Swiggy to double quick commerce store count to over 1,045, area to 40 lakh sq ft by March 2025

On-demand convenience platform Swiggy is betting big on its quick commerce business and plans to double its store count to over 1,045 with more than double the area to 40 lakh square feet by March 2025, the company said on Tuesday.

Swiggy, which runs its quick commerce business under the Instamart brand, in a management discussion shared on bourses said it is rapidly growing its geographical footprint, and is now available in 54 cities as compared to 27 cities in March 2024.

"Our growth strategy is based on hyperlocal expansion (same store growth and densification in existing cities), and geographic expansion (launching in new cities). We plan to double our store count by March 2025 (vs 523 in March 2024), while increasing the average size of our stores by 30-35 per cent," it said.

The company further said it is replacing some of its older, small-format stores of 2,500-2,800 sq ft with larger stores of 3,500-4,500 sq ft that can house up to 20,000 SKUs.

"Additionally, we are rolling out 'megapods' (8,000-10,000 sq ft) in top cities, which can house over 50,000 SKUs. These megapods will serve consumers in 10 to 30 minutes with an extended selection of items beyond the top 20,000 SKUs," it added.

This facility is already available in many pincodes of Bengaluru, it said, adding many customers there have wider selection by "getting their most frequently used items in 10 minutes and the extended assortment in 10 to 30 mins through a single order basket, seamlessly fulfilled on a split-cart-basis".

Overall, Swiggy said, "We expect to more than double our active dark store area to 4 million sq ft by March-25 (versus 1.5 million sq ft in March-24), through a combination of new store additions and larger sized stores." The expanded dark store area with a larger selection will lead to a higher share of user spends, and expansion of average order value, it added.

"Our AOV (average order value) has grown by 7.3 per cent in H1FY25, and we are expecting double digit growth annually for the foreseeable future," Swiggy said.

On city wise distribution of the quick commerce business, the company said it is evenly distributed across the country, with "our largest city contributing 21 per cent of the overall GOV (gross order value) with 17 per cent of the overall dark store footprint".

The company also said it has witnessed its quick-commerce 'take-rate' and contribution margin consistently rising over the years.

"We expect our steady-state take-rates and contribution margin to expand to 20-22 per cent and 8-9 per cent respectively, delivering a 4-5 per cent adjusted EBITDA margin," it said.

The 'take-rate' by the platform includes fees for platform and enablement services to merchant partners, advertising revenue from brand partners, and fees charged from users which includes delivery fee, convenience and other charges, the company added.