Free Read: Analysis: Why Swiggy bought Dineout

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Inside Swiggy's strategy of adding Dineout to cart

Swiggy finally announced its deal to acquire Dineout in a mix of cash and stock, last week. The deal value is pegged at about $125 million and comes in quarters after the food delivery major had been considering developing a dining-out service in-house, but things did not materialise.

Aditi Shrivastava

Swiggy has a chance to be aggressive. The Dineout deal is a step in this direction. With Dineout, Swiggy can match Zomato’s dining-out, ratings and table reservation offerings, which were a key differentiator between the two until now.

Interestingly, Swiggy was also looking at integrating Dineout on its app but has chosen to keep it independent for now. That said, if it wants to match Zomato’s top of the funnel user traction, and leverage its loyalty product Swiggy Supr more effectively, an in-app integration is likely coming soon.

In July last year, foodtech major Zomato made quite an impression on Dalal Street with its stellar listing and valuation of $14 billion. Its biggest competitor, privately held Swiggy, was worth $5.5 billion then. But the tables have turned in this great rivalry for industry dominance and perception.

Swiggy is currently valued at $10.5 billion, whereas Zomato’s stock has endured a correction of over 55% since its debut, pushing down the valuation to $5 billion. This is just the opening that Swiggy, unaffected by fluctuations in the public markets, had been waiting for. It is set to challenge Zomato more aggressively on the business front, having raised $700 million in a round led by US-based asset manager Invesco in January.

“Swiggy will be aggressive. If Zomato matches the intensity, it will miss earnings, and if it doesn’t, it will lose market share,” said a person tracking the space.

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