Zomato founder and CEO Deepinder Goyal on Thursday said he is ‘very happy’ with the acquisition of instant grocery delivery platform Blinkit (formerly known as Grofers) and that the quick commerce vertical has not seen any slowdown in business.
“As far as quick commerce is concerned, we haven’t seen any/much slowdown in the business. But that could be the low base effect, in addition to relatively low penetration due to the early-stage nature of that business,” Goyal said in a letter to shareholders.
Zomato announced the Rs 4,447 crore acquisition of Blinkit in June this year in an all-stock deal, to power its quick commerce play where its rival Swiggy had already taken huge strides in building out a large business vertical.
The acquisition was closed on August 10 and, therefore, September quarter results included just 50 days of Blinkit financials, the company said.
As per the company’s September quarter results, Blinkit’s gross order value (GOV) rose 26 per cent quarter-on-quarter to Rs 1,482 crore while the revenue grew 44 per cent quarter-on-quarter.
Adjusted Ebitda loss in quick commerce fell to Rs 259 crore from Rs 326 crore in the June quarter, leading to adjusted Ebitda (as a percentage of GOV) of minus 17.5 per cent in the September quarter compared with minus 27.8 per cent in June quarter.
The quick commerce platform fulfilled 26.1 million orders in the second quarter of FY23, up 17.5 per cent from the previous quarter. Average order value (AOV) grew from Rs 528 to Rs 568 and average monthly transacting customers stands at 2.6, up from 2.2 in the previous quarter.
“So far, I am very happy with the Blinkit acquisition. As we see this business more closely, our level of excitement has only increased. Our hypothesis seems to be playing out on both strong customer adoption as well as the core economic model. I am (nervously) excited about where we are headed in this business,” Goyal wrote.
Blinkit is a marketplace and does not own any inventory. Third-party sellers, who sell their products on Blinkit’s marketplace, own the inventory of these products and stock this inventory in a network of warehouses and dark stores operated by Blinkit. Hence, any losses related to unsold or expired inventory are borne by the sellers themselves, Goyal explained in the letter.
He said the integration was quick and great, but some people who didn’t like the transition left the company. “There were a number of people who didn’t like the transition, and decided to leave, but we are past all the pain, and now have a stable team at Blinkit which is executing very well to produce outcomes that would surprise the best of us,” his letter read.
Zomato’ business-to-business (B2B) supplies vertical Hyperpure has begun supplying to the sellers on Blinkit, which Goyal says is turning out to be another opportunity for the B2B arm.
“This has the potential to further accelerate revenue growth for Hyperpure going forward. It is a bit early though to talk about how the product mix and margins will shape up in this business,” he said.
