Why Swiggy is in Flipkart’s anti-portfolio

First Published: Mon, Jun 25 2018. 11 28 PM IST on Mint: https://www.livemint.com/Companies/z18LuuGIZEsdiIJclfDDNN/Why-Swiggy-is-in-Flipkarts-antiportfolio.html

If Flipkart would have partnered with Swiggy, it could have been a counter to what Amazon’s Prime is for Amazon today — a high-frequency experience to keep the brand relevant in the consumer’s mind.

Now that I am a power user of India’s leading food delivery aggregator Swiggy, I find it ironic that I had let go of the opportunities to invest in its Series A and B rounds. As a leader in the corporate development team at Flipkart back then, the mandate was to find strong strategic and financial investments and, looking back, I feel Swiggy fits well into both buckets.

E-commerce in India has always had a ‘low-frequency’ issue. Even publicly disclosed numbers during the Flipkart-Walmart deal point to just about four items a year per buyer, which is low by global standards. From a strategic perspective, if Flipkart would have partnered with Swiggy, it could have been a counter to what Amazon’s Prime is for Amazon today — a high-frequency experience to keep the brand relevant in the consumer’s mind.

Back then, it made sense for Flipkart not to invest in non-core areas, but in hindsight, it seems to be a wrong decision. The other concern was that a hyper-local delivery model would never be profitable without the consumer paying for it. We also felt the propensity for the Indian consumer to pay for a ‘convenience’ would be limited.

I got this wrong. There is a section of consumers willing to pay in certain markets (especially in tier I markets such as Bengaluru); Two, and more importantly, strong founders like Sriharsha Majety, and his team always find a way to navigate to the right opportunity, provided the market is large enough and the margin pools exist. Certain moves by Swiggy — whether the launch of their own cloud kitchens with ‘The Bowl Company’ or an ad platform for restaurants through banner and listings ads — have been quite interesting. The core takeaway as an investor is to ask the right questions — the importance of ‘what if’ over ‘what is’.

A lesson I have taken to all my subsequent investment decisions.