'Desi' Swiggy bets on Instamart model shift, mirroring main rival Blinkit

Shareholder approval for Swiggy's foreign ownership cap will let its quick-commerce unit Instamart switch to a potentially more profitable inventory model as the Indian delivery platform plays catch-up with market leader Blinkit in a highly competitive sector.

Instamart has operated under a marketplace model since launching in August 2020, earning commissions on products sold in India's $11.5 billion quick-commerce market. The approval gives Prosus-backed Swiggy the status of an Indian-owned ‌and controlled company (IOCC), ⁠required ⁠under the country's foreign investment rules to hold inventory.

Also Read: Swiggy becomes majority Indian-owned


"The first benefit is bulk-buying advantage. Second, they can share data analytics with ​their brand partners and third, wastage will be less," Anand Rathi analyst Shobit Singhal said.

MARGIN IMPROVEMENT

An inventory-led model ​could improve Instamart's margins, particularly in higher-value categories, while giving it greater control over pricing, assortment and supply chains, analysts said.

Swiggy has said the transition could add about 80 basis points to Instamart's ​contribution margin, which measures revenue after variable costs. "That's about 4-5 rupees ⁠an order - ‌about a sixth of the 30 rupees an order it needs to break ​even," said Samarth ​Patel, associate vice president, Equirus Securities.

Also Read: Swiggy’s Rs 60,000 crore breakeven challenge: Can Instamart grow without restarting the cash war?

Instamart's first-quarter contribution margin was negative 0.2%, ⁠against negative 1.8% in the previous quarter.

Eternal's Blinkit, which moved to an inventory-led model last year, has logged overall margin improvement for five straight quarters, turning positive in the March 2026 quarter.

The company attributed this to inventory ownership, supply-chain efficiencies and a move into higher-margin categories including electronics, home decor and gourmet foods.

Swiggy, which went public in 2024, is yet to turn profitable. Earlier this month, it set a fiscal 2031 target to turn earnings per share positive.

RISING COSTS

The shift, however, would result in higher working capital to fund ‌purchases and manage stock, brokerage Jefferies said in a note. Eternal said last month that working capital at Blinkit was "largely driven by inventory ownership".

Swiggy and Eternal have been investing heavily in quick commerce to expand ⁠beyond groceries into higher-margin categories, jostling for consumer attention alongside deep-pocketed rivals such as Amazon India, Walmart's Flipkart and Reliance.

Smaller rival Zepto is looking to raise up to $837 million in a highly anticipated ​public listing this year.

These platforms operate marketplace models, limiting their ability to profit from inventory-led products and control pricing, especially in quick commerce, Akshay D'Souza, a consumer sector consultant, said.

For Swiggy, the new status is only a part of a broader route to profitability, D'Souza said, adding the company must also grow sales of higher-margin premium goods and build its private-label portfolio.