How BlinkIt is WINNING India’s ₹23,000 Crore Quick Commerce Industry | GrowthX Wireframe

Summary

Blinkit, a quick commerce giant in India, has disrupted the market with a valuation of $13 million and 46% market share. It has tripled its revenue to 2300 CR rupees, expecting to break even by 2025. The company's success lies in its dark stores strategy, efficient delivery, and high average order value. With a strong brand and potential Zomato integration, Blinkit is poised to continue leading the quick commerce industry.

Takeaways

• 📈 Blinkit has surpassed Zomato in valuation and is now valued at roughly $13 million with a 46% market share in India's 23,000 CR quick commerce industry.
• 💰 Blinkit's revenue has tripled from 800 CR to 2300 CR and is expected to break even in the first quarter of FY 2025.
• 🛒 The average order value for Blinkit is approximately 600 rupees, which is close to the typical order value for most customers.
• 🏪 Blinkit earns revenue from three main sources: warehousing services and marketplace commissions, ads shown on the app, and customer fees including delivery and packaging.
• 📊 The take rate for Blinkit, which is the share kept from an order, is roughly 110 rupees out of an average order of 600 rupees.
• 🚚 The cost side for Blinkit includes last-mile delivery costs, dark store mid-mile and warehousing costs, variable costs like packaging and payment charges, and customer acquisition costs.
• 💡 Blinkit's contributing profit, which considers only variable expenses, is approximately 15 rupees from each transaction, but this is not the net profit as it excludes fixed expenses.
• 🔑 The scale insight for Blinkit involves reaching more customers and scaling revenue through the use of dark stores, which are strategically located to ensure quick delivery.
• 🏬 Dark stores are large, inventory-rich facilities that serve as quick delivery points and are significantly more efficient in terms of gross merchandise value per square foot than traditional supermarkets.
• 📊 Blinkit has the highest average order value compared to competitors, which contributes to a higher contribution margin and is a key strategy for the company's growth.
• 📈 Blinkit's market share has increased from 32% in 2022, and with Zomato's acquisition, there is potential for significant growth in new customer acquisition through Zomato's large user base.

Q & A

What is Blinkit and why is it in the news?

Blinkit is a quick commerce company that has recently gained significant attention for its rapid growth and valuation, surpassing that of Zomato. It has reported over 2,300 CR rupees in revenue and has disrupted India's quick commerce industry with a market share of 46%.

How did Blinkit increase its revenue from 800 CR to 2300 CR?

Blinkit managed to triple its revenue by expanding its market presence, optimizing its operations, and leveraging its quick delivery model which caters to the demand for instant gratification in the consumer market.

What is the average revenue Blinkit earns per order?

On an average order of 600 rupees, Blinkit earns roughly 110 rupees, known as the take rate, which is the share Blinkit keeps for itself from each order.

What are the main sources of revenue for Blinkit from each order?

The main sources of revenue for Blinkit from each order include warehousing services and marketplace commissions from suppliers, ads shown by brands on the platform, and customer fees which cover delivery and other service charges.

What is the concept of dark stores in the context of Blinkit's business model?

Dark stores are large, warehouse-like facilities that Blinkit uses for storing and preparing orders. They are strategically located in close proximity to customers to ensure quick delivery within a 15 to 20-minute window. These stores do not have walk-ins and are exclusively for the use of delivery riders.

How does Blinkit's average order value (AOV) compare to its competitors?

Blinkit has the highest average order value among its competitors, at about 635 rupees, which is significantly higher than other platforms like Big Basket, Zepto, and Instamart.

What is the significance of the average order value in quick commerce?

A higher average order value is significant in quick commerce because it directly impacts the contribution margin for the company. A larger AOV means more profit per delivery, making the business model more sustainable and profitable.

How does Blinkit's business model differ from a traditional supermarket?

Unlike traditional supermarkets, Blinkit's dark stores do not cater to walk-in customers. They focus solely on fulfilling online orders quickly, with a high inventory turnover and optimized operations for delivery efficiency.

What is the role of Zomato in Blinkit's growth?

Zomato, which acquired Blinkit in 2022, has played a crucial role in its growth by providing access to a large user base and integrating Blinkit services within its app. This has allowed Blinkit to tap into Zomato's extensive customer base and potentially increase its market share.

What strategies has Blinkit employed to increase its market share?

Blinkit has employed strategies such as increasing the number of dark stores, enhancing its SKU strategy to offer a wide variety of products, and creating buzz through bold initiatives like delivering high-demand items like iPhones or PS5s within minutes.

