Zomato-owned Blinkit’s quick commerce business may not see an impact from the macro slowdown and inflation this year despite a 2.6% q-o-q dip in average order value (AoV) seen in the December quarter (Q3FY23). In fact, Blinkit will look to expand its supply side of the business and add more dark stores in the next few quarters, Albinder Dhindsa, CEO of, Blinkit said in an analyst call on Friday.
“The dip in average ticket size (on Blinkit) is due to consumers buying smaller batches than before since consumers are spending less during this period. However, we’re not able to exactly attribute the AoV dip to the macro slowdown. We are already fairly penetrated in the cities that we operate in,” said Dhindsa.
He further pointed out that Blinkit will judiciously use the cash on its infrastructure spending, although it will look to invest more on the supply side. “We are spending more of our time planning the supply side of our investments, and we currently looking at what would be the right time for us to sort of start making them,” Dhindsa said.
Zomato
In Zomato’s financial statement on Thursday, Dhindsa also pointed out that the quick commerce firm has identified several new “high-potential neighbourhoods” in existing as well as new cities. “Currently, we believe that we can comfortably grow our dark store count by ~30-40% over the next 12 months. This will also depend on our ability to find the best and most cost-effective locations for these stores,” he added.
Speaking on the core food delivery business, Zomato’s chief financial officer Akshant Goyal said that the company is on a concrete road towards profitability given that it turned Ebitda positive (excluding Blinkit revenues).
“The actual profit is a function of growth in the business and margin expansion. In the December quarter results, contribution margins in the business have expanded compared to the second quarter…And once (order) growth comes back it would accelerate the absolute profits of the business, which should help us over time generate (net) profits,” added Goyal.
However, Goyal pointed out that there is always a “trade-off” when chasing profitability, especially during a macro slowdown environment.
“You can (for example) make delivery free for customers, and of course, that will trigger order growth. But that’s not the kind of growth that we want. So in an environment where there is a macro slowdown, and the (restaurant) industry itself is not growing, we think we’ve grown faster,” said Goyal.
At a standalone level excluding quick commerce revenues, Zomato’s business posted a net profit of `61.6 crore, which increased sequentially from Rs 11.8 crore in the previous quarter. In the same quarter last year (Q3FY22), Zomato’s standalone business reported a net loss of Rs 324.7 crore.
Further, Goyal explained that in the next few quarters, he expects Zomato’s core food delivery business to grow in terms of order frequency and AoV. He said this would be mostly driven by restaurants increasing their menu prices, improvements in the recommendation engine on the app, and due to more fine-dine restaurant players onboarding food delivery platforms.
Currently, Zomato’s core food delivery business makes revenue from both charging the customer for the order delivery, and charging restaurants a commission. Goyal said that he still believes there is room for expansion in the take rates (or commissions). “We calculate the absolute take rate as a combination of the commission revenue and the customer delivery charges. I think as an aggregate, we think there is still room to grow here. We are close to about 23.8%-24% in the average take rates in the last quarter. And from here on, I think this (take rate) will go up despite delivery charges continuing to come down slightly because of Zomato GOLD subscriptions gaining scale,” he added.