Over the last couple of years, Zepto has steadily increased its share of the quick-commerce market, edging out Swiggy Instamart. According to a report from HSBC Global Research, Blinkit has grown its share to 40%.
The report, created in collaboration with Zepto’s senior management, estimates that the company’s market share rose from 15% in March 2022 to 28% in January 2024.
During the same period, Instamart’s market share declined from 52% in March 2022, when it held the largest share in the ecosystem, to 32% in January 2024. Conversely, Blinkit‘s market share increased from 32% to 40% over that timeframe.
Swiggy Instamart did not respond to a request for comment regarding the report.
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According to the report, Blinkit, boasting approximately $2 billion in gross merchandise value (GMV) terms and poised to double in 2024, holds the dominant position in the market. Currently, Blinkit’s margins at the earnings before interest, taxes, depreciation, and amortization (EBITDA) level stand at -2%, with expectations to enhance to 4-5% by FY27.
HSBC also increased the target price of Zomato, the parent company of Blinkit, to INR 215 per share and assigned it a ‘buy’ rating. Zomato shares were last traded at INR 188.3 per share on the NSE.
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“Our projection is that India would move straight from unorganised retail (kirana shops) to quick-commerce (QC), with minimal penetration of modern retail (MR). Furthermore, in our opinion, the bulk of value movement at this point is happening from unorganised retail to QC. Importantly, this is caused by the fact that, in contrast to MR, QC mimics the majority of characteristics of unorganised retail in India,” the report said.
This report comes as all major quick-commerce platforms expand their offerings, recording robust sales growth in non-grocery categories like beauty, toys, health, and electronics, as reported by Snackfax on March 4. According to a Goldman Sachs report, around 15% of Zepto’s $1.2-billion annualized gross sales currently come from non-grocery products.
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According to the HSBC report, advertising revenue would also play a vital role in the profitability of quick-commerce platforms.
“Even when juxtaposed with ecommerce platforms such as Flipkart & Amazon, QC is better positioned to capture ad spend due to its better terms of trade (take rate) for grocery versus non-grocery. We believe that advertising take rates (terms of trade) in food are about 6-8% higher than in electronics, giving QC platforms a significant relative edge over other ecommerce platforms,” it stated.
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