Sriharsha Majety says that the recent investments into lower consumer-side monetisation have not yielded the desired incremental order-growth
As the quick commerce business of Swiggy posted a loss of Rs 908 crore during the third quarter of the current financial year, the company’s Co-founder and Group Chief Executive Officer Sriharsha Majety stated that irrational competition has impacted the order and sales growth of the business.
“Amidst irrational competition, our recent investments into lower consumer-side monetisation have not yielded the desired incremental order-growth, especially at the bottom of the average order value (AOV)-pyramid and are being reviewed,” Majety said in shareholders’ letter for Q3FY26.
He added that the company has consciously chosen not to participate in deep-discount-driven, purely-volume-focussed growth that sacrifices AOVs and margin. “Hence, amidst high competitive intensity, our contribution margins continued to improve incrementally to -2.5 per cent as structural improvement in unit-economics through a reduction in platform-funded discounts and improving darkstore utilisations were balanced by our short-term investment from the no-fee experiment,” he added.
The adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) loss rose to Rs 908 crore for quick commerce, led by continued investments into marketing, but operating leverage drove adjusted Ebitda margins to -11.4 per cent.
“The category is only 25 per cent done, and we continue to have a very large opportunity to go after. Ultimately, as we have outlined before, playing to win in the long-term will depend on our ability to increase our staying power in a hyper-competitive market,” Majety added.
The Co-founder reiterated the guidance for contribution breakeven in Q1FY27. In Q3, Instamart continued to grow at over a 100 per cent YoY, generating a gross order value (GOV) of Rs 7938 crore. Growth was partially impacted by around 300 bps of GST-related price-cuts and base-effect from an earlier start to the festive season this year.
The company’s darkstore network expanded to 4.8 million square feet, as it net-added 34 stores and expanded to three more cities. Over the past four quarters of heightened competition, the company moved a finite amount of consumer-facing investments around the P&L to fulfil key business objectives that lead to longer-term structural improvements. These involved creating a larger grocery cart (Maxxsaver) to expanding categories and customer behaviour (non-grocery thrust including QIM), to removing friction in the buying process without breaking carts (no-fee above Rs 299 in Q3).
As a result, AOV rose to a new high of Rs 746, 40 per cent YoY growth, with wallet-share continuing to rise secularly despite frequencies remaining flat QoQ, he pointed out.
