Despite attractive discounts to customers, how Zomato is gaining edge over Swiggy | The Financial Express

Despite attractive discounts to customers, how Zomato is gaining edge over Swiggy

On Wednesday, Prosus released data which put Swiggy’s H1CY22 food delivery gross merchandise value (GMV) at $1.3 billion or roughly Rs 10,500 crore compared with $1.6 billion or around Rs 13,000 crore for Zomato during the same period.

Despite attractive discounts to customers, how Zomato is gaining edge over Swiggy
The gain comes at the cost of a loss for Swiggy which is persisting with aggressive market tactics such as big discounts.

Zomato may be gaining an edge over rival Swiggy despite the latter’s more attractive discounts to customers. With a brisk growth rate of 55% in the six months to June, compared with a more sedate 40% for Swiggy, Zomato seems to be forging ahead. However, the chunky discounts have probably led to Swiggy making bigger losses. At over $315 million, it is meaningfully higher than Zomato’s standalone losses of $50 million and a combined (with Blinkit) loss of around $170 million.

On Wednesday, Prosus released data which put Swiggy’s H1CY22 food delivery gross merchandise value (GMV) at $1.3 billion or roughly Rs 10,500 crore compared with $1.6 billion or around Rs 13,000 crore for Zomato during the same period.

Analysts at Jefferies peg the food delivery share of Zomato at around 55% in H1CY22, which it believes could be the highest for the food delivery player. The gain comes at the cost of a loss for Swiggy which is persisting with aggressive market tactics such as big discounts.

Also Read: On back of restaurant delivery, quick-commerce businesses, Swiggy’s food biz GMV hits $1.3 billion in 6 months

Swiggy, they point out, is still running its flagship Swiggy One scheme whereas Zomato has given up on Pro. “This partially explains a much higher loss for Swiggy,” the analysts wrote, pointing out that both players have seen good growth in quick commerce.

The Swiggy Instamart business continues to gain traction, growing at 15X y-o-y and hitting a gross merchandise value (GMV) of $257 million during H1. Zomato’s Blinkit has also grown at an impressive pace and reported a GMV of around $270 million.

The numbers are clear evidence of an increased buy-in from customers, but the business isn’t getting much easier.

“Our industry interactions indicate that the trend continues to be weak in October and November for the food services industry. Coupled with an increased dineout trend, we do see a possibility of modest growth in the coming months for the food delivery sector, including Zomato,” the analysts wrote.

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First published on: 25-11-2022 at 02:00 IST