In a move that could reshape the competitive landscape of the food delivery industry, Swiggy , a major player in the sector, has announced a strategic partnership with electric mobility firm Bounce. This collaboration aims to deploy e-scooters in Swiggy's delivery fleet across multiple cities, potentially impacting rivals like Zomato Ltd.

Partnership Details

The partnership between Swiggy and Bounce will unfold in phases, with the initial rollout covering Delhi NCR and Bengaluru over the next three months. E-scooters will be made available to Swiggy and Instamart delivery partners through both the Bounce mobile app and Swiggy's Delivery Partner app at special pricing.

Industry Implications

This move by Swiggy could have significant implications for the food delivery industry:

1. Sustainability Push: The collaboration aims to reduce carbon footprint, aligning with growing environmental concerns and potentially setting a new standard in the industry.

2. Cost Efficiency: By lowering operating costs for delivery partners, this initiative could potentially allow for more competitive pricing in the food delivery market.

3. Expanded Accessibility: The partnership is expected to make electric mobility more accessible and affordable for delivery partners, potentially attracting more gig workers to the platform.

Swiggy's EV Strategy

Swiggy has already established partnerships with over 50 EV partners nationwide, indicating a strong commitment to electric mobility. The company plans to scale this new partnership across multiple cities in the coming months, further solidifying its position in sustainable delivery practices.

Potential Impact on Competitors

For competitors like Zomato, Swiggy's move could present both challenges and opportunities:

• Competitive Pressure: Rivals may need to consider similar initiatives to maintain their competitive edge in terms of sustainability and cost-efficiency.

• Market Dynamics: The food delivery market could see shifts in partner preferences and customer loyalty based on perceived environmental responsibility and potentially lower delivery costs.

• Innovation Imperative: This development may spur competitors to accelerate their own sustainability initiatives and explore innovative partnerships in the electric mobility space.

As the food delivery industry continues to evolve, stakeholders will be watching closely to see how this partnership unfolds and whether it will trigger a broader shift towards sustainable delivery practices across the sector. For investors in food delivery companies, this development underscores the importance of staying attuned to industry trends and competitive moves in the rapidly changing food delivery landscape.

Swiggy has increased its platform fee to Rs 14.00 from Rs 12.00 in select high-volume geographies, as the company grapples with financial challenges and intensifying competition in the food delivery space.

Financial Pressures and Mutual Fund Activity

Swiggy reported a significant widening of its net loss to Rs 1,197.00 crore for the April-June quarter, doubling from the previous period. The company also experienced a substantial net cash outflow of Rs 1,053.00 crore, highlighting the financial strain on its operations.

Despite these challenges, Swiggy's operating revenue showed robust growth, surging 54% year-on-year to Rs 4,961.00 crore. This growth was primarily driven by strong order volumes and strategic investments in its quick-commerce arm, Instamart.

Interestingly, mutual funds have shown increased interest in Swiggy, investing Rs 1,400.00 crore by purchasing 3.43 crore shares. Major buyers include Mirae Asset, HDFC, SBI MF, Bandhan, and Invesco.

Platform Fee Increase

The decision to raise the platform fee aims to offset rising costs and support profit margins. However, it's worth noting that the platform fee represents only a small fraction of the average order value, which typically ranges between Rs 500.00-600.00.

Competitive Landscape Shifts

The food delivery market in India is witnessing increased competition with the entry of new players. Ownly, a recent entrant, is challenging established platforms by offering lower restaurant commissions ranging from 8% to 15%. This move puts pressure on Swiggy and its rival Zomato, which currently charge commissions between 16% and 30%.

Market Performance and Analyst Views

Despite recent monthly gains, Swiggy's shares have experienced a significant decline, dropping 26.52% year-to-date. This performance reflects the ongoing challenges in the food delivery sector and investor concerns about profitability.

However, some analysts remain optimistic. HSBC values Swiggy at Rs 430.00 per share, while Jefferies has upgraded both Swiggy and Zomato stocks to Buy.

Zomato's Contrasting Scenario

In contrast to Swiggy's share performance, Zomato's stock has surged 17%, hitting a 52-week high of Rs 319.80. Despite this positive trend, mutual funds sold 5.4 crore shares of Zomato's parent company Eternal worth Rs 1,700.00 crore in July. ICICI Prudential and Mirae Asset led the selling with Rs 810.00 crore and Rs 820.00 crore respectively, while Axis Mutual Fund bought Rs 375.00 crore worth of Eternal shares.

Goldman Sachs has raised Zomato's target price to Rs 340.00 with a Buy rating, indicating continued optimism in the sector despite the challenges.

As Swiggy navigates these financial headwinds and competitive pressures, the company continues to focus on growth strategies, particularly through its Instamart quick-commerce initiative. The platform fee increase is just one of the measures being implemented to improve its financial position in a rapidly evolving market landscape.