With Amazon, Flipkart, Tata, and Reliance entering quick commerce, Blinkit, Instamart, and Zepto face tough competition to maintain their lead.
Blinkit held the largest market share in the Indian quick commerce space at 40% and is growing at 122% YoY (25% QoQ)
Unlike Swiggy and Zepto, Blinkit’s grocery delivery experience stretches back a decade and that cannot be ignored, as per industry watchers
Quick commerce has revitalised Indian ecommerce like nothing else before it. The very public rise of Zomato-owned Blinkit in particular has caught the attention of the industry, and Zepto’s eye-catching $1 Bn round has underscored that ecommerce in India is well and alive.
Even if that is not the ecommerce we have come to know. For decades Amazon India and Flipkart have dominated conversations around online shopping, but Swiggy Instamart, Blinkit and Zepto have grabbed the limelight in record time.
Blinkit, which holds the largest market share at 40% and is growing at 122% YoY (25% QoQ), has been at the forefront, but don’t count out Zepto or Swiggy Instamart just yet. In fact, even the likes of Tata BigBasket, Jio Mart and Flipkart are indexing towards quick commerce.
Blinkit is by far the most visible of these platforms, given the public company spotlight on Zomato.
The group company’s bigger focus on Blinkit can also be seen through the lens of Zomato’s recent announcements. Despite a cash balance of INR 10,814 Cr (as of September 30, 2024), Zomato has announced plans to raise up to INR 8,500 Cr ($1 Bn) via a qualified institutional placement (QIP).
Founder and CEO Deepinder Goyal stated that the investment will further strengthen the balance sheet and ensure a level playing field with its competitors such as Zepto and Swiggy.
Blinkit and the new going-out vertical District are expected to receive significant investments in the coming months from the parent company.
Expansion Is The Name Of The Game
For Blinkit, the big focus is on setting up new dark stores and warehouses for larger non-grocery The company added 152 new dark stores and seven warehouses in the July-September quarter. As a result of this push, Blinkit reported record revenue of INR 1,156 Cr, more than twofold increase from INR 505 Cr in the same quarter last year. Even sequentially, Blinkit reported a healthy 23% revenue growth.
However, Zomato’s top two revenue streams are food delivery and B2B supply chain platform Hyperpure. The focus is now on lifting Blinkit to the top of this list.
In fact, as quick commerce evolves and expands, many experts believe that food delivery will eventually become part of the service. Swiggy, Zepto and Zomato are all planning instant cafe-style food delivery through their platforms, so for Zomato, Blinkit is a big focus area.
Notably, Zomato announced in its Q4 FY24 earnings that Blinkit had turned EBITDA-positive in March 2024. And as the service base and scale grows, we expect the company to stretch into 20 and 30-minute delivery timelines, like some of its competitors.
Quick commerce dynamics are changing rapidly. Amazon’s instant delivery project is set to launch in Q4 FY25, while Flipkart has already introduced ‘Minutes’ in key metros. Tata’s BigBasket and Reliance’s JioMart have also announced plans to go all-in on quick commerce.
Blinkit’s market share has dropped from 46% last quarter to 40% in Q2 FY25 as the competition catches up. Clearly, Blinkit will need to continue innovating to retain, if not increase, its market share, and continue the revenue momentum. What does this mean from the point of view of quick commerce players venturing into non-grocery categories?
Is Blinkit Shifting To Full Ecommerce?
Market observers and startup founders in this space, however, believe Blinkit is not aiming to be fully horizontal like Amazon and Flipkart in the near future.
Instead, it is focused on vertical integration around quick commerce and expanding into categories like electronics and FMCG products.
Milind Sharma, a serial entrepreneur and founder of jewellery brand Mabel as well as Flyo and PepperTap (acquired by Shadowfax) before that, told Inc42 that Blinkit is extremely data-driven when it comes to FMCG product selection, even if the product is seasonal in nature.
This approach means Blinkit is unlikely to list products solely to expand its catalogue. Even though the company wants to add to its SKU portfolio, it’s not an anything goes approach.
The key difference between ecommerce and quick commerce is that the latter curates products, while Amazon and Flipkart list pretty much everything under the sun. Amazon India and Flipkart each have over 150 Mn products listed on their platforms, while Blinkit carries around 5,000 to 7,000 SKUs currently.
It’s another matter that Blinkit is targeting consumers who also shop on Amazon and Flipkart. However, its use cases are geared toward instant gratification, putting it in competition with local retailers and kiranas, which usually stock around 1,500 to 2,000 SKUs.
Despite entering the non-grocery segment, the likes of Blinkit will not have the same product depth as Amazon and Flipkart.
This is best indicated in the areas that Blinkit is looking to focus on — items like printouts, paan shop, seasonal appliances, kitchen appliances with high-usage frequency. These items may not significantly drive up the average order value (AOV) by themselves, but can be a force multiplier for Blinkit as it is anyway catering to grocery demand.
