Quick comm makes a dash for food deliveries

Bengaluru-based Swish, which promises 10-minute food deliveries recently raised $2 million from Silicon Valley venture capital firm Accel, with participation from Urban Company’s Abhiraj Bhal and Varun Khaitan and former Swiggy Instamart head Karthik Gurumurthy, among others. 

“Ten-minute delivery is picking up because it is catering to the impulsive user who prioritizes convenience, just like quick commerce. The entire impulse market is very big and is poised for massive growth," said Karan Taurani, an analyst at Elara Capital.

While Swiggy’s ₹11,300 crore initial public offering in November was considered a reason to celebrate for India's food-tech ecosystem, Zomato’s expected Sensex debut next month has added excitement.

Aniket Shah, co-founder and chief executive officer of Swish, said the idea of starting up in the space was born out of the need to meet the growing demand for faster food deliveries.

“We realized that quick commerce was initially seen only as a convenience, but has now become indispensable as people are seeking faster solutions to their everyday needs. However, despite advancements in other categories, food delivery times often range from 30-60 minutes, which fall short of the urgency that customers now expect, especially with cravings," Shah told Mint.

Emulating success

These new companies are looking to learn from established food delivery startups such as Swiggy and Zomato, which began small and grew into well-capitalized, listed companies within a decade to form an integral part of the urban and semi-urban household ecosystem.

Swiggy recently rolled out Bolt, a feature promising food delivery from select nearby restaurants within 10-15 minutes. Zomato, after trying Zomato Instant earlier, is now looking to roll out quick delivery of snacks like samosas and chai through its quick commerce arm Blinkit, Mint reported last month. Zepto’s Café offering is expanding rapidly, with at least 140 cafes launched every month.

“It's already at ₹160 crore of revenue and we are live in just 15% of our stores. By next year, we think it will hit ₹1,000 crore—if we scale it to all our dark stores," Aadit Palicha, co-founder and chief executive of Zepto, told Mint in an interview earlier this week.

Quick commerce has grown exponentially in India, with the gross merchandise value (GMV) touching almost $3.3 billion in FY24 from $500 million in FY20, according to a September report by Chryseum Advisors, a private markets platform. The GMV is expected to touch $9.9 billion in the next five years. For Swiggy and Zomato, their quick commerce arms Instamart and Blinkit, respectively, are among the key focus areas, with both companies rapidly expanding dark stores and maintaining chunky cash reserves, indicating that 10-minute food delivery could be a natural opportunity.

However, 10-minute food deliveries are more complex. Since few items can be prepared within minutes, the feature is likely to be restricted to readymade snacks and beverages from nearby eateries. Moreover, scaling up will be tough, according to Elara Capital’s Taurani.

“I don’t see 10-minute food delivery as a great proposition at a respectable scale because some popular food items like pizza, burger, and biryani are not going to be delivered in 10 minutes. This will work only for a few categories like confectionery and bakery items," he said.

“Given the proposition of 10-minute delivery, this is suitable for quick-prep dishes where the delivery partner can quickly go and collect the order from the restaurant. Hence, it represents a logistical challenge for which platforms eventually could end up charging a higher platform/convenience fee," said Shivaraj Jayakumar, practice leader (consumer and internet), Praxis Global Alliance.

But Shah of Swish plans to expand the food selection by operating modified cloud kitchens.

“We operate optimized and modified cloud kitchens or ‘delight centres,’ as we call it, and control the entire process of preparing fresh food and delivering in a radius of 1.5-2 km to ensure the food reaches consumers in the best quality, temperature and time."

By March 2025, Swish plans to establish 150 delight centres across Bengaluru and expand to other tier-1 cities, Shah said.

Swiggy, on the other hand, is focused on offering quick-to-prepare meals from popular restaurants and quick service restaurants within a 2 km radius of the consumer.

Room for a third?

While the new entrants are optimistic, whether there is scope for more players remains a matter for debate.

Swiggy and Zomato have outperformed older, well-funded hyperlocal delivery companies such as TinyOwl, Foodpanda and PepperTap, growing in size and popularity by acquiring firms like Scootsy (Swiggy) and Runnr (Zomato).

Taurani said that smaller players, if successful, could be targets for behemoths like Swiggy and Zomato, which possess the wherewithal to scale up, given their sector expertise and cash-rich balance sheets.

Shah, on the other hand, said the Indian consumer market is large enough for many companies, especially with the total addressable market (TAM) expanding.

“While there are existing players who have done brilliant work in expanding the food delivery market, we believe that the incremental demand for food delivery that can be satisfied by delivering food immediately is of magnitude larger than the current TAM. I believe we’re creating a new TAM as we continue to expand," he said.

With India’s food delivery market expanding rapidly and expected to cross ₹2 lakh crore by 2030 (according to a report by Bain and Swiggy), consumers can expect an increasing number of companies swooping in to provide the convenience they crave.