On the financial front, the company expects the losses to continue as it continues to bring forward store expansion
Amid heightened competition in the quick commerce ecosystem from Swiggy Instamart and Zepto, Blinkit’s Founder and Chief Executive Officer (CEO) Albinder Dhindsa, highlighted that the business has been experiencing a pause in margin expansion. The CEO, however, ruled out the case of core customers moving away from the platform.
Zomato’s quick commerce business posted a loss during the third quarter of the current financial year (Q3FY25). The company stated that the losses were largely due to pulling forward the growth investments in the business that it would have otherwise made in a staggered manner over the next few quarters.
“In addition to that, heightened competition has led to a pause in margin expansion in the business, which is expected and should be temporary. So far, we have not seen any attrition of our core customers which tells us that customers are continuing to choose Blinkit over other options,” Dhindsa explained.
To support the claim, he added that the monthly retention of Blinkit’s core customers has sustained despite the competition. The core customers have been defined as the customers who were active between September 2022 (the first full month post-acquisition by Zomato) to December 2022.
Dhindsa further explained, “These customers, who comprise one-third of the platform GOV(Gross Order Value) for December 2024, paid an average delivery charge of around Rs 20 per order in Q3FY25 even when there were other players offering very low (or no) delivery charges.”
In the last two quarters, the business has added 368 net new stores (152 in Q2FY25 and 216 in Q3FY25) accounting for about 37 per cent of its total store network of 1,007 stores. In the same period, it also added 1.3 million square feet of warehousing space, accounting for over 30 per cent of its overall warehousing network. The business incurred capital expenditure of around Rs 370 crore in the two quarters for the same.
The company is expecting to be even more margin dilutive in the short term (as compared to new stores) citing that new warehouses take longer to ramp up than new stores. The business ramped-up the digital marketing spends in Q3FY25 with a focus on new customer acquisitions. As a result, the average monthly transacting customer (MTC) growth gathered pace in Q3FY25 with average MTC of 10.6 million during the quarter.
On the financial front, the company expects the losses to continue as it continues to bring forward store expansion. It stated that the networks might have to carry a greater load of under-utilised stores which will impact near-term profits in the next one or two quarters. However, the company believes that these investments will likely result in GOV growth remaining above 100 per cent, at least for the current fiscal and the next.
