Exploring the Distinct Approaches of Swiggy and Eternal in India’s E-commerce Landscape
Swiggy and Eternal, the leading players in India’s e-commerce sector, have recently outperformed both domestic indices and their Asian counterparts, including China. This surge comes as the quick commerce market in India is projected to reach a staggering $100 billion by 2030. With the ability to deliver essential items like groceries and personal care products in approximately 10 minutes, these companies are reshaping the digital retail landscape in India, showcasing a competitive edge that contrasts sharply with the challenges faced by their Chinese peers.
Swiggy and Eternal’s Market Performance
In the past month, Swiggy Ltd. has seen its shares rise by 20%, significantly outpacing the NSE Nifty 100 Index. Meanwhile, Eternal Ltd., the parent company of Zomato, has experienced an 11% increase in its stock value. This remarkable growth is attributed to the rapid expansion of India’s quick-commerce sector, which focuses on delivering everyday necessities within minutes. In contrast, Chinese companies have struggled due to aggressive pricing competition that has negatively impacted their food delivery services. Despite the entry of major players like Amazon and Walmart’s Flipkart into the Indian market, analysts believe that established companies such as Swiggy, Eternal, and the privately-held Zepto will maintain their competitive positions. Nirav Karkera, a fund manager at Fisdom, noted that these incumbents have effectively managed delivery costs and utilized their riders efficiently. In fact, Swiggy, Eternal, and Zepto collectively hold about 88% of India’s quick-commerce market share, with Eternal’s Blinkit leading the segment since its acquisition by Eternal in 2022.
Growth of India’s E-Commerce Sector
India’s e-commerce landscape is witnessing significant growth as major companies invest heavily in expanding their networks of warehouses and “dark store” distribution centers across various cities. This strategy aims to enhance delivery efficiency and meet the rising demand for quick commerce. However, this aggressive expansion has also led to tighter profit margins. As the market matures, established companies are expected to scale back on expansive investments, allowing them to focus on improving profitability. Newer entrants, on the other hand, will need to continue investing to carve out their market presence. Leading companies are also exploring ways to boost revenue by promoting higher-value orders and introducing paid services. Analysts from JM Financial have observed that digital retail platforms are increasing their minimum order requirements and implementing strategic discount policies to strengthen their financial performance. They suggest that losses for Blinkit and Instamart may have peaked, indicating a potential shift towards profitability.
Challenges Facing Indian E-Commerce
Despite the promising growth, the Indian e-commerce market faces ongoing challenges. Research from JM Financial indicates that Zepto has gained significant market share, primarily at the expense of Instamart. Although Swiggy continues to operate at a loss, analyst confidence in the company has risen, with buy recommendations reaching their highest level since Swiggy’s market debut in late 2024. Investment expert Karkera warns that Zepto’s anticipated stock market entry could divert some investments away from Eternal and Swiggy. Nonetheless, all companies are expected to benefit from the expanding market opportunities. Aditya Soman, an analyst at CLSA Ltd., emphasized that incumbents are extending their lead in user base and store networks, even as they reduce discounts and implement delivery fees. He remains optimistic about the quick-commerce sector, believing there is ample room for both established players and new entrants to thrive.
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