Indian food delivery startup Swiggy is set to reduce its workforce by about 400 jobs, which accounts for nearly 7% of its employees. This move comes as the company aims to enhance its financial standing in preparation for its anticipated IPO later this year. This decision marks the second round of layoffs for the Bengaluru-based startup, following a similar reduction in staff numbers early last year.
Key Takeaway
Swiggy is implementing job cuts to strengthen its financial position ahead of its upcoming IPO, reflecting the competitive dynamics in the Indian food delivery market.
Financial Focus
While Swiggy’s food delivery business has shown profitability over several quarters, the company has yet to achieve overall profitability. In contrast, its chief rival, Zomato, attained profitability last year. With an IPO on the horizon, Swiggy is under pressure to outperform Zomato on various metrics to secure a favorable valuation from retail investors.
Market Dynamics
According to reports, Zomato has been expanding its market share lead over Swiggy in the Indian food delivery sector. Analysts from UBS and AllianceBernstein noted that Zomato currently holds over 60% of the market based on app user count. They attributed Zomato’s accelerated growth to factors such as wider penetration, strong execution, and a robust content funnel.
Performance Metrics
Recent data indicates that Zomato has experienced faster growth post-COVID, surpassing Swiggy in terms of user base and Gross Merchandise Value (GMV). Zomato’s presence in over 750 cities, compared to Swiggy’s 600, has contributed to its market dominance. In the first half of the current year, Zomato’s food delivery GMV reached $1.7 billion, exceeding Swiggy’s $1.4 billion. Zomato’s success in Tier 2+ cities and certain Tier 1 cities has bolstered its monthly active user base, with 58 million annual transacting users in CY22.
