Swiggy’s Response to Rapido’s Entry into India’s Food Delivery Market
As Rapido prepares to penetrate India’s fiercely competitive food delivery market, Swiggy’s founder and group CEO, Sriharsha Majety, has expressed that the company remains “super agile and paranoid” and will not hesitate to exploit any opportunities that arise.
During an investor event held by Prosus in London, Majety recognised the challenges in breaking into this sector, regardless of the financial backing of new entrants. “There were a dozen players in food delivery in 2015. In 2017, Uber and Ola stepped in. Then, in 2019, Amazon made its move. In 2021, ONDC entered the picture,” he explained. “Both Swiggy and Zomato deserve credit for recognising these trends. We genuinely believe we excel at serving our consumers. Finding a significant opportunity can be quite challenging.”
Majety was addressing a query about whether Rapido’s entry could disrupt the food delivery ecosystem. Though Swiggy owns about 15% of Rapido, and both companies share Prosus as an investor, he stated that every entity will “chart its own course.”
“It will be intriguing to observe if an alternative approach to food delivery can expand the category since we, too, are anticipating further growth,” Majety added. “If we identify a new opportunity, we intend to act swiftly. We won’t be on the sidelines watching.”
Rapido, primarily known for its two-wheeler taxi services, has reportedly established its commission framework with restaurant partners. According to an ET report from June 9, the platform plans to charge restaurants Rs 25 per order for those under Rs 400, and Rs 50 for orders exceeding Rs 400. This results in commission rates between 8-15%, which is notably lower than the 16-30% typically charged by Swiggy and Zomato.
“If there’s an opportunity, we will be in the market within weeks. We intend to test our luck with customers to drive growth in the category,” Majety mentioned.
Majety also commented on the swiftly evolving quick commerce sector, estimating its potential size to reach $30-40 billion in the next three to five years. However, he cautioned that such a market will likely sustain only two significant players, rather than five or six.
“Currently, the quick commerce market is on track to achieve a $30-40 billion size within three to five years. That size can sustain more than two players, but it seems improbable that it can support five or six,” he elaborated.
Presently, Blinkit, Zepto, and Swiggy’s own Instamart lead this segment, commanding around 85-90% of the market share. A recent BofA Global Research report indicated a slight decrease from the 90-95% share reported just a few months back. The remaining share is divided among Tata Digital’s BigBasket, Flipkart Minutes, Amazon Now, and Reliance Retail’s JioMart.
“We can anticipate some consolidation in the market,” Majety noted. “Currently, there are three major players and four minor ones. While there will be some consolidation, certain legacy e-commerce players might continue offering services to remain relevant.”