How does Blinkit's positioning as a one-stop marketplace contribute to its success?

Blinkit's positioning as a one-stop marketplace allows it to capture a larger share of the consumer's wallet by offering a diverse range of products and services, which in turn increases customer retention and average order value.

Outlines

00:00

💡 Blinkit's Business Model and Revenue Breakdown

This paragraph delves into the financial success of Blinkit, a quick commerce company that has recently surpassed Zomato in valuation. With a valuation of approximately $13 million and a 46% market share, Blinkit has disrupted India's quick commerce industry, which is worth 23,000 CR rupees. The company's revenue has tripled from 800 CR to 2300 CR and is expected to break even in the first quarter of FY 2025. The paragraph explains the revenue side of Blinkit's business, which includes warehousing services, marketplace commissions, ads, customer fees, and other sources like membership plans. It also discusses the cost side, including last-mile delivery, dark store and warehousing costs, variable costs like packaging and customer acquisition costs. The average revenue per order is estimated at 110 rupees, known as the take rate, which is the share Blinkit keeps for itself. The contributing profit, which only considers variable expenses, is roughly 15 rupees per transaction.

05:00

🏪 The Role of Dark Stores in Quick Commerce

The second paragraph focuses on the concept of dark stores, which are large stores without walk-ins, strategically located within a 1.5 to 3 km radius from customers' homes to ensure quick delivery. These stores are significantly larger than traditional shops, with a higher gross merchandise value per square foot compared to organized supermarkets like DMart. The paragraph explains the operational structure of dark stores, which includes a mother warehouse located on the outskirts of the city that supplies inventory to multiple dark stores. Blinkit has established the highest number of dark stores, totaling 451 in 27 cities, outpacing its competitors. The paragraph also touches on the importance of the average order value (AOV) in quick commerce, with Blinkit boasting the highest AOV among competitors, which has contributed to its success. The company's strategy of offering a wide variety of products, including high-value items like iPhones and PS5s, has positioned it as a one-stop marketplace, attracting more customers and increasing AOV.

10:01

📈 Market Share Dynamics and Growth Opportunities

The final paragraph discusses the market share dynamics in the quick commerce industry, highlighting the significant growth of Blinkit and its competitors like Instamart and Zepto. It mentions that Blinkit's market share has increased, while Instamart's has decreased. The paragraph also addresses the potential impact of Zomato's acquisition of Blinkit and the strategic decision to keep the two brands separate, emphasizing the strength of the Blinkit brand. The potential for Blinkit to leverage Zomato's large user base for customer acquisition is explored, as is the opportunity for growth as the company expands into new regions. The paragraph concludes by inviting viewers to share their thoughts on which businesses should be analyzed next, signaling an open dialogue with the audience.

Keywords

💡Blinkit

Blinkit is a quick commerce company that has gained significant value and revenue in the Indian market. It is central to the video's theme as it has disrupted the quick commerce industry with its high valuation and market share. The script mentions Blinkit's revenue growth from 800 CR to 2300 CR and its valuation of roughly $13 million, illustrating its impact on the industry.

💡Zomato

Zomato is a food delivery app that acquired Blinkit in 2022 to enter the quick commerce space. The video discusses how Blinkit has become more valuable than Zomato's own food delivery business, highlighting the strategic importance of Blinkit within Zomato's portfolio and the competitive landscape of the industry.

💡Quick Commerce

Quick Commerce refers to the business model of delivering goods within a short time frame, often 15-20 minutes. The video explains how Blinkit has disrupted this industry in India, with a focus on its revenue and cost structure. The term is integral to understanding the video's exploration of the business dynamics within this sector.

💡Revenue Side

The revenue side pertains to the income generated from each order, which includes warehousing services, marketplace commissions, and advertising fees. The script breaks down the sources of Blinkit's revenue, emphasizing the importance of understanding the financial dynamics of quick commerce businesses.

💡Cost Side

The cost side involves the expenses associated with fulfilling orders, such as last-mile delivery, dark store and warehousing costs, packaging, and customer acquisition costs. The video delves into the cost elements of Blinkit's business model, showcasing the economic aspects of quick commerce.

💡Take Rate

Take rate is the share of revenue that a platform like Blinkit keeps for itself from an order. The script uses the term to illustrate the average revenue per order, which is a key metric in understanding the profitability of each transaction in quick commerce.

💡Contribution Margin

Contribution margin is the profit earned by serving each order, considering only variable expenses. The video explains that Blinkit is contribution margin positive, indicating its operational efficiency and the potential for profitability once fixed costs are covered.

