Zooming in on hyperlocal delivery services, Swiggy has acquired Mumbai-based on-demand delivery company Scootsy in all-cash deal for an undisclosed amount. A Moneycontrol report pegs the amount at Rs 50 crore.

Founded in 2015, Scootsy is a mobile app based intra-city delivery service in Mumbai that delivers items across categories food, bakery items, groceries, stationery, fashion items, home decor, curated craft items, gift stores, electronic stores amongst other things. The startup also does late-night delivery for emergency needs till 3 AM. In the late night time slot, it delivers select items like Maggi, OTC medicines, diapers, shaving cream, mosquito repellent, sanitary pads etc in approximately within one hour.

Scootsy was incubated by Ant Farm, and was launched in 2015. In April 2017, the company raised funding of  $3.6 million from Agnus Capital, and Singapore-based investment firm Khattar Holdings.

According to media reports, Scootsy was going through a capital crunch owing to extensive cash burn involved in hyperlocal delivery business and did not pay salaries to its employees for three months. As a result, the number of riders reduced and impacted the deliveries.

“With this acquisition, Swiggy will further strengthen Scootsy’s curated restaurant network and
help the brand expand to newer cities on the back of its operational excellence and backend strength,” Swiggy said in a statement. It also added that Scootsy will continue to operate as an independent app post the acquisition. After this deal, Scootsy will also expand more in Mumbai, and will foray into 4-5 major Indian cities in the coming months.

Swiggy’s diversification

Swiggy is looking at diversifying its business with the hyperlocal delivery segment. In April it had launched a new service will be called ‘Dash’ for piloting in this segment. At that time, Swiggy’s spokesperson neither denied nor shared any details on this development and had said that “at Swiggy, we’re continuously experimenting with ways in which we can enrich the lives of our consumers and partners by making it more convenient and hassle-free”.

When in February this year, Swiggy raised Series F funding of US $100 million, it had said that it will use the capital to strengthen its technology and introduce new products and services.

The diversification makes sense for the company as the food delivery business is getting fiercely competitive with the players like Zomato, Ubereats, and now Ola- after it bought Food Panda India. In its earnings call for Q1 FY19, Info Edge’s (Zomato’s parent company) CEO Hitesh Oberoi said that Zomato is “increasingly delivering more and more of using its own delivery system…” On competition with Swiggy, the company added that Zomato is expanding aggressively and that it not only expects the gap to narrow but also overtake it in the coming few months.

Founded in 2014, Swiggy has about 35,000 restaurant partners spread across 17 cities. Swiggy currently does 14 million orders per month as on June 2018, according to MediaNama sources.

Zomato, which has its food order and delivery services in 21 cities in India,  launched its online ordering and food delivery services in May 2015, and currently does about 10.5 Million orders a month. Zomato recently said at the time of  Football World Cup, it touched an order run rate of 13 million orders in the month.