Zomato-owned Blinkit to grow dark store count by 30-40% in a year

Quick commerce platform Blinkit, which was integrated within Zomato’s operations in August 2022, looks to ramp up its dark store network as more of these stores turn profitable. In a letter to shareholders announcing its Q3FY23 earnings, Zomato stated that Blinkit can “comfortably grow” its dark store count by 30-40 per cent over the next 12 months, and has identified several high-potential neighborhoods in existing as well as new cities.

But store expansion will also depend on its ability to find the best and most cost-effective locations. “We are seeking opportunities for store openings in high-potential areas based on the data our systems generate, the management bandwidth and time to supply creation,” Zomato CFO Akshant Goyal stated.

He further explained, “Unlike the food delivery business, the growth in quick commerce business is dependent on various factors such as availability of product from the brand, seller ability, and supply chain capacity. Only when we feel confident that we can provide a great experience for our customers in a high potential location, do we start the process of opening new stores.”

Blinkit currently has a network of 400+ dark stores through which it services in 20-odd cities. More than 20 per cent of its Gross Order Value (GOV) now comes from stores that are contribution positive (in Dec 2022), the company shared.

Blinkit’s GOV grew by 18 per cent QoQ to Rs 1,749 crore in Q3, driven by a 21 per cent jump in order volumes. Growth in revenue per order also led to the higher QoQ revenue growth of 28 per cent to Rs 301 crore. The number of orders on Blinkit increased 21 per cent to 3.16 crore. “All of this growth has come without any expansion in our dark store footprint as evident from the increase in GOV per dark store,” Blinkit CEO Albinder Dhindsa said.

The business, however, continues to bleed, with adjusted EBITDA losses in Q3 at Rs 227 crore, narrowing marginally from Rs 259 crore in the previous quarter. Overall, Q3FY23 was the highest ever in terms of new and returning customers for the quick commerce player.

“Blinkit is also less impacted vis-à-vis the food delivery business as our typical purchase basket tends to be more skewed towards essential / non-discretionary spends. The slight downward pressure on average order value might be a result of the slowdown where customers are preferring to buy smaller packs instead of larger ones,” Dhindsa shared.

Blinkit believes that consumers are increasingly opting for convenience (quick deliveries) and reliability in low-involvement FMCG products and groceries, thereby helping its platform scale up. “Given Blinkit’s differentiated value proposition of quick delivery, we believe that we are gaining share vis-a-vis next day (or next week) e-commerce businesses (Amazon, Flipkart, etc.). This is especially true in case of ‘low-involvement’ products (for example groceries, FMCG products, electronic accessories, etc.) where customers are not necessarily looking to spend a lot of time comparing a wide range of products or features,” Dhindsa explained.

“We are also becoming a platform of choice for many emerging brands which are using Blinkit to launch themselves nationally,” he added.

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