“The idea at Blinkit has always been to increase SKUs that are fast-moving and could help raise the AOV and profit margin. This is why BigBasket, Blinkit, and Zepto listed the iPhone 16 on their platforms, as it met all these criteria. However, this doesn’t mean they’ll continue selling iPhones indefinitely; once sales decline in a given area, they’re likely to stop offering it there. With Amazon and Flipkart, this wouldn’t be the case,” a quick commerce market analyst told Inc42.
Where Blinkit Differs From Amazon, Flipkart
Recently, Blinkit cofounder and CEO Albinder Dhindsa emphasised that Blinkit is benchmarking its pricing with Amazon and Flipkart, meaning that products like Apple iPhone 16 are priced on par with Amazon or Flipkart, with the added benefit of instant delivery.
Jitesh Agarwal, founder and CEO of Treelife Consulting, pointed out that one advantage for Blinkit is its relatively lower delivery cost compared to horizontal players, while the cost of goods remains similar. This allows Blinkit to stretch its legs a little more when it comes to sales margins than Flipkart or Amazon.
The app has also launched a self-service tool for D2C brands to list their products on Blinkit, bringing itself on par with Amazon and Flipkart to some extent. “On quick commerce platforms, we can reduce our inventory from 60 days to just a week, giving us better demand visibility,” noted a D2C ayurveda brand founder.
As per this founder, and others that have spoken on the matter, D2C brands are even willing to pay Blinkit, Zepto, Swiggy and other QC platforms a commission of 35%-40%, whereas Amazon and Flipkart charge around 20%. This is because competition is relatively lower on quick commerce platforms and brands can tailor their inventory capacity according to the city they want to sell in.
Agarwal also mentioned that brands on QC get instant revenue realisation, as customers receive their orders immediately, and companies receive payments right away. This is a significant advantage over Amazon, where payments may take 3-4 days.
While QC players are seeing growth, they face substantial challenges, particularly with rising operational costs. Previously, many products like vegetables and dairy were locally sourced, which reduced logistics issues. However, with expanded SKUs and a shift toward ecommerce, players may now need to focus on logistics and warehousing, leading to increased operational costs and working capital needs.
Lavneesh Arora, a former senior director at Delivery Hero, said, “Working capital will definitely increase, which is a big challenge.” QC companies are evaluated based on metrics like delivery cost, average order value, and order density, with working capital often overlooked.
He added that going ahead, certain dark stores would be located at the city’s outskirts, therefore Blinkit could require some extra time for the delivery, depending on the products. Dark stores for infrequent & high-value purchases could be outside and require extra time.
“In general the delivery times will not be so stringent and allow for more bundling/stacking of order delivery. Slower and stacked order delivery and high order value are key to profitability,” said Arora. That’s the same idea that Swiggy has with its mega dark stores, as reported by Inc42 a few days ago.
A Clash Of The Titans
With Amazon, Flipkart, Tata, and Reliance entering quick commerce, Blinkit, Instamart, and Zepto face tough competition to maintain their lead.
“Amazon and Flipkart dominated ecommerce and didn’t let others scale up by using methods like deep discounting. They may adopt similar strategies in QC, which could create a challenging environment for Blinkit, Zepto, and Instamart,” a Swiggy Instamart insider admitted.
While Blinkit CEO Dhindsa has focused on price benchmarking, many daily-use products are still sold at a 10%-20% premium on quick commerce. Given that India is a price-sensitive market, there is a limited customer base willing to pay extra for instant delivery. This is where the competition may be able to catch up.
This challenge is reflected in Blinkit’s order value per store, which has decreased after the addition of new stores. However, Dhindsa emphasised that newer stores need time to reach the average sales levels of established ones.
The high commissions paid by D2C players to Blinkit and QC platforms are partly due to low competition.. Once SKU levels reach a certain threshold, D2C brands may seek other options or may not be happy with the high commissions. Blinkit & co will need to balance SKU growth with the need of D2C brands for visibility and discovery.
What advantage does Blinkit have in the upcoming clash? For one, unlike Swiggy and Zepto, Blinkit’s grocery delivery experience stretches back a decade. Sure it was not quick commerce as it is today, but as PepperTap founder Sharma adds, a decade of learning cannot be ignored.
One key factor for Blinkit’s success is that its operations are managed completely separately from Zomato. Before Blinkit, Zomato attempted quick commerce twice, but realised its delivery fleet was not suited for dark store operations, plus quick commerce had a far higher ceiling than food delivery.
This realisation led Deepinder Goyal to acquire Blinkit and invest millions and this unabashed belief in quick commerce has taken Blinkit far beyond Swiggy’s Instamart.
Essentially, Blinkit has a lot more flexibility and autonomy in setting its course, which perhaps Swiggy cannot match just yet, given its unified app architecture. And even as it evolves and adapts to the new realities of quick commerce, this freedom might just be Zomato-owned Blinkit’s biggest advantage against its arch rival.
Edited by Nikhil Subramaniam
