Instamart has operated under a marketplace model since launching in August 2020, earning commissions on products sold in India's $11.5 billion quick-commerce market. The approval gives Prosus-backed Swiggy (SWIG.NS) the status of an Indian-owned and controlled company (IOCC), required under the country's foreign investment rules to hold inventory.
"The first benefit is bulk-buying advantage. Second, they can share data analytics with their brand partners and third, wastage will be less," Anand Rathi analyst Shobit Singhal said.
MARGIN IMPROVEMENT
An inventory-led model could improve Instamart's margins, particularly in higher-value categories, while giving it greater control over pricing, assortment and supply chains, analysts said.
Swiggy has said the transition could add about 80 basis points to Instamart's contribution margin, which measures revenue after variable costs. "That's about 4-5 rupees an order — about a sixth of the 30 rupees an order it needs to break even," said Samarth Patel, associate vice president, Equirus Securities.
Instamart's first-quarter contribution margin was negative 0.2%, against negative 1.8% in the previous quarter.
Eternal's (ETEA.NS) Blinkit, which moved to an inventory-led model last year, has logged overall margin improvement for five straight quarters, turning positive in the March 2026 quarter.
The company attributed this to inventory ownership, supply-chain efficiencies and a move into higher-margin categories including electronics, home decor and gourmet foods.
Swiggy, which went public in 2024, is yet to turn profitable. Earlier this month, it set a fiscal 2031 target to turn earnings per share positive.
RISING COSTS
The shift, however, would result in higher working capital to fund purchases and manage stock, brokerage Jefferies said in a note. Eternal said last month that working capital at Blinkit was "largely driven by inventory ownership".
Swiggy and Eternal have been investing heavily in quick commerce to expand beyond groceries into higher-margin categories, jostling for consumer attention alongside deep-pocketed rivals such as Amazon India (AMZN.O) , Walmart's Flipkart and Reliance (RELI.NS).
Smaller rival Zepto is looking to raise up to $837 million in a highly anticipated public listing this year.
These platforms operate marketplace models, limiting their ability to profit from inventory-led products and control pricing, especially in quick commerce, Akshay D'Souza, a consumer sector consultant, said.
For Swiggy, the new status is only a part of a broader route to profitability, D'Souza said, adding the company must also grow sales of higher-margin premium goods and build its private-label portfolio.
($1 = 95.7525 Indian rupees)
