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Naspers-backed Swiggy scrambles to grab the grocery opportunity

The delivery fleet of food tech companies is largely sitting idle as restaurants remain closed during the 21-day national lockdown.

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Bengaluru-based online food delivery giant Swiggy is looking to expand its grocery services to about 150 cities from three at present, as the nation-wide 21 days lockdown imposed by the government to prevent the novel coronavirus to spread has increased the demand for everyday essentials.

Swiggy, which has a fleet size of about 250,000 executives for food delivery across 500 cities, said it would use its existing manpower to deliver groceries. At present, its grocery delivery arm Swiggy Stores is present in Bengaluru, Gurugram, and Hyderabad.

“This is wartime. We can open in as many cities as needed as it will take one to two days,” Swiggy COO Vivek Sundar told local media Times of India (TOI). He added that 80-85% of their fleet is currently idle, which the company can leverage for grocery delivery.

Its arch-rival Zomato is reportedly in talks with Grofers and Bigbasket to enter the e-grocery space which is estimated to reach USD 10.5 billion in size. Last week, local media reports said Zomato may launch its grocery delivery service in the coming weeks.

The Indian government after an emergency meeting with e-commerce companies said the delivery person belonging to a company that provides essential services such as food, grocery, milk and vegetables, and medicine will be allowed on the road.

Despite this, a majority of restaurants are shut across the country which has paralyzed both Swiggy and Zomato. Currently, they are primarily depending on cloud kitchens and a few chain restaurants such as McDonald’s and Pizza Hut for food delivery.

“As per the Prime Minister’s directive, food delivery is designated under essential services as many people rely on the service for their meals,” a Swiggy spokesperson told KrASIA. “There has been a short-term impact in terms of softening in volumes which can be attributed to the shortage of supply due to temporary closure of many high-volume restaurants located in malls and disruptions on the ground across certain states.”

“However, Swiggy is working with local governments to remain operational and extend our support during these testing times, especially to the customers in need.”

Now when the majority of the fleet is sitting idle for both Swiggy and Zomato, putting their back on grocery deliveries may turn the current crisis into an opportunity.

Swiggy entered hyperlocal delivery space with the acquisition of milk-delivery startup Supr Daily in 2018. It doubled down on the segment last year with its twin hyperlocal services: Swiggy Stores and Swiggy Go. While the former is focussed on supplying groceries to the customers from the neighborhood stores, the latter is an instant pick-up and drop service of anything and everything.

At present, Swiggy Stores is operational in Bengaluru, Gurugram, and Hyderabad. Last month, Swiggy had raised USD 113 million to expand its hyperlocal delivery services, Swiggy Stores, Swiggy Go, and SuprDaily.

Swiggy’s Sundar told TOI that to be able to expand its grocery services fast, it is required that “grocery stores should remain open, the delivery fleet must operate without harassment, and supply chain of groceries from factories to shops must not get disrupted.”

Earlier this week, a lot of delivery executives from Swiggy and Zomato, along with e-retailers like Bigbasket, Grofers, Amazon, and Flipkart faced harassment from local authorities despite the government classifying online delivery of both cooked food and groceries as essential services. Later, many state governments started streamlining the operations by giving out delivery guys authorization passes. However, as of now, at least nine states such as Tamil Nadu, Punjab, Uttar Pradesh, Goa, among others have still not allowed food delivery businesses to operate during the lockdown, despite the central government directive.

“Our cancellation rates were 10x normal rate as restaurant staff was stuck or the delivery boy was not allowed to move. We are still struggling with beat cops on the ground even in cities like Bengaluru, which is in the best operational state in the country right now,” Sundar said.