Swiggy’s quick commerce business Swiggy Instamart will eventually move to an inventory-led model, like its rival Eternal-owned Blinkit.

Responding to a question on Instamart moving to an inventory-led model during the post-earnings Q2 FY26 call, Swiggy cofounder and group CEO Sriharsha Majety said, “This is an eventuality that we do expect to happen.” However, he didn’t disclose any timeline for the move.

This comes as Instamart seems to be now focussing on efficiency improvement and profitability versus network expansion. The company added only 40 dark stores in Q2 FY26 compared to 316 stores added in Q4 FY25. Notably, its competitor Blinkit added 272 stores in Q2.

However, this did not impact revenue growth, which the company’s management attributed to a marked improvement in store-level productivity and order density.

According to Swiggy, the existing dark store network is capable of handling up to twice the current order volume without additional infrastructure. Notably, the platform, which operates over 1,100 dark stores across major Indian cities, claimed to have maintained over 100% growth in gross order value (GOV) for three consecutive quarters while reducing losses.

Instamart’s contribution margin improved to -2.6% in Q2 FY26 from nearly -6% a year earlier, and the company expects to reach contribution break-even by June 2026.

The quick commerce arm reported an adjusted EBITDA loss of INR 849 Cr in Q2 FY26, a 5.2% drop from INR 896 Cr in the previous quarter. However, it rose 136% YoY from INR 359 Cr. Instamart’s gross order value rose 108% YoY and 24% QoQ to INR 7,022 Cr, while the average order value increased 40% YoY to INR 697.

Notably, as the company looks at turning Instamart profitable, control over sourcing and inventory is essential.

An inventory-led approach would enable tighter cost control, faster replenishment, reduced wastage, and higher fill rates. The company’s recent investments in large-format stores are part of this broader move towards greater operational control.

The company is also raising INR 10,000 Cr via QIP for the expansion of Instamart and the potential shift to inventory-led model.

The move to raise funding comes at a time when rival Zepto’s recent $450 Mn (about INR 4,000 Cr) fundraise has further intensified competition in the quick commerce segment. Meanwhile, Blinkit continues to add new dark stores and its total store count is expected to be at 2,100 by December 2025.

Like other players, Instamart has also expanded beyond groceries into high-margin categories such as electronics, personal care, household items, and pharmacy.

These non-grocery verticals already contribute around 25% of Instamart’s gross merchandise value (GMV), up from less than 15% a year ago. The company said that pharmacy has emerged as a strong growth driver, meeting internal adoption targets well ahead of schedule. In the coming quarters, the company plans to take non-grocery GMV to about 50% of Instamart’s total GMV.

The diversification also lifted Instamart’s average order value (AOV) to INR 697 in Q2 FY26..

Meanwhile, Swiggy is bullish on Instamart’s advertising revenue, which it expects to account for 6-7% of the quick commerce arm’s GMV in the long term. This would be higher than the ad revenue of Swiggy’s food delivery business, which currently stands at about 4% of its GMV.

On the back of these efforts, Swiggy expects Instamart to achieve break-even by June 2026 and sustain long-term EBITDA margins of around 4%. The company claimed that one-fourth of its dark stores are profitable, and this share is expected to rise gradually as new stores mature.

Responding to a question on the rise in competition in the quick commerce segment, Majety said, “Competition has remained steady with no significant increase or decline in intensity… We expect this level of competitiveness to continue for now, fluctuating slightly with seasons and monthly objectives.”

On Amazon’s entry in the segment, Swiggy said that Amazon Now has been operating in select parts of Bengaluru for a couple of quarters now and the company isn’t focussing on it as a competitor yet.

On competition with Zepto, Majety said it’s easy to compare with publicly listed peers but difficult to get accurate numbers from private companies “or even to understand the definitions and assumptions behind their calculations and projections. That makes comparisons quite challenging”.

At the same time, pursuing volume growth at the cost of poor average order values or low contribution margins is a strategic choice which the company does not want to make, the CEO said.

“Ultimately, we are focused on winning in the long term, and that requires consistency and discipline, especially at this stage of the category,” Majety said.

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