Zomato Explores Lucrative Potential with Blinkit 2023
In the ever-evolving landscape of the food delivery industry, competition is fierce, and companies constantly seek new avenues for growth and profitability.
Zomato, a prominent player in the food delivery and restaurant discovery space, has set its sights on a significant profit opportunity by investing in Blinkit, a hyperlocal delivery startup.
This strategic move not only reflects Zomato’s ambition to diversify its offerings but also signifies its commitment to tapping into emerging markets and catering to evolving consumer preferences.
The meal delivery network Zomato anticipates that its third-largest section, Blinkit, will show promising signs of profitable development in the near future, providing a greater possibility for profit than its main food delivery operation.
Since paying Rs 4,447 crore to buy Blinkit (previously Grofers) in August of last year, Zomato has witnessed a consistent increase in its gross order value on a quarterly basis.
The company observed that in certain cities where Blinkit and the food delivery industry are both present, Blinkit’s gross order value exceeds that of the company’s primary business.
By the end of this fiscal year, the business plans to build 100 more dark shops, especially in locations where demand outpaces the serving dark stores’ capacity, in order to sustain the surge in orders. The business is optimistic that the new locations won’t have a detrimental effect on segment margins.By Q1 of FY25, Blinkit should break even, according to Zomato. Analysts observed that Blinkit’s contribution margin increased to 1.3% in Q2, marking the company’s first positive quarter due to higher volumes and improved operations at its dark shops.
Numerous analysts have raised their price targets for Zomato’s shares as well as their projections for the company’s total profit and sales as a result of Blinkit’s development.
Though Blinkit has grown over the last several quarters, rivals like Zepto and Swiggy’s Instamart are becoming more and more formidable.
Blinkit, formerly known as Grofers, is an Indian hyperlocal delivery platform that specializes in delivering groceries, essentials, and daily-use products to customers’ doorsteps.
Founded in 2013, the company has grown steadily and has a strong presence in major Indian cities. Blinkit leverages its network of delivery personnel and localized warehouses to offer fast and convenient deliveries, often within hours of placing an order.
The company’s user-friendly app and website have made it a go-to choice for consumers looking for a hassle-free shopping experience for everyday needs.
In August 2022, Zomato announced a strategic investment of $100 million in Blinkit, marking its entry into the hyperlocal delivery segment.
This move came on the heels of Zomato’s acquisition of the food delivery giant Uber Eats in 2020, which solidified its position as one of India’s leading food delivery platforms. The investment in Blinkit demonstrates Zomato’s commitment to diversifying its portfolio and addressing a broader spectrum of consumer needs.
By investing in Blinkit, Zomato is poised to expand its delivery ecosystem beyond just food. With Blinkit’s extensive reach in the grocery and essentials market, Zomato can tap into a lucrative sector that has witnessed rapid growth, particularly during the COVID-19 pandemic. The demand for convenient and contactless delivery of groceries and daily-use items is expected to remain high, providing a significant profit opportunity for Zomato.
Zomato can leverage its vast user base and data analytics capabilities to cross-promote Blinkit’s services to its existing customers. This synergy can lead to the creation of attractive bundle offers, encouraging consumers to use both platforms for their food and grocery needs. Such bundling strategies can boost sales and profitability for both Zomato and Blinkit.
By diversifying into hyperlocal delivery, Zomato can enhance customer loyalty by becoming a one-stop-shop for a wide range of needs. This can lead to increased customer retention and higher customer lifetime value, which are crucial factors for profitability in the competitive food delivery industry.
Blinkit’s presence in multiple cities in India aligns with Zomato’s goal of expanding its reach across the country. As Zomato integrates Blinkit’s services into its platform, it can strengthen its foothold in urban and semi-urban areas, catering to the diverse needs of a larger customer base.
Diversifying its revenue streams is a prudent strategy for Zomato to reduce its dependence on the food delivery segment, which can be affected by seasonality and market dynamics. Blinkit’s focus on essentials and daily-use items provides a stable income source that can help balance Zomato’s financial performance.
Zomato’s investment in Blinkit represents a strategic move that holds substantial profit potential. By venturing into the hyperlocal delivery space, Zomato aims to capture a larger share of the consumer wallet and create synergies between its food delivery and grocery delivery services.
The company’s ability to leverage its existing infrastructure, customer base, and technological capabilities positions it well to capitalize on the evolving demands of Indian consumers.
As the food delivery industry continues to evolve, Zomato’s diversification efforts through Blinkit could prove to be a game-changer, driving growth and profitability in new and exciting ways.
