Zomato's Expansion into 10-Minute Delivery Space with Blinkit Poised to Challenge E-Commerce Giants

19 Feb 2024 , 11:26 AM

Zomato, a prominent player in the food delivery sector, is gearing up to expand its 10-minute delivery platform, Blinkit, by incorporating products from various categories, as reported by the Economic Times. This strategic move is expected to position Zomato in direct competition with established e-commerce giants like Amazon and Flipkart.

To facilitate this expansion, Zomato intends to develop its supply chain capabilities to directly source products and manage inventory, according to sources familiar with the matter. The company aims to establish partnerships with individual brand owners across different categories to enhance its inventory offerings.

This foray into the direct-to-consumer (D2C) space is viewed as a significant long-term growth driver for Zomato. The company is exploring avenues to manage the flow of products for D2C brands, akin to traditional marketplaces, without directly owning any inventory.

Despite encountering setbacks in its attempts to acquire and merge with e-commerce enabler Shiprocket, which collaborates with numerous D2C brands, Zomato remains steadfast in its expansion strategy.

Blinkit, Zomato’s rapid delivery platform, witnessed a remarkable surge in gross order value (GOV) to ₹3,542 Crore in Q3FY24, marking a staggering 103% year-on-year growth from the previous year’s ₹1,749 Crore. This growth underscores the platform’s increasing popularity among consumers.

Moreover, Zomato’s revenue from ads experienced a robust increase of 220% year-on-year during the October-December quarter, outpacing the growth in total order value. The company’s strong financial performance is reflected in its reported net profit of ₹138 Crore for the same period, marking the third consecutive quarter of profitability. Revenue also surged by 69% year-on-year to ₹3,288 Crore, indicating robust growth momentum.

Zomato CEO Deepinder Goyal has expressed confidence in the potential of Blinkit to deliver shareholder value, asserting that Blinkit’s GOV rivals that of Zomato in certain large cities where both platforms operate. Goyal envisions Blinkit playing a pivotal role in Zomato’s success over the next decade, surpassing the core food delivery business in terms of value generation.