💡Dark Stores

Dark stores are large, warehouse-like facilities used by quick commerce companies for inventory and order fulfillment. The video describes how Blinkit uses dark stores to ensure quick delivery and highlights their size and efficiency compared to traditional supermarkets.

💡Average Order Value (AOV)

Average Order Value (AOV) is the average amount spent per order. The script emphasizes the importance of a high AOV for increasing contribution margins and discusses how Blinkit has a higher AOV compared to its competitors, contributing to its business success.

💡Market Share

Market share refers to the portion of the market a company controls. The video discusses how Blinkit's market share has grown and how it compares to competitors like Instamart and Zepto, indicating its dominance in the quick commerce industry.

💡Super Apps

Super Apps are platforms that offer a wide range of services, often including financial services, food delivery, and other functionalities. The video mentions that Zomato has kept Blinkit as a separate app, believing that standalone brands perform better in India rather than integrating all services into a single super app.

Highlights

Blinkit's valuation has surpassed that of Zomato, with a market share of 46% and a revenue of over 2,300 CR rupees.

Blinkit has tripled its revenue from 800 CR to 2300 CR and is expected to break even in Q1 of FY 2025.

Understanding the economics of quick commerce involves analyzing both revenue and cost sides of the business.

Blinkit's revenue per order includes warehousing services, marketplace commissions, ads, and customer fees, totaling an average take rate of 110 rupees.

Cost elements for Blinkit include last-mile delivery, dark store and warehousing, variable costs, and customer acquisition costs.

Blinkit earns an average of 15 rupees from each transaction as contributing profit, considering only variable expenses.

Blinkit's growth strategy includes a structured approach to revenue ladder growth, detailed in a free resource.

Dark stores are a key component of Blinkit's quick delivery strategy, located within a 1.5 to 3 km radius of customers' homes.

Blinkit's dark stores are significantly larger and more efficient than traditional supermarkets, with a higher gross merchandise value per square foot.

Blinkit operates the highest number of dark stores, with 451 in 27 cities, compared to competitors.

Blinkit's average order value (AOV) is the highest among competitors, at approximately 635 rupees, contributing to a higher contribution margin.

Blinkit has successfully increased its AOV through a strategic SKU expansion, positioning itself as a one-stop marketplace.

Blinkit's active user base stands at about 32 million, higher than competitors like Zepto, which has 22 million active users.

Blinkit's market share has grown from 32% in 2022, while Instamart's has fallen, and Zepto's has increased.

Zomato's acquisition of Blinkit and the addition of a Blinkit access button on the Zomato app could significantly expand Blinkit's customer base.

Zomato has deliberately kept Blinkit as a separate app to leverage the strength of the Blinkit brand and avoid the super app model.

Blinkit's long-term strategy and brand trust, built over more than a decade, positions it well for continued leadership in quick commerce.

