Zomato mulls expanding Blinkit to compete with ecommerce giants

Zomato's CEO Deepinder Goyal stated on August 3, 2023, that Blinkit will be more valuable in terms of delivering shareholder value than the core business in the next decade.

Food delivery major Zomato is planning to expand its 10-minute delivery platform, Blinkit, by adding products from various categories, according to a report by the Economic Times.

The latest move could potentially put Zomato in direct competition with e-commerce giants like Amazon and Flipkart. To achieve this, Zomato plans to build its supply chain to directly source products and manage stock, sources told ET.

This push into the direct-to-consumer (D2C) space is being seen as a long-term growth driver for the company. Zomato has already been in talks with individual brand owners across various categories to stock up on inventory, the report added.

It has been reported that Zomato is planning to manage the products' flow for Direct-to-Consumer (D2C) brands, similar to marketplaces, without owning any inventory directly. Zomato declined to comment on ET's query.

Another source tells ET that Zomato has attempted to acquire and merge with e-commerce enabler, Shiprocket, at least twice as part of this strategy. Shiprocket works with many D2C brands. However, Shiprocket declined the offer.

Moneycontrol could not independently verify the report.

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Blinkit saw its gross order value (GOV) doubling to Rs 3,542 crore in Q3FY24, registering a growth of 103 percent year-on-year (YoY) from Rs 1,749 crore clocked in Q3FY23.

While the company’s total order value grew 103 percent, its revenue from ads outpaced that and registered an increase of 220 percent YoY during the October-December quarter. The company did not specifically provide how much it earned through ads on the platform.

Zomato reported a net profit of Rs 138 crore for the period of October-December. This marks the third consecutive quarter where the company's earnings came in the green. The revenue for the same period rose by 69 percent year-on-year to Rs 3,288 crore. This growth happened at a time when the broader e-commerce sector was facing challenges due to high inflation and muted demand.

In contrast, Zomato had posted a net loss of Rs 347 crore and revenue of Rs 1,948 crore during the same quarter of the previous year.

Zomato CEO Deepinder Goyal had stated on August 3, 2023, that Blinkit will be more valuable in terms of delivering shareholder value than the core business in the next decade. Goyal wrote in a letter to the shareholders that Blinkit's gross order value (GOV) is close to Zomato's GOV in some of the large cities where they both operate. He believes that Blinkit will be more beneficial to their shareholders in the next 10 years compared to Zomato. This is just the beginning, and Blinkit will continue to grow and contribute to Zomato's success in the coming years.