Since acquiring the online grocery delivery business, formerly known as Grofers, in an all-stock deal in August 2022 for ₹4,477 crore, Zomato has invested ₹4,300 crore in Blinkit.
According to sources close to the situation, Zomato has been increasing its investments in Blinkit primarily to fund its rapid expansion and make up for operational losses in the fiercely competitive quick commerce market.
“Blinkit’s quick expansion and rising marketing costs have resulted in a high burn rate, even if its sales are sufficient to cover its operating needs. According to a person with knowledge of the matter, this calls for fresh financial infusions to support expansion.
In a recent interview, Blinkit CEO Albinder Dhindsa had a similar opinion, stating that the company’s expansion activities account for the majority of its expenses. Whether they are paid for through marketing or idle expenses, these expansion-related expenses cannot be avoided. We may have been able to pay for our expansion expenses based on our growth trends, but higher marketing expenditures have hindered the process,” Dhindsa continued.
Rapid Commerce Rivals Increase Investments
Swiggy, Instamart, and Zepto, Blinkit’s main competitors, have also been actively raising money to grow their companies. With its initial public offering (IPO) in November 2024, Swiggy raised ₹4,500 crore, while Zepto has collected over $1.3 billion in many investment rounds over the past year.
A ₹1,000 crore investment in Swiggy’s supply chain division, Scootsy Logistics, which operates dark stores for Instamart, was approved by the board on February 21. In order to expand its network of dark stores, Swiggy plans to spend a another ₹1,300 crore in Scootsy, according to its IPO prospectus.
The Expansion Strategy of Blinkit: Higher-Value SKUs and Dark Stores
Blinkit is following an aggressive growth trajectory based on its dark store architecture in order to strengthen its position in the industry. As of December 2024, the company had 1,007 dark outlets, three months ahead of schedule and surpassing its growth goal of 1,000. As of right now, Blinkit has revised its expansion goal to aim for 2,000 dark stores by December 2025 instead of 2026.
To increase the average order value, Blinkit has also increased the range of products it offers by adding high-value SKUs like printers, laptops, and televisions.
Rapid Commerce Conflict
Fast commerce has become a high-cash-burn industry, with companies spending billions on expansion and client acquisition. The cumulative monthly cash burn of rapid commerce businesses, including newcomers, is estimated by the industry to be between ₹1,300 and 1,500 crore, more than doubling in recent months.
Blinkit’s operating losses grew to ₹103 crore from ₹8 crore in the previous quarter, despite the company approaching operational breakeven in Q2 FY25. While Instamart recorded an adjusted EBITDA loss of ₹578 crore in Q3 compared to ₹358 crore in Q2, Swiggy reported a net loss of ₹799 crore.
Zomato’s Robust Financial Support
Zomato’s own financial stability allows it to continue investing in Blinkit. Zomato received ₹8,500 crore through a qualified institutional placement (QIP) in November 2024 in order to fund its rapid commerce operations and enhance its balance sheet. As of December 31, 2024, Zomato had cash reserves of ₹19,235 crore, which was enough to finance the expansion of Blinkit.
