Swiggy co-founder and group CEO Sriharsha Majety cuts a relaxed and confident picture, sporting a sweatshirt emblazoned with the Swiggy logo. Majety, who usually prefers staying under the radar, has a pit stop in Bengaluru before heading to Rajkot, the third-largest city in India in terms of retail IPO subscriptions.

Swiggy’s management plans to cover at least 25 Indian cities in the run up to its initial public offering (IPO) opening this week, marking a significant moment for the online food and grocery delivery giant, as it seeks to raise Rs 11,330 crore.

Majety spoke to Moneycontrol on the timing of the IPO, why ten-minute food delivery can be a gamechanger, why Instamart is not competing with DMart and handling quarterly earnings calls.

For the last two years, quick commerce has occupied more mind space than food delivery. When we spoke to Deepinder Goyal of Zomato recently, he said that food delivery now seems slower because, quick commerce, you're getting everything in 10 minutes. And you recently launched Bolt, which is your 10-minute food delivery offering. Do you think that can be the next big game changer?

I think there will be new consumption occasions that will get unlocked because of this. There are many times when you can't plan your life around 30 to 40-minute food deliveries. If you're, for example, taking off for your office commute in 20, you feel like you want to get a coffee, maybe you can't do that. If you're in between meetings at the office and you forgot to get your lunch, you only have a 20-30-minute break, you can't plan your life around it.

I think that's how the first incidence of usage will begin. But once people get used to it, there's no going back. That's what we've seen in quick commerce as well. Because as consumers start anchoring on a new normal, saying, okay, this is my anchor, then that anchor stays. And I think it's up to us to keep making sure that we can offer more and more selection and get closer and closer to that new expectation. It will create an increase in consumption. There's no doubt about that.

But is the demand coming from your existing cohort or is this creating new demand?

Typically, the fastest feedback that you get is from your high-frequency users and your mid-frequency users because they're already there.

It takes a little bit longer to see how much it is stoking new user acquisition, etc. Because it's also the scaling process is underway every day we're expanding into more cities. The reaction that we've gotten, the clearest reaction is from the high-frequency users who love it.

Will you be expanding the number of offerings? I think now it's about 8 to 10.

If you speak to any of the restaurant partners who are on the programme, they absolutely love it. They want to figure out how they can get more growth. Some of them are fine-tuning, optimising their own kitchen operations to make sure that they can give faster handovers for the Bolt orders. That is on the restaurant side.

People are very excited. I think they're also believing this new vision for, let's say, 10-minute food delivery can exist. Now that we've demonstrated that it can happen, there's some sort of magic for folks who are experiencing it on all sides. In terms of growing the supply, I 100 percent think it will grow some more. But will it be like maybe 100 options? I think that remains to be seen. The supply on board is a function of the supply density that is in the area already. So, your densest neighbourhoods will have much higher supply already. But if you go to a fringe neighbourhood, there aren't that many restaurants to begin with. So there, it will have a longer lead time. But I think the only way we expect it to go is up, up, up. The selection will keep going up, whether it is the number of restaurants or the menu items that are available in a restaurant.

In terms of quick commerce, you have to be geared to every small and micro consumer insight. There are different cities celebrating different festivals, and you need to continuously innovate on selection. So how are you doing that at a micro level or at an execution level? How have you geared Instamart for that?

Yeah, it's a great point. I think festivals are a great example in this case. Because each geography has various demographics, folks living in the city, and it does take a deep community understanding to figure out what micro events are happening, what need states they may have thereafter, et cetera. I'll talk about, like, maybe a fun example that the team has been doing lately.

Apparently, for, some of the big festivals or smaller festivals, understanding the calendar, the teams have been connecting with a lot of pandits (person who conducts religious ceremonies) to understand how consumption happens, what are the items that they need.

Because these are not native to us. Our team is relatively young. But to understand the calendar through folks who see it all is maybe an interesting way of unlocking what consumption patterns, what items they may need, what rituals they have.

But honestly, this is just the beginning, I think we need to do 10x more to understand because there are so many of these and we'll all need to rapidly come up to speed with this change in consumption.

How confident are you of closing the gap with Blinkit? Because you had a head start there, you kind of launched and built the quick commerce category from start during the pandemic. Where do you think you kind of fell behind and how will you claw back your market share there?

I think, firstly, we're still in like year three of the category. I think it's very, very early.

So, I think a lot will play out. We're in the very, very early stages. And I think we feel very, very confident about our path to being a dominant player in this space. I think there's just been like a few iterations already in the space. We started with the 30-minute version of the world, not having ever spent a minute doing grocery as a vertical and we've learned so much over the last one, two years in terms of what the category needs are, what the basket sizes can be, what the laws of physics are. And like just being able to pull this off. So, I think we are a lot wiser. Now we are armed to put those learnings into the play.

I think the next part of the quick commerce battle will not be about speed, will be about assortment and some price, some affordability.

I don't mean like converting into a value-based this thing because that will never be. But yeah, I think we have the team for it. We have the learning. We have a brilliant network that we've built out over time. And we have a high degree of clarity on what needs to be done.

When you say affordability, in terms of categories, prices, will you look at private labels, your own brands in some categories?

