Amazon’s Aggressive Rapid Delivery Plans Spark $15 Billion Selloff in Eternal and Swiggy
The relentless growth of Amazon and Flipkart into India’s quick-commerce sector has led to a market meltdown, erasing more than $15 billion of value from Eternal and Swiggy. Blinkit, has seen its stock tumble 28% from its highs, while Swiggy has lost close to 47% as competition heats up.
In India, the 10-minute delivery party was started by Eternal Ltd. and Swiggy Ltd. Flipkart, owned by Walmart Inc., and online retail powerhouse Amazon.com, Inc. are now aiming to bring it crashing down. Currently, Blinkit, owned by Eternal, has fallen 28% from its October all-time high, and Swiggy, owner of competitor Instamart, has fallen nearly 47% from its most recent peak in September.
The company promises doorstep delivery of anything from eggs to gadgets within minutes. As a result of investors being scared off by the intense competition, the two have sold off assets worth over $15 billion.
Amazon and Flipkart Looking for Bigger Share of India’s Qcommerce
The fast-commerce market in India is over $11 billion, and Amazon and Flipkart are increasing their investments in the country. Both companies are expanding their dark store networks, which serve as their last-mile warehouses, in an effort to get into smaller cities. Similarly, Zepto Ltd intends to accumulate a war chest to compete with market leaders Blinkit and Swiggy Instamart by raising up to $1 billion through an initial public offering.
The current difficulty, according to Eternal shareholder and Franklin Templeton fund manager Yi Ping Liao, is the extremely high level of competition, which has a depressing effect on near-term profitability. According to Liao, the length of time that the competitive intensity lasts is a concern. The Seattle-based e-commerce giant is making up for the time it took to launch by offering lightning-fast shipping options. Amazon revealed this week that it intends to increase the number of Indian cities and villages served by its Now service from 15 to 300. This comes as it prepares to increase its investment in the country's artificial intelligence (AI) and cloud infrastructure by $13 billion.
India’s Q-Commerece Becoming a Fierce Battle Field
With 1,000 dark stores under its belt, Flipkart Minutes has expanded to 130 locations in under two years. In the next months, Flipkart plans to open 1,500 outlets in more than 180 locations. Macquarie Equity Research reported on May 15 that Blinkit had 2,243 dark stores in the year ended March 31, while Swiggy was in second place with 1,143.
The business empire of billionaire Mukesh Ambani is expanding into fast cross-category commerce through its JioMart platform by utilising Reliance Retail Ltd.'s extensive network of physical locations. Shareholders of Reliance were informed at the annual general meeting earlier this month that the company's network of 3,100 outlets and more serves over 1,200 cities. The positive aspect is that the increase in demand has spread beyond the major cities and into smaller communities in Tier 2 and Tier 3. Therefore, analysts from Emkay noted in a research dated June 14 that the quick-commerce model has a pan-India appeal.
