Swiggy Instamart Launches Instacafe, a Café-like Division to Capitalize on Higher Profit Margins


Swiggy Instamart has recently unveiled its latest venture, Instacafe, in response to the launch of Zepto Café by its rival, Zepto. This strategic move aims to bolster Swiggy Instamart’s profitability by tapping into the higher profit margins associated with café products, as opposed to grocery delivery.

According to a report, Instacafe, the newest addition to Swiggy Instamart, offers a diverse range of convenient snacks, including sandwiches, puffs, baos, coffee, cookies, tarts, croissants, and more. Customers now have the option to include these delectable items in their Instamart grocery orders.

The introduction of Instacafe by Instamart marks yet another expansion in its portfolio, following the introduction of private brands and an assortment of electronics and mobile accessories. This strategic move, aimed at increasing the average order size of customers, is expected to drive up the per-order profit margin.

Swiggy Instamart envisions Instacafe as a digital hub for popular fast-moving snacks, reminiscent of the concept commonly found in brick-and-mortar grocery stores. Instacafe initially launched as a trial in select areas of Hyderabad last year and subsequently expanded to Bangalore in March. The platform has plans to introduce additional items to its menu in the future.

Currently in its pilot phase, Instacafe offers approximately 60 stock-keeping units (SKUs) or items in specific areas of Bangalore and Hyderabad. In contrast to Zepto Café, which procures branded products in bulk, Instacafe primarily sources unbranded food items directly from dark-store managers catering to specific locations.

While there were initial concerns about potential competition with Swiggy’s core business, Instacafe is positioned by Swiggy as a provider of quick snacks rather than complete meals. However, it is important to note that both Swiggy and its competitor are gradually expanding their offerings to include larger meal options. This indicates an evolving strategy in response to increased scrutiny of the business models employed by quick-delivery start-ups.

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