India’s two leading quick commerce companies, Eternal-owned Blinkit and Swiggy’s Instamart, have called competitive intensity in the quick commerce space “irrational”.
In a shareholders’ letter after the company announced its third quarter earnings, Sriharsha Majety, Co-founder, Managing Director and Group CEO of Swiggy, said Instamart’s recent investments into lower consumer-side monetisation have not yielded the desired incremental order growth amidst “irrational competition” in the quick commerce space.
As competition is high and irrational in quick commerce, Swiggy said its growth at the bottom of the average order value pyramid has been slower. “Our eventual right to win will come from the fruition of our differentiated assortment proposition, and we want to only focus disproportionately on bringing the proposition to life in a bigger way while navigating the path towards profitability,” Majety explained.
“Even if this creates any short-term bumps in order-growth in an irrational market, we believe that focusing on these two while continuously improving the consumer experience is the right strategy towards winning in the long-term,” he added.
Blinkit, too, highlighted “irrational competitive intensity” in its shareholder letter call last week. “In periods of irrational competitive intensity, customer acquisition remains anchored in a narrower set of discounted, lower-margin categories, which slows the natural expansion of the basket,” Albinder Singh Dhindsa, Founder and Chief Executive Officer of Blinkit, said.
The Gurugram-based quick commerce firm said its guidance of 3,000 dark stores by March 2027 assumes continued irrational competitive intensity. “However, if the competition moderates in the near term, we would want to aim for 3,500-4,000 stores by March 2027,” Dhindsa added.
Amid irrational competitive intensity, accelerating store count or assortment is counter-productive, as the underlying demand profile pushes out the path to profitability of these new dark stores, said Dhindsa. “While aggressive pricing actions can stimulate demand, that demand is often less durable, leading to moderation in subsequent growth,” he added.
These comments come a month after the founder of India’s leading quick commerce player warned that India’s quick commerce industry is heading towards a shakeout as investor appetite fades.
“Usually when this kind of imbalance exists, the correction is very swift,” Dhindsa told Bloomberg.
“It often catches people by surprise.” Blinkit, which turned EBITDA-breakeven in the third quarter, said despite elevated competitive intensity over the past few months it saw margin improvement aided by supply chain cost efficiencies, a favourable shift towards long tail categories and operating leverage.
Meanwhile, Swiggy said it is hard to predict the near-term growth trajectory in quick commerce.
“Some of our recent efforts to test the saliency and velocity of user behaviours through the no-fee campaigns have had limited success due to continued irrationality in competitive activity across pricing and monetisation levers. We have chosen not to participate in fuelling such behaviour, thereby choosing to forego such inducement-led volume gains. This may therefore have a near-term impact on underlying volume growth,” it said.
