Swiggy rethinks Rapido investment as rivalry heats up in food delivery
Swiggy initially invested in Rapido in 2022, and the investment has since appreciated considerably. However, Rapido's strategic move into food delivery aims to disrupt the long-standing duopoly held by Swiggy and Zomato.
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Food and grocery delivery giant Swiggy is "actively re-evaluating" its significant investment in ride-hailing firm Rapido, as the latter's foray into food delivery threatens to ignite a direct rivalry. Swiggy, which holds approximately a 12% stake in Rapido, valued at around $120 million (Rs 1,020 crore) based on Rapido's current valuation of just over $1 billion (Rs 8,500 crore), acknowledged a potential conflict of interest as Rapido scales its food delivery ambitions.
Swiggy initially invested in Rapido in 2022, and the investment has since appreciated considerably. However, Rapido's strategic move into food delivery aims to disrupt the long-standing duopoly held by Swiggy and Zomato. This push comes amidst growing discontent from restaurant owners who have voiced concerns over high commissions, preferential treatment, and elevated customer acquisition costs imposed by the established players.
Swiggy's management, led by CEO Sriharsha Majety, expressed a "super agile and paranoid" stance, indicating that they are closely monitoring Rapido's expansion. In a shareholder letter, Swiggy stated that a key consideration is "what will new competition unlock for the consumer which we are not already doing at scale." The company also hinted at proactive measures to "ensure that competition does not get a clear opening."
While acknowledging happiness with Rapido's success and value creation as a shareholder, Swiggy's conclusion points to an impending strategic shift. The re-evaluation signals a crucial moment in India's competitive food delivery landscape, potentially ushering in a new era of intensified competition and innovative offerings for consumers.
