SUMMARY
The number of orders grew 21% QoQ to 3.16 Cr, while revenue from the quick commerce vertical grew to INR 301 Cr in Q3 FY23
Revenue per order increased despite reduction in average order value due to growth in commission rates and better ad monetisation, said CEO Albinder Dhindsa
Going forward, Blinkit expects advertisement revenue to be a significant driver for increase in revenue per order
The third quarter (Q3) of the financial year 2022-23 (FY23) turned out to be a mixed quarter for Zomato-owned quick commerce platform Blinkit. The foodtech giant’s shareholders’s letter, released along with its financial results for Q3, showed that Blinkit’s average order value (AOV) declined on a quarter-on-quarter (QoQ) basis during October-December, but other key financial metrics saw improvement.
Blinkit’s order volume grew 21% QoQ to 3.16 Cr, offsetting the 2.6% decline in AOV to INR 553 during the quarter under review.
The company attributed the drop in AOV to the macro slowdown, as a result of which customers are preferring to ‘buy smaller packs instead of larger ones’.
“We are an early stage business, so any macro slowdown doesn’t have a visible large-scale impact on our growth metrics. Blinkit is also less impacted vis-à-vis the food delivery business as our typical purchase basket tends to be more skewed towards essential / non-discretionary spends,” Blinkit CEO Albinder Dhindsa said.
Noting that AOV is important, Dhindsa said that the company can still build a profitable business at an AOV 20% lower from the current level.
“Revenue per order increased despite reduction in AOV due to growth in commission rates and better ad monetization, while cost per order reduced due to operating leverage. More than 20% of our GOV is now from stores that are contribution positive (in the month of Dec 2022),” he added.
Zomato’s adjusted revenue from the quick commerce vertical rose 27% to INR 301 Cr in Q3 from INR 236 Cr in Q2, while gross order value (GOV) increased 18% to INR 1,749 Cr from INR 1,482 Cr in the preceding September quarter.
Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) loss improved to INR 227 Cr in the quarter from INR 259 Cr in Q2.
Average monthly transacting customers grew to 31 Lakh in Q3 FY23 from 26 Lakh, while average GOV per day, per dark store rose 24% QoQ to INR 524 from INR 422.
On the question of opening new dark stores, the Blinkit CEO said that the company has identified ‘several new high potential neighbourhoods’ in current and new cities and is looking at scaling the number going forward.
Chiming in, Zomato CFO Akshant Goyal said that Blinkit is well placed to grow its dark stores by 30-40% in the next 12 months, depending on several factors.
Touting the company’s quick delivery model, Dhindsa said that Blinkit is likely grabbing the market share of ecommerce players such as Amazon and Flipkart, especially across categories such as groceries, FMCG products and electronic accessories.
Tapping Into Ads
Meanwhile, Blinkit is also looking at making advertising income a meaningful source of revenue.
“Blinkit has become a preferred platform for advertising and engagement for over 500 brands. These brands, large and emerging, use us to build brand awareness and to also push their sales on the platform with performance advertising,” said Dhindsa.
Citing the platform’s hyperlocal model, Dhindsa said that the quick-commerce vertical is looking to leverage its unique selling proposition to attract more brands to advertise on the platform. He said Blinkit offers visibility on consumption trends at a neighbourhood level, which could enable brands to ‘micro-target relevant audiences’.
As per the company, more than 50 brands are currently using Blinkit’s sampling services which enable them to create custom cohorts to test new product launches.
The company also announced that Blinkit launched its self-serve advertising platform Blinkit Brand Central in December last year. The new platform will allow brands to bid on search keywords and will help them create customised brand stores on Blinkit app, it said.
“We expect advertisement revenue to be a significant driver for increase in revenue per order going forward,” said Dhindsa.
Overall, Zomato reported a consolidated net loss of INR 346.6 Cr in Q3 FY23, while its food delivery business registered QoQ degrowth in adjusted revenue.
The company released the Q3 results after market hours. Shares of Zomato ended the day 0.3% higher at INR 54.40 on the BSE.
