As the global tech giants Amazon, Uber and also Flipkart (rumoured) getting into the game of food-delivery business in India, it is quite possible that homegrown food delivery startups Swiggy and Zomato would want to band together to fight for their existing market share collectively.
It is being reported that an online news outlet has recently spoken to an undisclosed source who is directly connected to the discussions of a potential merger between the two home-grown food delivery startups Zomato and Swiggy. Investors from both the companies are allegedly giving serious thought to the synergy and have been reported to have held meetings to discuss the possibility of a merger.
The undisclosed source mentioned that though there are no such concrete timelines, the proposal of a potential merger is something that interests both the parties at this point in time. However, we believe that it is too early to predict the possible future of the merger actually going through. This was also the case back in 2017 when sources mentioned that there were talks of a merger between the two startups Zomato and Swiggy back then but it quickly fell apart due to some major differences of business thought alignment between the two companies.
Back then executives from Zomato – the Gurgaon-based startup had shown a keen interest in a stock-based merger. On the contrary, executives from Swiggy, the Bengaluru-based startup, was keen to acquire and operate the entire food delivery business of Zomato. They wanted Zomato to continue as a restaurant search and discovery only business whilst being a shareholder in Swiggy and therefore the whole discussion couldn’t reach to any conclusion.
Now in 2019, with global giants such as Amazon and Uber trying to strengthen their position in the Indian food-delivery market, the potential threat of losing major market share might just have turned real for both the Indian companies that are bleeding badly. Swiggy which currently holds the top-most position in the market has reported a loss of Rs 397.3 crore on revenue of Rs 442.3 crore in FY’18. Zomato which currently hold the second position just after Swiggy has reported a loss of Rs 1,001.1 crore on revenue of Rs 1,397 crore in FY’19. This clearly proves they are not really running at their most financially optimal positions respectively.
So where do we see the ‘renewed’ merger talks of the Indian home-grown food delivery startups Zomato and Swiggy heading towards?
As of right now, it is quite difficult to ascertain as to where they are exactly heading in terms of a concrete solution.
Meanwhile, a Zomato spokesperson has outright rejected the news on the possible merger by saying that the latest speculation is absolutely untrue. It has often been noticed that companies try to keep topics as sensitive as mergers strictly under the wraps until they (both parties – Zomato and Swiggy) have reached a conclusive and final answer, so it can quite possibly mean that or either it’s just another rumour to stir up controversy in the business world. Be it what may, the threats of losing possible market share to the giants such as Amazon and Uber are quite undeniably true and therefore it will be interesting to see how Zomato and Swiggy plan to hold down their fort when trouble finally comes knocking to their front doors!