Transcripts

blinket is all over the news blinket is

now more valuable than zato blinket

reported over 2,300 CR rupees in revenue

and then now speak about zomato they

speak about blinket blinket is bigger

than zomato right

now with the valuation of roughly $13

million and a market share of 46% it has

disrupted India's 23,000 CR quick

Commerce industry a company that zomato

acquired in 2022 to enter into Quick

Commerce but now has become more

valuable this M's own food delivery

business in fact the company 3xs its

revenue from 800 CR to 2300 cror and is

expected to break even in the first

quarter of fi 2025 so let's dive into

the insights that blinkit has cracked

well but before we do that let's also

understand how actually a quick Commerce

player like blinket makes money and what

actually are the economics of this

business and to understand this we went

through multiple reports including ones

by JM Financial JP Morgan and even City

see to understand this properly you need

to split the business into Revenue side

and cost side we'll not only break down

the elements in each category but also

talk about the amount of each of these

line items and not just that we'll also

do an estimate of what an average

revenue and an average cost amount looks

like for every order by the way this is

going to be detailed so feel free to

pause the video wherever you feel

confused first of all let's take a

realistic average order value of 600

rupees which is very close to what most

people usually order on blinket if you

look at the revenue s which is the money

that blinket owns here for themselves

from each order order is divided into

three sources the first one is

warehousing services and Marketplace

commissions this is basically the amount

that suppliers are paying to blinket for

showing and selling their products and

see on every order of 600 rupees 11 to

13% is coming from suppliers which is

roughly 72 rupees now the second part of

the income of this order is the ads that

companies show on blinket this is the

price that Brands pay to show their

products above other products as you

scroll the app for example Brew might

pay to show its coffee for first when

someone searches for a keyword like

coffee it's roughly 2.3 to 3.5% in our

case let's take 3.5% and it will come

down to 21 rupees the next is customer

fees which includes your delivery fees

handling fees for packaging and

delivering the four to your doorstep and

even additional fees like fees they

charge you for having a small cut this

percentage comes at around 3 portion of

the average order value and is roughly

18 rupe in our case by the way there are

also other levers like membership plans

or free delivery plans that these PL

platforms try to sell you often like

zepto does it with their offering of

zepto pass but if we don't over

complicate and dive much deeper into

this we'll see that in a nutshell on an

average order of 600 rupees blinket ons

roughly 110 rupees this 110 Rupees is

known as a take rate the share that

blinket keeps for itself from an order

now let's come down to the cost side

even here you have four elements the

first one is the biggest one which is

the last mild delivery cost which is the

last step when the Riders deliver the

orders to you and cost about roughly 7%

to Blink it and in our case it would

come down to 42 rupe the next one is

dark store Mid Mile and warehousing cost

this entire combination of cost comes

down to about 6.5% and in our case it

would be 39 rupe the other variable cost

which includes packaging wastes support

communication and payment charges are

roughly 2% which comes down to 12 rupees

and now the fourth and the last one is

customer acquisition cost which is the

discount the incentives and the offers

they try to give you to make tempting

deals for you this comes at about 0.2 to

0.3% at about 1.8 rupees so if you

subtract these two amounts blinket earn

roughly 15 rupees from entire

transaction this 15 Rupees is not the

net profit by the way but the

contributing profit now what is that see

contributing profit is the profit that

the company is earning by serving each

order and Company considers only the

variable expenses in this case which is

the expense that we have already

discussed and it does not mean net

profit because there are so many fixed

expenses that are not considered like

expensive salary of tech folks rent

Insurance depreciation and all similar

big sums of money blinket is now

contribution margin positive and it is

not just blinket that is considering

contribution margin as a metric because

even other industry players consider

this now this brings me to the very

first Insight the scale Insight but

before we get into that I have the

ultimate free resource for you the

resource is a structured growth strategy

on how zepto can crack Revenue lad

growth this document not only lays down

solid foundations on topics like

business model icps and Market size

estimation for the company but also goes

deep into the four main levers company

can use to crack Revenue LED growth you

can grab this resource in the

description and it's completely free for

a Wht F now coming back to the scale

Insight see at the very core the

fundamental of any business is to get

closer to more customers to scale and

get more revenue and as a quick Commerce

giant like blinket how do you scale for

example how do you make sure that

customers in indran nagar JP nagar and

cor mangla are getting the orders and

not just that how do you make sure that

these customers are getting the orders

within 15 to 20 minutes the answer to

this is the dark stores the 2,500 to

4,000 ft big stores that are located in

1.5 to 3 km radius near your homes to

ensure super quick delivery and by the

way these stores are super big for

example if your nearest kirana shop has

about 1,500 skus these stores can have

4X the number of SQ in fact a highly

effici dark store can do a better gross

merchandise value per square foot than a

highly organized Supermarket like Dart

so while a dark store or blinket can do

a gmv of 90,000 rupes per sare ft² dmart

can only do a gmv of 47,000 rupes per

sare ft² but how does this work see

these stores are like supermarkets but

have no walk-ins which means that only

Rider can go and collect stuff from

there these stores have lot of inventory

that comes from a mother warehouse store

which is located in the outskirts so to

give you a context for every 40 d stores

located in the city there's always a

mother Warehouse which is located at the

outskirts of city and that is more than

10 times big as a dark store which is

about 20,000 to

175,000 ft big it is super huge and

companies don't set dark stores

