How BlinkIt is WINNING India’s ₹23,000 Crore Quick Commerce Industry | GrowthX Wireframe
Summary
TLDRBlinkit, 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
💡 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.
🏪 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.
📈 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.
Mindmap
Keywords
💡Blinkit
💡Zomato
💡Quick Commerce
💡Revenue Side
💡Cost Side
💡Take Rate
💡Contribution Margin
💡Dark Stores
💡Average Order Value (AOV)
💡Market Share
💡Super Apps
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
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