Exclusive: Swiggy runs dark store pilots under the brand name Urban Kirana

As delivering essential products has become a top priority for several consumer internet businesses, Swiggy is piloting with dark stores under the brand name Urban Kirana, according to two people familiar with the firm’s plans. The company is currently running a pilot in Bengaluru with six stores in areas including Indiranagar and Koramangala with more in the pipeline, added the people cited above. 

This allows Swiggy to deliver frequently-ordered products seamlessly. 

“In February, Swiggy launched a pilot with three dark stores in Bengaluru,” said one of the sources, requesting anonymity. “The initial experiment worked well for the company and now it has launched three more stores in the city.”

Swiggy also has set up two such stores in Gurugram. Entrackr has verified this independently. Sources said that Urban Kirana was conceptualized before the Covid-19 crisis and Swiggy is likely to expand it to other cities after evaluating the situation after some clarity on the ongoing crisis.

Swiggy also has plans to roll out dark stores in Hyderabad, say sources, but Entrackr couldn’t ascertain if it has already set up Urban Kirana there or not. Urban Kirana appears as one of the grocery store options in Swiggy Stores with a curated list of products to choose from which are then delivered within two hours following the order. 

To be sure, the products in these dark stores are being sourced from third parties with Swiggy guiding them based on customer preferences and past purchases, add the people cited above.

Queries sent to Swiggy’s spokesperson remained unanswered at the time of publishing this story. We will update the story as and when they respond. 

While the call on Urban Kirana’s expansion plan across other cities isn’t on the cards at the moment, Swiggy’s dark stores have proven to be handy and efficient in fulfilling essentials and grocery deliveries at a time when Swiggy Stores is witnessing a spike in orders due to a nationwide lockdown.

Setting up dark stores by e-grocers isn’t a new phenomenon. Grofers and BigBasket had tried this in the past. However, they abandoned them later as both companies moved from instant delivery format to slot-based or next day delivery.

BigBasket shut down its on-demand delivery last year while Grofers scrapped it almost two-and-a-half years ago. Entrackr had exclusively reported about the shutdown of ‘Express Delivery’ feature by BigBasket in June 2019.

Fulfilling on-demand delivery is not as viable as the cost per delivery is high. This is the reason for both Grofers and BigBasket to move away from the express delivery feature. Such service costs over Rs 50 per delivery while slot based delivery is relatively cheaper. For Swiggy to scale up on Urban Kirana, figuring out the economics would be key.