India's Quick Commerce Boom: Swiggy, Zomato Parent Eternal Lead eCommerce Stock Surge - durReey.com.
India's eCommerce Stocks Surge as Fast Delivery Fuels Growth Bets: A Deep Dive into the Quick Commerce Revolution, Stay Updated, Shop Smarter, Get Inspired!
Mumbai, Maharashtra – India's dynamic e-commerce landscape is currently witnessing an unprecedented surge, with top Indian eCommerce stocks significantly outperforming both local indices and their regional rivals. This remarkable rally, as reported by Bloomberg, is largely fueled by renewed investor confidence in the burgeoning quick-commerce sector, sparking heightened expectations for both profitability and commanding market dominance for established players.
June proved to be a stellar month for quick commerce delivery leaders. Swiggy stock saw an impressive 20% surge, comfortably outpacing the NSE Nifty 100 Index. Meanwhile, Eternal, the parent company of Blinkit and the food delivery giant Zomato, climbed a notable 11%. This Indian e-commerce growth stands in stark contrast to the struggles faced by China’s food-delivery behemoths, where fierce price wars have eroded over USD 70 billion in value for industry leaders like Meituan and JD.com since March.
The Rapid Expansion of India's 10-Minute Delivery Market
The India quick-commerce market, built on the promise of 10-minute delivery for daily essentials, is experiencing rapid expansion. Bloomberg Intelligence projects an astonishing potential market size of USD 100 billion by 2030. Despite fresh competition from established giants like Amazon India and Flipkart, industry incumbents Swiggy, Eternal (Zomato & Blinkit), and the unlisted Zepto are widely expected to retain their market dominance. This stronghold is attributed to their robust supplier networks and crucial early-mover advantages.
Nirav Karkera, Head of Research at Fisdom, highlights the operational efficiency of current leaders: “Established players have shown they can manage delivery costs effectively, especially in paying and utilising riders efficiently. New entrants still need to prove they can do this sustainably.” This emphasizes the competitive edge of firms adept at efficient delivery logistics.
Dominance and Path to Profitability
Currently, Blinkit, Instamart (Swiggy), and Zepto collectively control nearly 88% of India’s quick-commerce market, according to analytics from JM Financial. Eternal's acquisition of Blinkit in 2022 was a strategic move that cemented its firm lead in this rapidly evolving segment. The incumbents have invested heavily in building extensive networks of dark stores and warehouses, a costly expansion that previously impacted their margins.
However, a significant shift is anticipated this year. Analysts project these substantial expenses to stabilize, paving the way for a decisive pivot towards profitability. “Losses may have already peaked for both Blinkit and Instamart,” noted JM Financial analysts led by Swapnil Potdukhe in a June 26 report. Furthermore, these companies are actively increasing average order values, curbing discounts, and monetizing their services through delivery fees and premium offerings, all contributing to improved financials.
While Zepto's growth has, to some extent, come at the expense of Instamart, Swiggy continues its journey towards financial improvement. Although it remains unprofitable, investor sentiment has notably brightened, with analyst 'buy' ratings reaching a post-IPO high for the food delivery and quick commerce platform.
The prospect of an upcoming Zepto IPO could potentially divert some investor attention. However, analysts remain optimistic, believing that the Indian quick commerce market has ample room for multiple strong players to thrive. Aditya Soman of CLSA succinctly puts it: “The incumbents continue to stretch their lead in users as well as in store networks, despite lowering discounts and levying delivery and handling fees. We remain positive on the quick-commerce opportunity. We believe there is enough room for the incumbents and a couple of new entrants.”
This vibrant sector, driven by fast delivery services and online grocery delivery, continues to be a key area for eCommerce investment in India.