Everywhere by the way they are smartly

set based on multiple parameters like

average household income of the area

peak time traffic of the area

infrastructure of the area and also the

population density also there's usually

about a staff of 25 to 30 people who are

working in three shifts in these dark

stores would take care of the packaging

and as youve discussed earlier as well

in the video that the operating cost for

a dark store comes at about rupe 22 for

each order and if you want to understand

this calculation better we have put it

here so you can pause the video and look

at this table now blinket has done a

really solid job here as they have right

now the highest number of dark stores

with 451 stores in 27 cities compared to

450 stores of instamart in 25 cities 330

of zepto in 10 cities and 350 stor of

big Basket in 35 cities by the way this

is not something they built in a day

because it was the first grocery app in

the country which started in 2014 as

Growers so their team and their

execution is way more experienced if you

compare them with other competitors and

now they're just building on this and

increasing their penetration throughout

the country by the way they're mostly

penetrated in North and East India and

90% of the gmbb comes from top paid

cities but as they enter South and other

cities this can be a huge opportunity

for them as they already have an

experienced DNA running in the

organization now coming down to the

second Insight which is cracking High

average order value but why are we

talking about aovs average order value

plays a big role in quick Commerce

because bigger the average order value

bigger is the contribution margin for

the company which means that delivering

just a set of bananas or apples is less

profitable for blinket than delivering a

set of bananas apples onions tomatoes

and a packet of bread together and

blinket has the highest average order

value if you compare it with all the

competitors and just look at the stock

Difference by yourself for big basket

the AO is about 400 to 500 rupe for

zepto and instamart it is around 450

plus and for blinket AO is about

staggering 635 rupees this is something

that has definitely given them an edge

in pulling one of the most important

levers in the ecosystem in fact in the

last quarter this number was 523 Rupees

at the start of q1 fi23 it just shows

the speed at which they're growing

really fast and they have done this

really well through their amazing SKU

strategy see every quick Comm player has

been bullish on adding more variety to

their SKU mix be it apparels sports gear

jewelry watches or even other technical

stuff in fact zepto has even launched a

zepto cafe within the app now everyone

is getting super creative and you must

have noticed it yourself right whenever

you open a quick Commerce app you

literally see a lot of stuff that you

were earlier thinking of buying only

from Amazon and if you look at blinket

they almost have the highest number of

skus which is similar to zepto and big

basket at about 6,000 to 6500 Mark but

what they have done really well is the

way they have positioned their platform

they have played with the psychology of

their customers with their super bold

initiatives like getting an iPhone in 10

minutes or getting the latest PS5 in 10

minutes in fact when they launched the

PS5 campaign the entire Twitter went

buzzing and people had a lot of

polarizing views like this but in the

end the idea was simple create Buzz

position yourself as a One-Stop

Marketplace get more customers and get

current customers to order more which is

a brilliant strategy this is where the

positioning play having iPhone or PS5 is

a master stroke because customers would

open their app for more variety and

options because customers know that if

an app can have PS5 or iPhone that app

would have everything so while Brands

like zepto focus on giving 20 to 40

rupees passes that would make your

delivery fee go away blinket has focused

on positioning and you can see that in

the numbers as well so while the active

users for blinket stand at about 32

million for the month of January for

zepto it's only about 22 million and

obviously this is also supported by

increasing consumption and per capita

Trends in the country and to give you a

macro View there's still a huge runway

in the industry because despite the

increasing number of users who use Quick

Commerce apps the monthly transacting

users for quick comme in the country is

still one3 of what it is for online food

delivery and 1/4 of what it is for

online caps not talking about the third

inside new customer acquisition see

blinket market share has not been the

highest forever it was 32% in 2022 and

in the same period insta Mar market

share has fallen from 52% while zeppos

has increased from 15 to 28% and we have

to talk about the elephant in the room

the zomato effect see zomato is the

biggest food delivery app that has more

than 100 million active users every

month on its app and a market share of

more than 56% when it comes to food

delivery these users are more than three

times what blinket has at the moment so

even getting 5% of zomato's monthly

active users as new customers could

bring more than 33% rise to their

current muu base in fact since the

acquisition zato has added a blinket

access button on the bottom left of the

app that you can see anytime you open

the app the idea is simple even if a

fraction of zomato's customers think

about ordering groceries they don't have

to do an effort to go into another app

and this could be a game changer for

blinket as it could open doors for new

customers in the company and now you

must be wondering why zomato does not

integrate both of these apps zomato has

deliberately kept two apps different

because the company believes that the

super Brands run better in the country

than super apps by the way super apps

are the apps that have everything on the

same platform be it Finance or be it

ordering food like WeChat in China and

even zomato knows that blink's brand

name is strong because they have created

this brand trust by staying in the game

for more than 10 years in fact what

would be really interesting to see is

how many of the users have been there

with them since their grow Force era a

time when customers had to order more

and had to also wait 90 minutes to get

the deliveries I guess that's the number

that we would never be able to find out

so these were the three insights that

blinket has cracked beautifully and how

they can continue to retain the Throne

of being the quick Commerce leaders of

the country do let us know in the

comments Which business businesses to

break down next I'll see you in the next

one ciao