Zomato plans for Blinkit to deliver more via ecommerce, Retail News, ET Retail

[ad_1]

Zomato could find itself up against ecommerce marketplaces like Amazon and Flipkart as it explores adding brands across a gamut of new categories to its 10-minute delivery platform, Blinkit. This major push into the fast-growing direct-to-consumer (D2C) space would entail the Gurgaon-based firm building its own supply chain to directly source branded products and manage stock, multiple people aware of the plans told ET. It would deliver these through Blinkit.

Zomato, which is scaling up its quick commerce operations, has “had conversations with individual brand owners for various categories to stock up inventory. This is being seen as a potential long-term growth driver,” one of the persons said.

This wouldn’t involve the company directly owning inventory, but instead managing the flow of products for D2C brands, like marketplaces do.

Zomato declined to comment on ET’s queries.

As part of the strategy, the Deepinder Goyal-led firm has at least twice attempted to acquire and merge ecommerce enablement firm Shiprocket, said another person briefed on the discussions. Shiprocket, which works with many D2C brands, did not agree to it.

More Supply Chain Control

Zomato bought a stake in Shiprocket during the latter’s $185-million round in 2021, and, according to Tracxn, currently holds 6.6% in the logistics provider.

Queries sent to Shiprocket remained unanswered as of press time.

As discussion between the two continues, Zomato has leased one warehouse each in New Delhi and Mumbai to support Blinkit’s ecommerce push.

In addition to food delivery– its largest segment – and quick commerce, Zomato operates in the business-to-business grocery supply space with Hyperpure, and the going-out segment with an event ticketing vertical called Zomaland, as well as a dining out vertical.

Quicker Ecommerce

Lately, with growth at its core business slowing, analysts have begun seeing Blinkit as Zomato’s next big growth story.

“New-age D2C brands in categories like home needs, small electronics, beauty and personal care are looking at quick commerce as a growing channel for sales,” said an industry watcher. “Blinkit has a strong footing there. Now, Zomato wants to set up a backend structure, where it would work directly with brands and help them sell on Blinkit. With this, the company gets greater control over its supply chain.”

India’s two largest food delivery firms, Zomato and Swiggy, have been looking to diversify. Last year, Swiggy rolled out its ecommerce marketplace Minis, which focuses on local delivery of brands across sectors with zero marketplace fees.

People said Zomato hopes to use hyperlocal warehouses and faster delivery timelines to its advantage and, through Blinkit, take on incumbents such as Walmart-owned Flipkart and Amazon.

For Blinkit, adding newer categories, especially in the D2C space, is an exercise to grow its average order value (AOV) – a metric that has played a big role in the company’s rising revenues as it minimises losses. In the December quarter, Blinkit’s AOV was Rs 635, up from Rs 553 a year earlier, and Rs 607 in the September quarter.

Margins would have been stronger, but for the thin slices on which most grocery businesses operate.

“For a large part, entry into newer categories has been responsible…for the increase in Blinkit’s AOV…but the company hasn’t given out details on its product mix,” said a Mumbai-based consumer sector analyst. “Typically, grocery products are less accretive on margins, so it’s likely that profitability is also improving on account of higher (share in the) mix (of) products such as consumer electronics, beauty and personal care, etc.”

Flipkart has announced same-day deliveries in 20 cities for several products. Ecommerce firms are not competing in groceries but constantly shorten delivery timelines amid intensifying rivalry from quick commerce firms for select products.

The analyst cited above also pointed out Blinkit’s strategy of capitalising on events and occasions such as popular cricket matches, festivals, new year’s eve and holidays. “Through these occasions, Blinkit is marketed as a larger platform for D2C products and brands…the items move quickly through inventory and turn in higher margins in rupee value terms than groceries and FMCG,” he said.

Blinkit has been offering occasional items with lower ticket sizes such as flowers, earthen lamps and stuffed toys, in addition to high-value goods such as top-end smartphones.

  • Published On Feb 19, 2024 at 09:06 AM IST

Join the community of 2M+ industry professionals

Subscribe to our newsletter to get latest insights & analysis.

Download ETRetail App

  • Get Realtime updates
  • Save your favourite articles


Scan to download App


[ad_2]

Source link

Leave a Reply