If they are able to increase platform at this rate, imagine the hockey stick growth of profitability just due to this. Talk about operating leverage!
Update: Reviewing @luckbychance post on status, this isn’t as big as I thought.
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I don’t think so. Beyond a certain point, it has a -ve impact on demand. Also in absolute sense, this is around 60-70crs of EBITDA on an annualised basis so not really anything significant to bottom line.
Would have rather preferred to undercut Swiggy since optically speaking Swiggy has poor unit economics. See below:-
| FY23 | Zomato | Swiggy |
|---|---|---|
| Revenue | 7079 | 8265 |
| PAT | -971 | -4179 |
| Loss Margin | -14% | -51% |
There’s a reason why Swiggy is forced to raise platform fee but Zomato necessarily needn’t follow suit. Infact a delta of between 5-10 and my hunch is a lot of folks will shift from one platform to another.
Even in H1FY24, Swiggy seems to be recorded a loss of around ~$200mn which is 1600 crs… Zomato on the other hand has a profit of 38crs in H1FY24
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As a customer, i am not happy with Blinkit. I ordered 7 items and items was delivered in sealed bag. However, one item was missing despite paying delivery fees of Rs 9. There is no customer care executive to call, they are asking us to email the issue. However, since item was of low value (Rs 20), i feel writing email to Blinkit is Hassle/hurdle or not a good customer service. So i am not inclined to use Blinkit again.
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Was able to find the note by Prosus (Swiggy’s investor) that has H1FY24 data… the slowdown in revenue growth for Swiggy is astonishing.
I’m not sure how long will Swiggy continue to hold given the relatively poor economics when compared to Zomato.
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Zomato’s quick commerce business is now more valuable than food delivery, says Goldman Sachs.
Goldman Sachs is now valuing Blinkit at ₹119 per share at a $13 billion equity valuation. That’s higher than the food delivery business, which is being valued at ₹98 per share.
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This is indeed a trend. Blinkit prices are comparable to that of Big Basket etc… so from a consumer view point why should one wait for two hours if the same service can be provided in 10-20 mins.
Plus likes of Blinkit have multiple revenue sources so not solely dependent on product margin:
My take is that QC positioning is some where between that of Supermarkets (QC can’t have the no. of SKUs a Supermarket has) and Kirana (less number of SKUs but ticket size can be as low as 10 Rs)
This in my opinion is a value migration story 
Note: I’ve written a full post on Blinkit. As per Valuepickr guidelines not posting the link here. Check out at my substack pankajg.substack.com
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Agreed. BlinkIt can even do a bigger gross than Dmart in the upcoming years
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Zomato could also start subscription based service for restaurants where they provide the analytics of their own restaurants to grow and improve. This would also increase the buy orders from customers and further improve the sales for Zomato.
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It’s a question of “when” rather than “if” by this time. The GMV is growing at close to 100% YoY and mind you this is in a subdued demand environment (Private consumption in Q3 was 2.2% if I’m not wrong). Q3 GMV was already 3.5k cr.
Q4FY27 GMV should be easily around 20k crs… or roughly equivalent to that of DMART’s at that point.
Infact, I forsee derating of a lot of horizontal retail plays in the market - Dmart, Reliance Retail, etc and re-rating of Zomato etc. DMART is trading at 90x multiple with growth of 15-20%. Surely a Zomato with rev growth of >50% & a hockey stick profit trajectory will be rated higher.
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Zomato has decided to voluntarily surrender the online payment aggregator license it wa sissied in Nov 2021. Deworsification cancelled.
