India’s two leading fast trading companies, EternalBlinkit owned by Blinkit and SwiggyInstamart of , have called the competitive intensity in the field of fast commerce “irrational”.
In a letter to shareholders after the company announced its third quarter results, Sriharsha Majety, co-founder, managing director and CEO of Swiggy Group, said Instamart’s recent investments in lower monetization on the consumer side have not resulted in the desired incremental order growth amid “irrational competition” in the fast commerce space.
As competition is high and irrational in fast commerce, Swiggy said its growth at the bottom of the pyramid in average order value has been slower. “Our eventual right to win will come from delivering on our differentiated assortment proposition, and we want to focus only disproportionately on delivering on the proposition more broadly while navigating the path to profitability,” Majety explained.
“Even though this creates short-term challenges in order growth in an irrational market, we believe that focusing on these two elements while continually improving the consumer experience is the right strategy to win in the long term,” he added.
Blinkit also highlighted “irrational competitive intensity” in its letter to shareholders last week. “In periods of irrational competitive intensity, customer acquisition remains anchored to a narrower set of discounted, low-margin categories, slowing natural basket expansion,” said Albinder Singh Dhindsa, founder and CEO of Blinkit.
The Gurugram-based fast-commerce company said its forecast of 3,000 dark stores by March 2027 assumes continued irrational competitive intensity. “However, if competition eases in the short term, we would like to target 3,500-4,000 stores by March 2027,” Dhindsa added.
In a context of irrational competitive intensity, accelerating the number or assortment of stores is counterproductive, because the underlying demand profile prevents these new dark stores from becoming profitable, Dhindsa said. “While aggressive pricing measures can boost demand, this is often less sustainable, leading to a moderation in subsequent growth,” he added.
The comments come a month after the founder of India’s leading fast trade player warned that India’s fast trade sector was heading for upheaval as investor appetite fades.
“Usually when this type of imbalance exists, the correction is very rapid,” Dhindsa told Bloomberg.
“It often surprises people.” Blinkit, which reached breakeven EBITDA in the third quarter, said that despite high competitive intensity in recent months, it saw margin improvement driven by supply chain cost efficiencies, a favorable shift toward long-tail categories and operating leverage.
At the same time, Swiggy said it was difficult to predict the near-term growth trajectory of fast commerce.
“Some of our recent efforts to test the magnitude and velocity of user behaviors through free campaigns have had limited success due to the continued irrationality of competitive activity on pricing and monetization levers. We have chosen not to participate in fueling such behavior, thus choosing to forgo such incentive-driven volume gains. This could therefore have a short-term impact on underlying volume growth,” he said.
