity.
The Managing Director (MD) Majety informed that with a high proportion of new dark stores (316 added on a third quarter base of 705) and new users (2.8 million transacting users (MTUs) added on a Q3 base of seven million), combined with high competitive intensity, the past quarter witnessed the peak of investments into quick commerce. As a result, contribution margins declined 100 basis points quarter-on-quarter (QoQ).
“Instamart MTUs grew 40 per cent QoQ to 9.8 million in tandem, across existing geographies as well as new cities. Overall, in Q4 we added more dark stores than we added cumulatively over the past eight quarters, and gained more MTUs than we did in the last six quarters combined,” Majety explained.
Adding that since a significant chunk of new stores and users were added over the latter half of the quarter, their order contribution in Q4 was muted. AOV continued to show healthy double digit growth with 13.3 per cent YoY rise to Rs 527, aided by the expansion of assortment through larger stores (including megapods).
Indicating a significant shift, Majety further explained that cross-pollination of users from quick commerce is also becoming a significant source of food delivery user growth, since around 30 per cent of users acquired on Instamart in the past six months are new to the Swiggy ecosystem.