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Two Food Delivery Giants Comparison
| Particulars | Doordash | Zomato |
|---|---|---|
| Market cap | $47B | $20B |
| Revenue | $8.6B | $1.58B |
| Annual net profit (latest) | $-0.558B | $43M (352 Cr.) |
| Prev. Annual Net profit | $-1.36B | $-119M (-971 Cr.) (Loss) |
| Free Cash Flow | $1.52B | $52.6M (431 Cr.) |
| Cash, cash equivalents, and restricted cash | $3.247 (March 2024) | $1.46B (12,000 Cr.) (Feb 2024) (Concall) |
| Gross Order Value | $65B * | $5.84B (47,918 Cr.) |
| Price to Earnings (P/E) | – | 488 |
| Price to Sales (P/S) (TTM) | 5.34 | 14.13 |
| Price to Free Cash Flow (P/FCF) (TTM) | 30.92 | 397 |
- Doordash includes subscription fees in GOV, Zomato doesn’t
I did my best, but the numbers above may contain some slight unintentional inaccuracies. So, use your best judgment
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My notes
- Blinkit has broken even. Q4 GOV was 4k crs out of which ~1800 crs is NCR only or ~45%.
- NCR is growing at 7% QoQ and there’s still some space in dark store addition.
- Store count should 2x in next 1 year and steady state EBITDA margins would be 4-5% of GoV
- BLR and other cities will start gaining focus now.
- No plans to reduce 20 rupee fee… focus on creating a service where consumers can pay (on comeptition with Zepto / Instamart as Blinkit goes to Mum & BLR)
Conservatively, Blinkit should 2x its GoV over the next year to around 20k crs. Underlying EBITDA being 800 to 1000 crs. Combined with Food Delivery, we’re looking at 2000 to 2200 crs of EBITDA.
Though actual EBITDA is likely to trend equal to Zomato’s EBITDA or around 1500 to 1700 crs for the whole year due to 0 EBITDA guidance on Blinkit.
Personally, I don’t mind the delayed path to profits because the hockey stick has become more acute now and I’m very confident that in metro cities, MT (Reliance Fresh, DMART, More, etc. etc.) will face the heat in key categories.
FY25E
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The gov you have taken as for zomato it does four sorts of gov - food delivery,household delivery,hyper pure and one more is it same for doordash
GOV taken for Doordash is the total value of orders completed on their marketplaces including membership fees related to DashPass and Wolt+. It does not include value of orders fulfilled through Drive, Storefront, or Bbot.
Doordash Drive is a platform that allows merchants to access a professional delivery fleet, without dealing with the logistics. Deliveries within 5 miles incur a base rate of $9.75 after that $0.75 per mile up to a maximum of 15 miles.
Doordash Storefront is a platform that allows customers to order directly from merchant’s website or social media. Merchants pay processing fees of 2.9% of the total transaction amount + $0.30 per order
Doordash Bbot is a platform that helps restaurants streamline in-store operations by allowing guests to browse menus, order, and pay using QR codes scanned at the table.
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Do you have any opinion why are people happy paying a delivery fee here of 20 when Swiggy Instamart only charges 5 rupees (if you become a member of their loyalty program)? What is so valuable in ordering from Blinkit that the consumer is paying 4x delivery fee?
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Blinkit has a much wider asortment and hence people have no option. The service isn’t bad, so that’s there. Lastly, the target audience that they are catering to may not care so much for the 20 bucks… they instead fatten the order (its my thesis), which is reflected in consistently higher AOVs for Blinkit.
Swiggy is still bleeding losses in its Q-Com businesss (FY25E EBITDA loss for Swiggy is likely to be around ~2400 crs) so I tend to think of their model of free deliveries as unsustainable.
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Credit cards, UPI, Wallets and other bank offers makes the delivery fee go away like Onecard gives free delivery once a month, Cred UPI give cashback in range of rs.10 to 20, Simpl also gives free delivery option sometimes cashback too.
Also, the prices are actually lower even after delivery fee for some products. For example local general stores and shops in my area sell fortune oil packet for Rs. 125 -130, same goes for Rs. 117 on blinkit. Additionally, black A4 print cost Rs. 5 per page at my local print shop and blinkit does it for Rs. 3 per page plus the paper quality is far better. There are many such examples.
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20 rupee fee is only applicable for small orders under 99.
5 rupee as handling charge is still there irrespective of order value. So it isn’t different from Swiggy instamart or even bigbasket.
Agree on better product catalog on Blinkit compared to counterparts.
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