After posting over 100-fold jump in net profit in the first quarter of FY25, Zomato's management said in an earnings call that it has gained market share in the cities of Southern states, a region where initial public offering-bound Swiggy has historically dominated.
"We are close to our national average market share even in Southern cities where we were lower some years ago," a senior Zomato official told analysts.
This comes after various brokerage firms have estimated that Zomato's market share in India's food delivery sector has risen to around 55 percent, while Swiggy has lost ground. To be sure, in 2020, Swiggy reigned supreme with a 52 percent market share. In the three years since, it has ceded space to Zomato, with Swiggy’s market share falling to 45 percent.
Where Zomato differed in its approach is in placing early bets in non-metro cities, a move that was not considered good for profitability. But, it took that leap knowing that these regions would not yield immediate results.
According to experts, Zomato built its business in a more localised way, approaching each region with a strategy that was unique to that market, be it supply chain, marketing or even restaurant choices.
Meanwhile, Zomato has also raced past Swiggy in terms of profitability. The Gurugram-based company has reported five consecutive quarters of net profits now whereas Swiggy logged an operating loss of over Rs 1,000 crore in the first nine months of FY24, according to reports.
Zomato's net profit jumped 126.5 times to hit Rs 253 crore in the April-June quarter (Q1), compared to the year ago period, even as the food aggregator hiked platform fees charged to consumers and saw an improvement in the operational profitability of its quick commerce arm Blinkit.
Apart from food delivery, its quick commerce arm Blinkit has also become a bright spot for Zomato. The implied value of Blinkit is now larger than that of Zomato’s core business (food delivery), analysts at Goldman Sachs said in a note published on April 25.
Zomato had acquired Blinkit for $568 million in 2022 but since then, on the back of improved performance, the latter’s implied valuation has grown to a staggering $13 billion, according to analysts at Goldman Sachs.
Now, Blinkit aims to hit 2,000 dark stores by the end of 2026 from 639 at the end of the June quarter.
"As of now, we see a line of sight of getting to about 2,000 stores for our current business. Most of these stores would be in top 10 cities in India. Beyond the large cities, the size of the market is still undiscovered. If everything goes as planned (which usually doesn’t), we plan to get to 2,000 stores, latest by the end of 2026 while remaining profitable," Blinkit chief Albinder Dhindsa said on August 1.
"Our average GOV (gross order value) throughput per store has grown from about Rs 6 lakh per day per store when we were at 383 stores exactly a year ago to about Rs 10 lakh today when we are at 639 stores. For our top 50 stores today, this number is Rs 18 lakh per day per store, and growing," he added.
Its GOV grew 130% year-on-year to Rs 4,923 crore in the June quarter, while operating loss decreased to Rs 3 crore.
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