Quick commerce giants Blinkit (owned by Zomato) and Zepto are actively making changes to their business models to enhance profitability and strengthen investor confidence. The companies are increasing commissions on each order, a strategic move that comes at a crucial time for both firms.
According to a report citing sources familiar with the matter, Blinkit has transitioned to a variable commission model for brands and sellers. Meanwhile, Zepto has gradually started raising the commission it charges users and brands to improve its financial health.
The commission hike comes amid Zepto’s planned IPO in 2024 and Blinkit’s attempt to regain investor confidence following a decline in its market capitalization over the past few months.
Zomato’s stock price fell to Rs 223 on March 7, down from Rs 302 on December 6, 2023, on the Bombay Stock Exchange (BSE). This decline aligns with the broader stock market downturn, but Blinkit’s recent aggressive cash burn strategy has also impacted sentiment.
While Blinkit and Zepto are moving towards increasing commissions, their competitor Flipkart Instamart has yet to make similar changes. According to a news gaency report, Flipkart’s Instamart and Flipkart Minutes have retained their existing commission structure.
The sources cited in the report suggest that the new commission structure at Blinkit is set to improve the platform’s take rate—the percentage of the Gross Order Value (GOV) that the platform retains as a commission.
Zepto’s take rate has already increased to 22-23% and is expected to rise further.
Zepto is projected to cross $4 billion in annualized gross sales next month, a significant jump from $3 billion recorded in January 2024.
The company’s latest valuation stands at $5 billion, according to market estimates.
Blinkit is also making structural changes to its commission model. Previously, the platform followed a fixed commission rate system, charging sellers between 3% and 18% based on the product category. However, from March 13, Blinkit will start charging sellers a variable commission based on the selling price of individual items, even within the same category.
Despite focusing on profitability, quick commerce firms continue to spend aggressively to capture market share. A source cited in the report stated:
“It remains as intense as ever, but now companies are finding ways to generate more cash while adapting to broader market conditions. Zepto has secured the No. 2 rank, but Blinkit still remains the largest player and continues to operate aggressively.”
The All India Consumer Products Distributors Federation (AICPDF) has filed an antitrust lawsuit against major quick-commerce players Zomato, Swiggy, and Zepto. The case alleges that these platforms are engaging in deep discounting practices, which hurt distributors and small retailers.
AICPDF represents 400,000 distributors supplying products from major brands like Nestlé, Unilever, and Tata to 13 million retail stores across India.
India’s e-commerce industry has faced regulatory scrutiny over pricing strategies. A previous antitrust investigation found that Amazon and Walmart-owned Flipkart favored select sellers and engaged in predatory pricing, a claim both companies denied.
The competitive landscape between Zomato’s Blinkit and Zepto recently escalated into a public verbal clash. Zomato CEO Deepinder Goyal raised concerns about the high cash burn rate in the quick commerce sector.
He stated in an interview:
“We think the total burn for all companies in quick commerce is around Rs 5,000 crore per quarter, conservatively speaking.”
Goyal further emphasized that Zepto accounts for more than half of this burn rate, while Blinkit’s cash burn remains significantly lower. He added:
“Last quarter, Blinkit burned around Rs 35 crore per month on average.”
Zepto CEO Aadit Palicha strongly refuted Goyal’s claims. In a LinkedIn post, he countered:
“This statement is verifiably untrue and it will be clear when we publicly file our financial statements.”
Palicha expressed his disappointment over the remarks, stating:
“Deepinder Goyal—whom I deeply respect as an entrepreneur—made an inaccurate statement about Zepto. His words implied that we are losing substantially more than Rs 2,500 crore per quarter.”
The quick commerce sector is undergoing significant financial and structural changes as platforms like Blinkit and Zepto gear up for profitability and investor confidence. With Zepto’s IPO on the horizon and Blinkit’s variable commission model, the industry is expected to witness further shifts in market dynamics.
However, regulatory scrutiny on pricing strategies and allegations of deep discounting may pose additional challenges. Meanwhile, the public spat between Zomato and Zepto CEOs reflects the highly competitive nature of the sector.
As the demand for quick commerce grows, companies will need to strike a balance between market expansion and profitability, ensuring long-term sustainability in a rapidly evolving industry.