Blinkit signals costly battle ahead in Indian quick commerce market

Zomato’s fast commerce unit Blinkit is accelerating its expansion and expects continued losses as competition in India’s instant delivery market intensifies.

Blinkit now aims to reach 2,000 dark shops — small warehouses in residential areas that exclusively service online orders — by December 2025, a year ahead of its previous guidance, after surpassing 1,000 stores by the end of the December quarter (beating its own projection by a quarter )

This acceleration led to a loss of Rs 103 crore ($11.9 million) in Q3FY25, as Blinkit added 368 stores and 1.3 million square feet of warehousing space in the past two quarters.

JPMorgan believes the industry has entered a “land grab mode,” with companies pursuing aggressive strategies around store rentals, product discounts and loyalty programs. The bank wrote in a note that some other major players – including Zepto, the No. 2 player in fast-paced commerce – are also expanding their dark store networks “significantly ahead” of schedule.

Quick-trade companies—those that deliver groceries and other products to customers within 10 to 15 minutes—are Cannibalizing e-commerce market share in IndiaForce established players to overhaul supply chains in response to changing consumer demand.

“As we continue to expand stores, our networks may have to carry a heavy load of unutilized stores which will impact near-term profitability in the next quarter or two,” said Akshant Goyal, Zomato’s chief financial officer. This investment is likely to result in growth “ie above 100%” till FY25 and FY26, he added.

Strategic change comes amid intense competition. Backed by Zepto, Lightspeed, Strepstone and Glade Brook, Raised over $1 billion last year. Zomato Also raised $1 billion In November last year through an eligible institutional placement.

Flipkart too His rapid trade launched Last year offers and added more than 100 dark stores. the amazon Launched its rapid commerce pilot South Asian markets last month and Swiggy, which operates India’s No. 3 rapid commerce platform, listed late last year. Biggest Tech IPOs of 2024 Globally.

“The biggest impact of intensified competition is accelerating consumer awareness and rapid commerce adoption,” said Alwinder Dhindsa, who leads Blinkit. He compared it to the early days of food delivery, when heightened competition led to higher customer acquisition investments across the industry.

While Blinkit’s core customers remain loyal — comprising one-third of the platform’s total order value in December — the firm said competitive pressures have put a pause on margin expansion. The company expects its current store network investments to eventually yield strong returns once the business achieves greater scale.

The expansion comes as Zomato’s core food delivery business grew at a slower pace of 17% year-on-year in the most recent quarter, compared to a brisk trade growth of 120%.