Swiggy looks to double Instamart revenue without costly dark store expansion

Swiggy says it can double its quick commerce revenue without adding more dark stores even as it prepares to raise $1.2 billion in fresh capital to counter rivals’ land grab.

While competitors race to blanket cities with thousands of dark stores, with Blinkit adding 272 dark stores during the second quarter this fiscal year, the Bengaluru-based company added only 40 warehouses.

Instead, executives aim to squeeze more revenue from existing Instamart dark stores through larger facilities and category expansion—betting on operational excellence over geographic sprawl.

“We have created sufficient capacity on the dark store network to easily double our business from here without having the need to add more stores,” Chief Financial Officer Rahul Bothra told analysts during the company’s earnings call.

Central to Swiggy’s thesis is a network design that mixes standard 4,000-square-foot dark stores with “mega stores” spanning 8,000–10,000 square feet. The larger format allows for deeper inventory—particularly in higher-margin categories like electronics and pharmacy—without driving up rental expense from proportional expansion.

That infrastructure is now showing results. Overhead expenses grew just 5% quarter-over-quarter even as order volume surged 25%, driving a 200-basis-point improvement in contribution margins to negative 2.6%. Swiggy reiterated guidance to reach contribution-margin profitability by June 2026, though executives declined to rule out hitting breakeven sooner.

“We want to retain flexibility,” Bothra said when pressed on the timeline. “Competition intensity goes up and down depending on how much investment is happening in the sector.”

The second pillar of Swiggy’s strategy is aggressively diversifying beyond groceries, the traditional anchor of quick commerce. Non-grocery items—electronics, fashion, pharmacy, and general merchandise—now account for 26% of Instamart sales, up from just 9% a year earlier.

The category mix comes with near-term trade-offs. Take rates have compressed as Swiggy offers incentives to drive trial and hasn’t yet built deep supplier relationships in newer verticals. But management expects margins to recover as the company moves “deeper into the supply chain” and customer inducements normalise.

Despite the optimistic operational narrative, Swiggy is preparing to raise additional capital through a qualified institutional placement. The foodtech company will hold a board meeting on October 31 to consider and approve raising up to Rs 10,000 crore (~$1.1 billion).

The funds will primarily fuel continued expansion in quick commerce, allowing Swiggy to maintain its competitive position as rivals raise substantial capital and add hundreds of dark stores.

Its rival Zepto earlier this month raised $450 million in a round led by US-based pension fund California Public Employees’ Retirement System (CalPERS).

Meanwhile, Reliance Retail has also accelerated investments in dark stores, logistics, and customer acquisition. The company’s quick commerce arm, JioMart, now delivers to over 5,000 pin codes across 1,000 cities, and is registering 42% quarter-on-quarter growth in average daily orders, according to CFO Dinesh Taluja. The retail giant opened 600 new dark stores in Q2, expanding its total network to more than 3,500 grocery outlets nationwide.