No, affordability for now is all about the delivery fee. How do we keep creating more ways to do that? On item pricing, et cetera, I think our job as quick commerce platforms is to make sure the prices don't feel irresponsible.

It's not about being the cheapest player in town because that's not the game we're playing.

So, to be able to do this and that is going to be important. We want to get the business to a healthier and healthier place, while making sure that you don't ever feel irresponsible.

Also, regarding availability, while platforms will continue to expand, hyper-local availability will be a crucial factor in determining how much larger the category can grow. If consumers search for specific items and cannot find them, it creates dissonance, and they may turn back to e-commerce or another competitor.

To win consumer wallet share, hyper-local availability is essential. To that end, we are experimenting with certain formats, such as the 10,000-square-foot megastore format we have launched, which allows us to cater to a larger pool of consumers within their neighbourhoods. However, this might result in slower delivery times, such as 20 minutes instead of 10.

But this would be for larger SKUs, like, electronics and that kind of thing?

I think you shouldn't think of it as a category unlock as much as, let's say, frequency. The highest frequency items, you want your eggs and tomatoes and maybe shampoos, et cetera, stuff that you use in everyday life to be the fastest. It needs to mimic user needs. The selection, speed needs to mimic user needs and expectations.

So, these 10,000 square feet stores, I mean, how many have you launched so far?

I think today the category, all players, are in, let's say, roughly the 15,000 SKU mark. I think it will increase. By how much is something that we'll find out. Because what is clear is that users want more. What is not clear is what is the best operating model to serve this user's need for more. And that is the first iteration that we're rolling out with these larger stores. And we'll get the feedback and then iterate on top of that. No point should we assume that it's already the operating model.

Where do you think it will sort of settle, say, in the middle of 2025? Because by then, you know, Flipkart Minutes is already there. Amazon would have launched its QC offering. Tata's coming up with Neu Flash. So, I mean, is there a place for five players?

Doesn't matter. I think today we are 10 percent done. Next day we're going to be 20 percent done. I think this game is going to be played over four, five years. And we're playing that four-year, five-year game and arranging ourselves to come out strong on that side. And if it is indeed that large market that we're talking about, it will support multiple players.

Market structure is a consequence of market size. In food delivery in 2019, it became clear that beyond a certain point of duration, you're not going to be able to grow the category much, much faster. So, it meant that player three, player four have to make choices.

But why do you say you are not taking share from DMart? Because DMart itself has cited the impact of quick commerce in its latest earnings call…

What we can see is at a high level the propositions are very, very different.

But if there is some incidental movement that happened, then you can't make a sensationalised statement saying if you spot an Instamart customer at a DMart that doesn't mean you are taking share away from DMart. That's you know brush stroke generalisation which I think is untrue. The proposition is different, the customer base is different. India has like 50 versions of grocery.

How much of a dent has ONDC had?

See, we keep watching the space closely. There is noise. But I think what we can do is to keep making sure that the paradigm that we have is serving consumers well. And ONDC has many things. Luckily, the businesses that we are in are punishing in operating complexity. And that means that it is not super simple for any business to be decentralized and run that way. But at the same time, these things keep changing.

Right now, I think there is also some noise because some of the incentives that are fuelling occasional growth in volumes, I don't see that as structural.

Where do you see the platform fee settling?

Honestly, I don't know. Because people ask us what percentage of orders will get free delivery. A couple of years back, I would have said, I don't know. Today, we are at 60 to 70 perecent.

Where else do you see, you know, scope to bring down operating costs, I mean, on the delivery side, this shift to EVs. Will that be a significant lever?

I think we've already made a lot of progress in terms of optimizing the delivery costs and going forward, EVs will be, it won't show up in like a year. I think mass adoption is going to be maybe like a five, six, seven, eight-year journey. When that happens, there will be a good, interesting chunk of savings in, let's say, the delivery costs. But outside of that also, if you see, delivery costs can also be a function of the last miles that consumers have

And in terms of, you know, overall scope to bring down, say, the operating costs in terms of tech, people costs, tech costs, what scope do you see there?

I think, firstly, I think all of these costs, tech costs or personnel costs have, like, come down actually over the last couple of years.

Even the tech costs have fallen off. As for AI, I think we have been an AI native business, maybe starting year three of our journey. When we started using it deeply for, let's say, the dispatch algorithms that we use on the operations side, the search and personalization and ranking logic that we use on the consumer side.

I'm also excited about how the teams are embracing the new developments that are happening around generative AI, around like agentic technology that is coming up.

Finally, Harsha, how this whole journey been for you? Most of the time you are someone who builds under the radar but now you are kind of out there doing multiple roadshows across cities, doing media interviews. How has it been?

I have never been uncomfortable. For me, it's just a personal choice.

So, will you do quarterly earnings call?

Of course, that is not an option. It's not a personal preference to do a quarterly call.

We will come out every quarter talking about the numbers, explaining the goods, bads, everything. That part is very comfortable. That's our fiduciary responsibility. It's not a preference.

I think, we will be upfront to also admit when we have made those mistakes and what are we doing to course correct.

Source: moneycontrol