Zomato, a foodtech major, has reportedly decided to put a halt to the integration of its quick commerce arm Blinkit. The company aims to shift its focus towards building super brands.
The directive from Zomato’s founder and CEO, Deepinder Goyal, to the company’s top management is to concentrate on developing “super brands” instead of “super apps,” as per a report by ET.
“In India, super apps haven’t proven as successful as they have in China and Indians lean towards super brands,” said Goyal.
Zomato’s approach is evident in its decision to maintain a distinct separation between its food delivery platform and quick-commerce unit. The focus is on developing Blinkit as an independent brand.
Ever since Zomato’s acquisition of Blinkit, there has been anticipation surrounding the integration of both apps into a unified platform. This is particularly notable, considering that its competitor, Swiggy, incorporates quick commerce service Instamart directly within its main app.
Zomato’s Blinkit Acquisition:
In 2022, Zomato acquired the quick commerce startup Blinkit for INR 4,447 Cr ($568 Mn) through an all-stock transaction. Following the acquisition, Zomato’s management communicated to analysts that the integration of Blinkit, with a specific focus on its delivery fleet, would enhance operational efficiencies. This strategic move is expected to play a significant role in advancing the publicly listed company towards profitability.
Nevertheless, as per sources cited by ET, there has been a shift in the current strategy. Zomato has now chosen to prioritize the integration of Blinkit into the company by seeking synergies with its business-to-business supplies vertical, Hyperpure. Moreover, users will find a dedicated tab on the Zomato app that directs them to the Blinkit app.
“At a corporate level, the message is to build brands and the most meaningful synergies are being driven — between not just food and Blinkit but also among the different verticals that the broader organisation runs — are happening mainly on the backend to ensure it doesn’t impact customer experience,” a senior executive told ET.
On the flip side, Swiggy, Zomato’s primary competitor, has opted for the integration of its quick commerce vertical, Instamart, directly within its main app. Swiggy is strategically utilizing its loyalty program and robust delivery fleet, backed by investments surpassing $700 Mn, to fortify its standing in this particular business segment.
Blinkit achieved positive contribution for the first time in the quarter concluding on September 30, 2023 (Q2 FY24).
In the shareholder letter accompanying the financial statements for Q2 FY24, Zomato stated that Blinkit’s contribution margin, calculated as a percentage of gross order value (GOV) within the entire business, progressed from -7.3% in Q2 FY23 to +1.3% for the quarter concluding on September 30, 2023.
Continue Exploring: Blinkit records first positive contribution, anchoring Zomato’s quick commerce success
During Q2 FY24, Blinkit registered 45.5 Mn orders, reflecting an increase of almost 24% quarter-on-quarter (QoQ) from the 36.8 Mn in the preceding quarter. Additionally, there was a substantial year-on-year (YoY) growth of 74.3% compared to Q1 FY23, where it recorded 26.1 Mn orders.
