Swiggy trailed Zomato in first half of 2022 despite offering bigger discounts: Jefferies report

Gurugram-based meals supply platform Zomato gained market share from Bengaluru-based rival Swiggy in the January-June interval, even because the latter has been offering larger reductions, in line with a analysis notice revealed by Jefferies on Thursday.

Zomato commanded a median market share of 55% in the food-delivery section in the course of the interval, clocking a gross merchandise worth (GMV) of $1.6 billion, in comparison with a GMV of $1.3 billion for Swiggy.

“This appears to be highest market share for Zomato in our view, and is despite aggression from Swiggy, which has been offering higher discounts and continuing with its flagship ‘Swiggy One’,” Jefferies mentioned.

The report comes a day after Prosus, the Dutch-listed arm of South African know-how investor Naspers,
reported half-yearly results that showed strong growth in its food-delivery business in India through Swiggy. Prosus owns a 33% stake in Swiggy.
Prosus mentioned Swiggy’s core food-delivery enterprise clocked order progress and GMV progress of 38% and 40%, respectively, for the first six months of calendar 12 months 2022.

Jefferies mentioned Swiggy’s losses in the course of the January-June interval have been “much higher at over $315 million”, in comparison with roughly $50 million in losses for Zomato on a standalone foundation, and almost $170 million, inclusive of losses at fast commerce unit Blinkit.

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“Of course, Zomato has since then further improved its performance with recent quarter loss at just less than $25 million at a consolidated level,” it mentioned.

For the July-September quarter,
Zomato nearly halved its losses to Rs 250.8 crore, in comparison with Rs 434.9 crore in the identical interval final 12 months.

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The restaurant discovery platform additionally noticed income from operations increase by 62% year-on-year to Rs 1,661.3 crore in the course of the three-month interval.

“…in general, Swiggy was offering more discounts in most cases compared to Zomato. This probably partially explains the reason for higher losses than Zomato, in our view,” the brokerage agency added.

On the quick-commerce companies of each the businesses, Jefferies identified that Swiggy’s Instamart enterprise continued to achieve traction and grew 15 occasions 12 months on 12 months, clocking a GMV of $257 million. This compares to $270 million in GMV recorded by Zomato-owned Blinkit.

Going ahead, Jefferies mentioned it sees a robust case for Swiggy dropping its “aggressive stance in food delivery to reduce its losses”.

“…and in case that does not happen, Zomato may be induced to increase its aggression to drive growth,” it added.

“With aggression continuing from Swiggy on discounting and its flagship program, Swiggy One, Zomato may come up with Pro membership in some form,” in line with the report.

Zomato not too long ago discontinued its Pro and Pro Plus membership schemes and is engaged on a brand new “loyalty programme” for meals supply, itss chief monetary officer Akshant Goyal mentioned earlier this month.

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