Someone asked me how to choose between Eternal , Swiggy to play the Quick Commerce theme, here is my answer.
From what we know today [Dec 2025], apart from Blinkit- No one cracked sustainability in Quick commerce yet. Let me explain with facts:
- Swiggy is still working on it’s Take Rate
- Take Rate, is simply put how much % revenue the company makes for every Rs.100 of product sold.
- Blinkit Nailed this with consistency, made sure there is enough ad-revenue & good value proposition to maintain this %.
- Swiggy used Discounting , Fee Wavier , Low AOV as a strategy to gain market share, over the past 2 quarters they realised this doesn’t work and slowly increased take rate.
- Zepto is playing even riskier game by opting for Low AOV, EDLP strategy [ Every day low price] & banking on throughput,Order Batching to make it sustainable [more on this later] - I highly doubt this will work and we will know it by next year once their numbers are out.
- Swiggy is slowly improving it’s AOV
- Major problem with this increasing AOV over last 2 quarters is, it is driven by Maxxsaver- i.e higher discounts on higher cart value. - Strategy is still tailored towards Discount driven value to the customer.
- Ofcourse there are other drivers like ad-revenue, Rs. 200 Min order value.
Where as for Blinkit, the AOV is primarity driven by Value to the customer in the form of
1. Reliablity [24X7 operations]
2. Availabillity [Lesser Stockouts,faster replenishment, Higher geo coverage, Adhering to Delivery time promise]
4. Better Assortment [Much higher #SKUs]
Blinkit AOV quality is much superior and stickier than Swiggy at the moment- Swiggy needs a lot of effort in matching Blinkit across all these. But that said, Swiggy should catch up eventually.
- Swiggy’s Repeat rates are terrible
- Repeat rates are basically the frequency at which they are ordering per quarter.
- The moment they transitioned to high AOV strategy by reducing discounts, increasing cart size- Price driven customers reduced ordering from them.
- Swiggy might eventually fix this problem by catering to more of the user purchase missions but i am skeptical. Majorly because of increasing competition from Flipkart Minutes and Amazon now. A typical Quick comm user shops with multiple apps [Since MAU to transansacting user is <30%] - So, it is a uphill task for Blinkit, Swiggy etc to improve this metric from here on.
- Zepto likely have nailed it we will know once the numbers are out.
- Swiggy took a major gamble with megapods without proven demand greenshoots
Below is the #orders [In Mill] delivered by Swiggy and Blinkit. Swiggy order volumes are stagnant for the past 2 Quarters where as Blinkit is scaling rapidly.
Swiggy still kept expanding it’s darkstore megapods to offer higher #SKU without any meaningful increase in demand & This led to cost increases without growth in Order Volumes.
There will be fruits to this gamble only when the orders per day per store metric improves significantly.
Blinkit is very very much ahead in this despite aggressive store expansion- this means, older stores of blinkit are probably having much higher orders per day throughput. This also means, once Blinkit cools down the store expansion, their profitability is far ahead than all other players.
- Variable costs per order are largely similar for Blinkit & Instamart:
-
For Blinkit, Variable cost increase should be looked along with increasing take rate [since some midmile costs moved to Blinkit post shifting to own inventory]
-
This numbers might improve for all players with increased order batching eventually, but will also be hit by inflation.
This number [Rs.115 /order ] is the major reason why Less Discounts, Higher AOV & Enough margin is important for the integrity of this business.
Zepto is betting heavily on order batching, high throughput to drive down this number. zepto likely have the lowest operating cost per order at the moment.
- Fixed Costs are higher for Instamart vs Blinkit:
- These costs should eventually converge for both the players IF Swiggy manages to increase their order throughput & at the same time realise better CAC for new customer acquisition [since increased spend is driving the CACs up for this space]
- Blinkit is superior in the industry in User acquisitions, while maintaining unit economics sanity:
- Below is the screenshot of sensortower showing the download intensity of all top e-com players, blinkit have been a clear leader along with Flipkart and management guided they will continue to spend. Their spend efficiency is far superior
Swiggy is unable to catchup due to competion and their spends are not able to drive the Active user metrics.
Signup and use below link to track this space: Sensortower E-com Tracker
- Reality is Blinkit is already Profitable:
-
Below are Blinkit unit economics, look at Q1 & Q2 FY25. They teased EBITDA profitability & then decided to postpone the profitability for absolute dominance
-
Since Q2FY25, they expanded stored from 791 to 1816 within a Year, that too by maintaining order per store per day metric sanity.
Swiggy on the order hand is very very poor in this, they increased their stores by 500 while loosing the hold on the store throughput from 1260 to 1025.
During this period, look at their burn, latest quarter they are burning 81rs per order- that too while loosing market share.
Obviously swiggy will improve burn levels from here, but will the model ever be profitable depends on Competitive intentity and real TAM in the space.. this we will know over time.
Closing statement:
Competitive intensity in this space is heating up and the playbook so far for companies is as below
- Decide how much max burn per month- say [200-300cr]
- Be okay to burn 50-100 Rs per order and attain 0.5-1 Mill orders per day scale
- Have AOV - 100-150rs.
- Give enough discounts.
- Flush riders with incentives
- While scaling up, do small things to reduce burn per order- things like
- Increasing Min order value to 200 > 250>300.
- Increasing location intelligence and bringing store locations closer to demand hotspots.
- Reduce product level discounts gradually
- negotiating better ad-revenue from brands showcasing DAU metrics.
- Better the assortment and cater to more purchase missions. [Flipkart & amazon have moat here]
This management will help them maintain burn and gradually increase #orders.
- Do, soft landing by transitioning to sustainable unit economics. [Just like how swiggy is doing now]
- This will be the make or break moment.
- Coz practically speaking, burning 50rs-100rs at blinkit scale [90cr order per year] is simply not possible for any company in india. so, companies are forced to do this transition.
- Zepto will do this post IPO, Flipkart Minutes and amazon might follow.
- for companies that could’t figure out last step- eventual consolidation is the final leg.
My understanding so far is, in the current market structure even with 50% CAGR in order growth- apart from Blinkit, no player is likely to make money. Also, when users are asked to move to 500 AOVs- their preferred platform could change. So, tread with caution if you are a long term investor.
This post is a high level look at current landscape and don’t contain other details on - Player level regional strengths/profitability, Niche categories, Company level burn apetites, Cost profitablity & then valuation related aspects post crossing that survival bridge etc. & purely a personal view as a industry observer.
On Risk-Reward scale, Blinkit >>Swiggy is what my personal opinion is at this stage.
Current prices have baked in these un-certainities.
Sources:
- Company disclosures, Dervied metrics [Link shared in previous post]
