Blinkit signals a costly battle ahead in the Indian flash trade market
Zomato’s express commerce business, Blinkit, is accelerating its expansion in India, but expects losses to continue to pile up as competition in India’s instant delivery market intensifies.
Blinkit now aims to have up to 2,000 dark stores (small warehouses in residential areas that exclusively serve online orders), a year ahead of its previous forecast. The company had more than 1,000 such stores by the end of the December quarter, beating its forecast by a quarter.
Blinkit added 368 stores and 1.3 million square feet of warehouse space in the last two quarters, and the acceleration led to losses of INR 1.03 billion ($11.9 million) in the third quarter of the current fiscal year.
JPMorgan believes that India’s grab-and-go industry has entered a “land grab mode”, with companies pursuing aggressive strategies around store leasing, product discounts and loyalty programmes. Other major players — including Zepto, the No. 2 name in this market — are expanding their dark store networks “significantly ahead of schedule” as well, the bank wrote in a note.
Express commerce companies, which deliver groceries, household goods, beauty and health products, and more recently even smartphones and laptops, to customers within 10 to 15 minutes. Cannibalization of e-commerce market in India. Its steep growth has forced existing e-commerce companies to overhaul their supply chains in response to changing consumer behavior.
“As we continue to move forward with store expansion, our networks may have to carry a higher load of underutilized stores, which will impact near-term earnings in the next quarter or two,” said Aksant Goyal, CFO, Zomato. He added that these investments will likely keep growth “well above 100%” through FY25 and FY26.
This strategic shift comes amid intense competition. Zepto, powered by Lightspeed, StrepStone, and Glade Brook, It raised more than $1 billion last year. Zomato It also raised $1 billion In November last year through qualified institutional placement.
Meanwhile, Amazon’s main competitor, Flipkart, is also on board Rapid Trade launched Service last year, the establishment of more than 100 dark stores. Amazon I started experimenting with its Express Trade service in India last month, while Swiggy, which operates India’s No. 3 express commerce platform, went public late last year in what was… The largest technology IPO in 2024.
“The biggest impact of intense competition has been the acceleration of customer awareness and adoption of quick commerce,” said Albender Dhindsa, who heads Blinkit. He compared it to the early days of food delivery, when increased competition led to increased investments in customer acquisition across the industry.
While Blinkit’s core customers remain loyal — they accounted for a third of the platform’s total order value in December — the company said competitive pressure is weighing on its margins. The company expects its current investments in the store network to eventually deliver strong returns once the business achieves greater scale.
The expansion comes at a time when Zomato’s core food delivery business reports slowing growth: the division grew 17% in the third quarter compared to the previous year, while express commerce was up 120%.
