Why Zomato-Owned Blinkit Is Still Facing Service Disruptions In Delhi-NCR

Zomato-owned quick commerce platform Blinkit, like many other Indian startups, is trying to turn profitable. It has taken a series of steps to cut down its expenses in its bid to become a profitable venture. One such measure was changing the pay structure of its delivery partners in Delhi-NCR. However, this didn’t pan out the way the platform would have liked.

Last month, delivery partners of Blinkit in Delhi-NCR went on a strike over the changes in their pay structure, resulting in disruptions in the services of the quick-commerce platform in the region. While it has been almost a month since the introduction of the new pay structure, the platform is still to recover from the disruptions. 

Blinkit Struggling To Meet Delivery Demand In Delhi-NCR

A source told Inc42 that over 50% of Blinkit delivery partners across Delhi-NCR have quit since the introduction of the new payment structure. Many of them have joined rivals such as Zepto, Swiggy, while some of them have joined ecommerce platforms such as Amazon. Consequently, Blinkit is struggling to deliver orders on time in the region and its app shows surge in demand most of the time.

To retain delivery partners, Blinkit is now offering extra incentives to its partners. Besides, it also plans to give referral bonus to its driver partners for bringing new partners on the platform, as per a delivery executive.

The executive claimed that delivery partners held multiple rounds of discussions with Blinkit management to explain to them the negative impact of the new pay structure on their earnings. However, the Zomato-owned platform said that the new pay structure would not be changed as the decision was taken by the company’s shareholders, the executive alleged.

Blinkit also allegedly fired a few drivers who went on strike and lodged complaints against those who led the protests, as per the delivery executive.

Over the last one month, Blinkit also shut many dark stores in the region. To cut costs, Blinkit also shifted locations of a few dark stores from main roads to interior lanes, according to the source mentioned above.

The quick-commerce platform is now delivering around 30% fewer orders in the region as compared to the pre-strike period, the source added.

A mail sent to Zomato seeking comments on the issue remain unanswered till the the time of publishing this story.

Issues With The New Payment Structure 

The protests started last month after the company introduced the new payout structure under which the delivery partners would have to book their time slots and complete the targets assigned to them. Besides, the partners would be paid on a per kilometre basis. However, the delivery partners said this would reduce their earnings.

Under the new pay structure, Blinkit is paying INR 12 per kilometre travelled by riders to deliver an order. The pay changes for less busy hours, such as 11 AM to 7 PM, during which drivers get only INR 9 per kilometre.

“Even if we work for 10-12 hours, we will be able to earn INR 1,000 per day under the new structure. Excluding fuel charges, mobile recharge, bike maintenance, we would be left with hardly INR 500 per day. How would we be able to meet our family expenses?” another delivery partner said.

The delivery partners demanded a minimum pay of INR 25 for the first kilometre travelled, while they said that the subsequent distance could be paid for according to the new pay structure. They also met Gurugram Deputy Labour Commissioner Dinesh Kumar and demanded a minimum pay of INR 25 per order delivered, restoration of earlier incentives and better working hours.

Meanwhile, the disruption in Blinkit services resulted in a 25%-50% surge in daily orders of its rivals BigBasket, Zepto and Instamart in Delhi NCR. 

While brokerage firm ICICI Securities said that the service disruption would lead to a 1% revenue loss to Blinkit in Q1 FY24, Zomato said the strike of delivery partners of Blinkit will have less than 1% impact on the company’s revenue. 

It must be noted that Blinkit was acquired by Zomato in August last year. Blinkit’s average order value (AOV) declined on a quarter-on-quarter (QoQ) basis during October-December. However, its order volume grew 21% QoQ to 3.16 Cr, offsetting the 2.6% decline in AOV to INR 553. The adjusted revenue from the quick-commerce vertical surged 27% QoQ to INR 301 Cr in Q3 FY23. 

Meanwhile, the impact of the partners’ strike and disruption in services would only be clear once Zomato releases its financial results for the June 2023 quarter.