Flipkart to Enter India’s Food Delivery Market, Swiggy and Zomato Shares Dip Up to 4%”

Flipkart’s Food Delivery Entry Shakes Swiggy, Eternal Shares; What Investors Are Watching

A fresh battle is brewing in India’s online food delivery market, and investors wasted no time reacting. Flipkart’s food delivery announcement triggered selling in shares of Eternal and Swiggy, as the market weighed the impact of another deep-pocketed competitor entering an already competitive industry.

The development comes at a time when both listed food delivery companies are focusing on profitability and expansion. While Flipkart’s entry could reshape competition over the long term, investors are now assessing whether it could pressure margins, increase customer acquisition costs and slow profitability for existing players.

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Flipkart confirms food delivery launch, intensifying competition

Walmart-owned Flipkart announced that it plans to enter India’s online food delivery market within the next few weeks, bringing a new challenger to a sector currently dominated by Eternal-owned Zomato and Swiggy.

Speaking about the launch, Flipkart Group CEO Kalyan Krishnamurthy said:

“We will launch food delivery in the next few weeks.”

He added:

“Like everything else we do, we will launch food delivery first, test the value proposition with customers, take feedback and continue improving the product until it really appeals to the customer. After that, we’ll start scaling it.”

The phased rollout suggests Flipkart will initially focus on refining its offering before expanding nationwide.

Key developments

• Flipkart to launch food delivery in the next few weeks.
• CEO Kalyan Krishnamurthy said the company will first test the service, gather customer feedback, and then scale the business gradually.
• The move pits Flipkart directly against Eternal-owned Zomato and Swiggy in India’s online food delivery market.

Eternal and Swiggy shares fall as investors book profits

The announcement led to profit booking across listed food delivery stocks.

At around 3 pm, Eternal shares were trading at ₹280 on the NSE, down 2.47%, while Swiggy shares declined 3.77% to ₹251.70.

The weakness reflected concerns that Flipkart’s large customer base, logistics network and financial strength could intensify competition in food delivery, potentially leading to higher discounts, increased marketing expenses and pressure on industry margins.

Although Flipkart is entering the market gradually, investors chose to price in the possibility of tougher competition ahead.

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Market reaction

• Eternal shares fell as much as 2.5%, trading around ₹280.
• Swiggy shares declined up to 3.8–4%, trading near ₹251.70 during the session.
• Investors booked profits amid concerns that a deep-pocketed Walmart-backed entrant could intensify competition through pricing and customer acquisition.

Swiggy also approves 49.5% foreign ownership limit

Alongside the market reaction, Swiggy announced that its board has approved a 49.5% cap on aggregate foreign ownership on a fully diluted basis.

The proposed limit will apply to foreign investors, including foreign-owned or controlled Indian entities, foreign portfolio investors (FPIs) and non-resident Indians (NRIs), while excluding investments made through the non-repatriation route.

According to a UBS note cited by NDTV Profit, the new ownership limit leaves relatively limited room for additional foreign shareholding but provides Swiggy with greater strategic and operational flexibility.

How Strong Is Flipkart’s Position?

Flipkart enters the food delivery market with several structural advantages that could make it a credible challenger to Eternal (Zomato) and Swiggy over time. However, it is still entering a market where incumbents have years of experience in restaurant partnerships, delivery operations, and customer retention.

Flipkart’s Competitive Strengths

Large Existing Customer Base

• Flipkart’s e-commerce platform already reaches tens of millions of active users, giving it a ready-made audience for food delivery without having to build demand from scratch.
• Reports indicate the platform has around 85 million daily active users, providing a large funnel for customer acquisition.

Nationwide Logistics Network

• Flipkart can leverage its Ekart logistics network, one of India’s largest e-commerce delivery platforms.
• Existing capabilities in warehousing, route optimization, last-mile delivery, and supply-chain technology can support expansion into food delivery, although restaurant delivery has different operational requirements.

Flipkart Minutes Infrastructure

• Its quick-commerce business, Flipkart Minutes, has expanded rapidly.
• Recent reports say it has crossed:
  • 1,000+ dark stores
  • 130+ cities
  • 8,000+ PIN codes
• This hyperlocal infrastructure could help accelerate restaurant delivery and reduce delivery times.

Walmart’s Financial Backing

• Flipkart is majority owned by Walmart, giving it access to substantial financial resources.
• This provides greater capacity to invest in:
  • customer acquisition,
  • discounts,
  • restaurant onboarding,
  • technology,
  • delivery infrastructure.
• While this doesn’t guarantee success, it strengthens Flipkart’s ability to compete aggressively if it chooses.

Cross-Selling Opportunities

Flipkart already operates a broad digital ecosystem that includes:

• E-commerce
• Flipkart Minutes
• Myntra
• Shopsy
• Cleartrip
• Super.money (fintech)

This ecosystem creates opportunities to:

• bundle food delivery with existing shopping journeys,
• reward users through loyalty programs,
• increase engagement across multiple services.

How Flipkart Compares

Here’s what happened today and why traders reacted

Investors reacted primarily to Flipkart’s decision to enter the food delivery business rather than to Swiggy’s ownership announcement.

The market views Flipkart as a serious competitor because of its established e-commerce ecosystem, nationwide logistics network and financial backing from Walmart. Even before operations begin, expectations of increased competition prompted traders to lock in gains in Eternal and Swiggy.

The sell-off reflected concerns that a new entrant could trigger another phase of aggressive pricing, promotional offers and customer acquisition spending, potentially delaying profitability across the sector.

What does Flipkart’s entry mean for investors?

For long-term investors, Flipkart’s entry signals that India’s online food delivery market remains attractive despite growing competition.

Existing players have spent years building restaurant partnerships, delivery infrastructure and customer loyalty. However, Flipkart’s extensive digital ecosystem could allow it to leverage its existing user base and delivery capabilities to expand into food delivery more quickly.

The key question for investors is whether Flipkart focuses on gaining market share aggressively through discounts or adopts a more measured expansion strategy.

If competition intensifies, investors may need to monitor the impact on margins, order growth, customer retention and profitability for both Eternal and Swiggy over the coming quarters.

What UBS said

According to a UBS note, the proposed 49.5% foreign ownership cap leaves limited room for additional foreign investors but could provide Swiggy with greater strategic and operational flexibility. At the same time, some analysts have cautioned that the cap could affect Swiggy’s eligibility for certain global indices, potentially leading to passive fund outflows.

Market outlook and what traders should watch next

While Friday’s decline reflected immediate concerns, the long-term impact will depend on Flipkart’s execution strategy and customer response after the service launches.

Investors will closely watch details around the launch timeline, pricing strategy, restaurant partnerships and geographic expansion. Quarterly earnings from Eternal and Swiggy will also be monitored for any signs of increased competitive pressure.

For now, Flipkart’s announcement has introduced a new variable into India’s rapidly evolving food delivery market, making competition one of the key themes investors are likely to track in the months ahead.