Zomato's e-commerce unit Blinkit is accelerating its expansion and expecting continued losses as competition in India's instant delivery market heats up.
Blinkit now surpasses 1,000 stores at the end of the December quarter, one year ahead of its previous guidance of December 2025. By December 2025, we aim to reach small warehouses, which are dark stores in residential areas).
This acceleration led to a loss of Rs 103 crore ($11.9 million) in Q3FY25 as Blinkit added 368 stores and 1.3 million square feet of warehouse space in the last two quarters.
JPMorgan said that the companies are renting stores; I believe the industry has entered “land grab mode” by pursuing aggressive strategies around product discounts and loyalty programs. Some other major players, including Zepto, the No. 2 player in express commerce, are expanding their dark store networks significantly ahead of schedule, the bank wrote.
Express-commerce companies that deliver groceries and other products to customers within 10 to 15 minutes— Cannibalizing e-commerce market share in IndiaIn response to changing consumer demand, established players have been forced to modify supply chains.
“As we continue with store expansion, our networks will have to carry more underutilized stores in the next month or two, which will impact short-term profitability,” Zomato's chief financial officer Akshant Goyal said. These investments could lead to growth that remains “significantly above 100 percent” in FY20 and FY26, he added.
The shift in strategy comes as competition heats up. Lightspeed, Zepto, powered by StrepStone and Glade Brook; It made more than $1 billion last year.. Zomato It has also raised $1 billion. Through qualified institutional placement in November last year
Flipkart too. It started its fast trading. Offered last year, more than 100 dark stores have been added. Amazon Launched its express commercial pilot. Swiggy, which runs India's No. 3 e-commerce platform in the South Asian market last month, listed late last year. 2024 World's Biggest Tech IPO.
“The biggest impact of intensifying competition is the acceleration in customer awareness and rapid commerce,” said Albinder Dhindsa, who heads Blinkit. Compared to the early days of food delivery, when competition was high, it led to higher customer investment across the industry.
While Blinkit's core customers remain loyal, accounting for a third of the platform's total order value in December. The company said competitive pressures have caused margin expansion to pause. The company expects to eventually see strong returns on its existing store network investments once the business achieves greater scale.
The expansion compares with a brisk 120% trade as Zomato's core food delivery business showed a sluggish 17% year-on-year growth in the last quarter.