IFAT (Indian Federation of App-Based Transport Workers) has urged Blinkit, the quick-commerce unicorn owned by Zomato, to reconsider its stance on recent reductions in pay for delivery drivers.
The industry body’s national General Secretary, Shaik Salauddin, said, “The sudden reduction in their wages not only undermines the workers’ hard work and dedication but also puts their livelihoods at risk.”
Salauddin stated that approximately 600 delivery personnel met with company officials on April 14 to address the pay reduction issue, but the company persisted with its decision to continue with the cut.
As a reminder, Blinkit reduced the remuneration of its delivery staff from INR 50 per order to INR 14 last week, prompting protests and indignation across Delhi/NCR. According to IFAT, over half of the 200 dark stores that Blinkit operates in Delhi, Gurugram, Faridabad, Ghaziabad, Noida, and Greater Noida have closed since April 13.
Last week, in response to a SnackFax query on the pay cuts, a Blinkit spokesperson had said, “We have introduced a new payout structure for our partners that compensates them based on their effort to deliver an order. This is an opt-in exercise, and our teams are on the ground to answer any questions from the partners.”
IFAT stated that Blinkit previously paid INR 50 per order to its first group of delivery staff, while the more recent employees earned INR 25 per order. The organization further revealed that the quick-commerce firm offered incentives and fuel expenses, which could amount to INR 1,400 per week in certain situations, in addition to the delivery payments.
“The protesting workers are also angry as these incentives have been gradually tapered out,” said Salauddin, adding, “We strongly condemn this unilateral decision by Blinkit and call on the company to reconsider its stance.”
The involvement of Yashpal Batra, a BJP representative from Haryana, in discussions with a local industry association in Gurugram that represents striking Blinkit staff last week has added a political aspect to the ongoing developments.
Numerous industry specialists, such as Ashneer Grover, the former CFO of Blinkit (formerly known as Grofers) and cofounder of BharatPe, have been expressing their views on the overall feasibility of the quick-commerce business model.
In 2017, Grover departed from Blinkit, then known as Grofers, and recently took to Twitter to voice his concerns about the sustainability of the quick-commerce model.
“BlinkIt/Zepto – [the] problem is not INR 15 for delivery against INR 50. [The] problem is 10 Min delivery has no economics – low ticket size and low margin can never be solved through forced low delivery cost. BlinkIt journey: 90 Min (bull run) —> Next day (bear run) —> 10 Min (bull run) —> ??,” wrote the ex-CFO on Twitter on April 16.
Zomato’s Q3 FY23 financial report indicates that Blinkit’s order volume rose by 21% QoQ to 3.16 Cr, although the average order value (AOV) decreased by 2.6% to INR 553.
Zomato founder Albinder Dhindsa remarked that although the AOV is significant, the company could still establish a profitable business even with an AOV that is 20% lower than the current level.
