Swiggy on Thursday said it has acquired retail distribution company LYNK for an undisclosed amount, paving the way for the SoftBank-backed company into India’s $570-billion food and grocery retail market.
According to Tracxn, LYNK, backed by RAMCO Cements, has raised $23 million in funding so far, including its $20-million Series A round of funding.
Founded in 2015, Chennai-based LYNK provides supply-chain services, building a distribution platform for future and credit services to kirana owners in India. Some of its clients include Lakme, Johnson & Johnson, Pepsico, and ITC.
Swiggy’s acquisition of LYNK comes amid intensifying competition between Swiggy and its rival Zomato, both of which are vying for a bigger portion of Indian consumers’ pockets through their food and grocery delivery offerings. Both companies have been making acquisitions to gain an edge over each other.
Excluding LYNK, Swiggy has made five acquisitions and four investments, according to Tracxn. In 2022, the company acquired table reservation platform Dineout; led a $180-million investment in bike and auto-taxi aggregator Rapido; and invested in restaurant management company UrbanPiper with Zomato.
Zomato has made 14 acquisitions and 14 investments so far, according to Tracxn. The company has spent over $676 million on acquisitions, including that of quick commerce startup Blinkit, restaurant information and recommendation service provider Urbanspoon, and food delivery startup Runnr.
Earlier this week, Rohit Kapoor, Chief Executive of Swiggy’s food delivery business, told The Economic Times that he had shifted his focus back to growth, instead of profitability, over the past few months after the business turned profitable in March this year, including all corporate costs but excluding ESOPs.
India has around 13 million kirana stores in India’s multi-billion grocery industry, which has seen the likes of Amazon.com and Reliance Industries slugging it out for a bigger share. In recent years, the popularity of these stores led to the emergence of a host of startups, such as LYNK, seeking to provide them with tech support to ensure timely deliveries and payments, trends in heat maps, retail markets, and other meaningful insights for high average order value, retention, and digital reach, tracking transactions, payment facilities, and analytics.
Buoyed by demand during the pandemic, these so-called kiranatech startups, which include names such as OkCredit, Dukaan, Khatabook, Shop Kirana, and Kirana King, saw marquee investors such as LightSpeed, Tiger Global, Matrix Partners, and Sequoia pouring in capital. However, with demand falling as the pandemic waned, these startups have seen investments crash from $222 million in 2021 to $38 million in 2022, with some companies shutting divisions or even laying off employees.
Last year, Dukaan laid off 23 employees in September, while OKCredit fired 40 in February. OkCredit also closed its e-commerce enablement platform OkShop last April.
However, Swiggy remains optimistic.
“LYNK is uniquely positioned in the retail distribution space with their brand-first, tech-led operating model and has demonstrated success with multiple FMCG brands. Our experience in supply chain and logistics gives Swiggy the unique opportunity to help LYNK scale up their offerings and empower retailers to serve their customers better, ” said Sriharsha Majety, CEO, Swiggy.
LYNK will leverage Swiggy’s strength in technology and logistics to rapidly scale their existing platform. It will continue to operate as an independent business post the acquisition led by co-founder and CEO, Shekhar Bhende.