Swiggy to shift Instamart to inventory-led model to boost margins

Swiggy is preparing to transition its quick-commerce platform, Instamart, from a marketplace model to an inventory-led model. This strategic shift involves the company purchasing goods directly from brands and manufacturers to hold within its own network, rather than primarily earning commissions on third-party sales.

This transition follows shareholder approval of a 49.5 per cent cap on foreign ownership, a move intended to help Swiggy qualify as an Indian-Owned and Controlled Company (IOCC). The shift is expected to provide greater control over pricing, supply, and product assortment. Swiggy estimates the change could improve Instamart’s contribution margin by approximately 80 basis points, potentially adding Rs 4-5 per order.

Following news of the strategic pivot and a bullish rating from brokerage firm Jefferies, Swiggy shares rose nearly 5% in intraday trading on the NSE. Jefferies assigned a ‘Buy’ rating to the stock with a target price of Rs 435, representing a potential 60% increase from previous levels. The transition to the first-party inventory model is expected to take two to four quarters once regulatory and corporate restructuring requirements are met.