Friday, August 12, 2022

Zomato, Blinkit will soon use each other’s customer base, says Deepinder Goyal

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Once the Rs 4,447 crore (approximately $568 million) acquisition of Blinkit is closed, Zomato will experiment with cross-leveraging its customer base for Blinkit and vice versa, its founder and CEO Deepinder Goyal has emphasized.



Goyal said that in India, super brands will work better than super apps.

“Which means that the Blinkit app will continue to work independently. We will also start working on integrating the delivery fleet back-ends, which should improve delivery efficiency over time,” he said in the letter to shareholders.

Technical integrations between the two companies will accelerate the pace of progress on both sides, he added.

According to the company, losses for Blinkit are dropping every month – from Rs 2,040 million (about $26 million) in January 2022 to Rs 929 million ($12 million) in July.

“Loses have decreased due to a) operating leverage and b) improved execution. As GOV (gross order value) per day per store increases, losses are declining given the high operating leverage in the business,” said Zomato CFO Akshant Goyaal.

The company said Blinkit has also closed a number of non-viable dark stores, which were not scaling, and the team will continue to evaluate non-performing stores.

In just six months, the Blinkit company has scaled up to 20 percent of Zomato’s GOV for food delivery, while having a presence in fewer than 15 cities.

According to Akshant, Zomato has taken about 45 months since its food delivery launch to reach Blinkit’s current monthly GOV scale.

Deepinder said there is a misconception that Zomato would have attained the same (or perhaps greater) scale and scope had we launched organic fast trading seven months ago.

Akshant added that Blinkit GOV in Gurugram is 70 percent of the Zomato food delivery government (for June).

“Quick commerce cuts a wide range of essential expenses, including groceries, fruits and vegetables, beauty and personal care, OTC drugs, office supplies, etc. Therefore, we expect the total customer base, average order value and monthly order frequency to be higher than the food delivery,” he said.

With continued solid execution and synergy realization with Zomato, post-transaction, Blinkit’s journey to profitability should “only accelerate,” the company noted.

Zomato reported Rs 185.7 crore in consolidated loss for the quarter ended June 30, compared to a loss of Rs 359.7 crore in the previous quarter.

Consolidated sales saw a 67 percent increase to Rs 1,413.9 crore from Rs 844.4 crore (same quarter last year), and 16.68 percent higher than Rs 1,211.8 crore in the last reported quarter.

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