Blinkit- A 3-Year Case Study- FY21-FY23

Blinkit: A 3-Year Case Study on Unit Economics and Future Growth (FY21-FY23)

Blinkit, formerly known as Grofers, has evolved from an online grocery delivery service to a rapid, 10-minute delivery platform for various essential goods. As part of Zomato‘s acquisition, It aims to dominate the quick commerce sector, competing with players like Swiggy Instamart and Zepto.

Blinkit's Business Model : Here is everything you need to know

It operates primarily on a dark store model. Dark stores are small warehouses strategically placed within high-demand zones, ensuring fast delivery to nearby customers. This model reduces overhead costs and maximizes delivery efficiency by limiting operational expenses associated with full-scale supermarkets.

How Blinkit's Smart Revenue Model is Disrupting the Market: A Deep Dive

Formerly Grofers, has a multi-pronged revenue model designed to sustain its rapid-delivery service and support its growing infrastructure of dark stores and delivery personnel. Let’s explore the core revenue streams that drive it’s business:

1. Delivery Charges

Delivery fees are a significant source of revenue. However, employs a tiered delivery fee structure depending on the order value:

Small Order Charges: For orders below a minimum threshold (usually ₹700), Blinkit charges a small delivery fee. This helps cover operational costs like fuel, logistics, and paying delivery personnel.
Peak Hour Charges: During high-demand periods, like evenings or weekends, Blinkit imposes an additional charge on deliveries. This “peak hour surcharge” incentivizes delivery workers to meet increased demand and compensates for the higher operational intensity during these times.
Zero Delivery Fee on Larger Orders: If an order exceeds the threshold, typically ₹700 or ₹1000, Blinkit waives the delivery fee to encourage customers to purchase more. This increase in average order value helps boost profitability.

Importance of Delivery Charges in Unit Economics: Delivery charges offset the operational costs associated with fast fulfillment, such as maintaining dark stores, rider fees, and fuel. While Blinkit strives for a balance between free deliveries (to attract customers) and delivery fees (to cover costs), the model depends heavily on driving higher order volumes and optimizing route efficiency.

2. Commissions from Vendors

Another vital aspect of Blinkit’s revenue stream is the commission it charges vendors to list their products on the platform. Here’s how this works:

Product Markup: Blinkit often negotiates product margins with vendors. In most cases, vendors agree to sell their goods at a slight markup, allowing Blinkit to earn a commission on each sale.
Commission Rates: Blinkit charges a commission ranging from 10% to 25% on the value of goods sold through the platform. This rate varies depending on the category (grocery, FMCG, electronics, etc.) and the specific agreement Blinkit has with the vendor.
Vendor Promotions: Blinkit allows vendors to run sponsored campaigns and gain visibility on the app’s homepage, search results, or banner ads. Vendors pay Blinkit for these services, enhancing product visibility and sales through the platform.

Impact of Commissions on Blinkit’s Profitability:
Commissions are a relatively low-risk and scalable way for Blinkit to generate revenue. As it onboards more vendors and expands into new product categories, this revenue stream grows without significant incremental costs.

3. Premium Memberships

Blinkit offers premium membership plans (similar to Zomato Pro or Swiggy Super) designed to create a loyal customer base while generating upfront revenue:

Benefits for Subscribers: Customers who opt for it’s premium membership receive free deliveries on all orders, faster delivery during peak times, and priority customer service.
Subscription Fees: Memberships are typically available on a monthly or yearly basis, with prices ranging from ₹99 per month to ₹499 annually, depending on the plan. This upfront revenue helps it maintain cash flow and offset some operational expenses.
Reduced Churn: Premium members are more likely to make frequent purchases since they avoid paying delivery fees. This helps it increase average order frequency, a key metric for growth.

Why Premium Memberships Matter:
This revenue stream promotes customer retention while providing it with predictable, recurring income. Premium members are also more likely to recommend the service to others, driving organic growth.

4. Advertising and Sponsored Listings

Similar to e-commerce platforms like Amazon or Flipkart, Blinkit allows brands and vendors to advertise directly on its platform:

Banner Ads: Vendors can buy banner ad spaces on it’s homepage or app, giving their products prominent visibility. These ads are usually auctioned, where brands compete for prime spots during high-traffic periods (e.g., weekends or festivals).
Sponsored Product Listings: Vendors can also promote their products by paying for top spots in search results or category pages. This is particularly useful for brands trying to stand out in highly competitive categories like snacks or beverages.

Revenue from Advertising:
By monetizing its platform through ads, it adds a supplementary revenue stream that doesn’t involve direct operational costs. It also strengthens relationships with vendors looking for ways to boost sales through digital advertising.

The Indus valley report

The Indus Valley Report divides India into three segments: India 1, India 2, and India 3, each representing different economic tiers, digital adoption rates, and consumption patterns. Blinkit, a quick-commerce platform, can tailor its revenue model to these segments effectively.

India 1: The High-Spending Urban Affluent Class That Fuels Blinkit's Success

Characteristics: India 1 includes the wealthiest 100 million people, largely residing in Tier 1 cities like Delhi, Mumbai, and Bangalore. These consumers have higher disposable incomes, access to technology, and are familiar with e-commerce platforms. They represent a highly lucrative market for premium and convenience-driven services.
Blinkit’s Strategy:
- Revenue Generation: It focuses heavily on this segment, which values convenience and time-saving solutions. By offering premium memberships with benefits like free delivery and priority service, it targets India 1 customers who are willing to pay for time-efficient solutions.
- High Margin Products: The availability of FMCG, electronics, and premium groceries appeals to the affluence of this segment. Advertising revenue is also significant, as brands targeting India 1 consumers are willing to pay a premium for top listings on it’s app.

India 2: Unlocking the Potential of the Booming Middle-Class Emerging Market

Characteristics: India 2 includes approximately 200-300 million people from Tier 2 and Tier 3 cities. These consumers are price-conscious but have growing access to the internet and smartphones. They are emerging e-commerce users, more sensitive to value for money than convenience.
Blinkit’s Strategy:
- Revenue Generation: It targets this group through competitive pricing and product variety, such as everyday groceries, household items, and FMCG goods. Delivery fees are crucial in it’s revenue from this segment, as India 2 consumers are likely to order below the threshold for free deliveries. Therefore, it earns through smaller commissions and higher order volumes.
- Expansion of Dark Stores: it’s dark stores in Tier 2 and Tier 3 cities enable it to serve these consumers efficiently. it may also focus on creating affordable delivery options, allowing it to capture the cost-conscious consumer base.

India 3: Tapping Into the Untapped Potential of the Low-Income Rural Segment

Characteristics: This group represents 500 million people in rural areas with limited internet access and lower disposable incomes. E-commerce penetration is minimal, and the adoption of digital services is still in its nascent stages.
Blinkit’s Strategy:
- Limited Reach: Currently, it may have limited revenue generation from India 3, as its core model depends on high-density urban centers. However, with increasing rural digitization, it could develop cost-efficient logistics solutions to tap into this market, such as partnering with local vendors or expanding into low-cost subscription models.
- Future Potential: As e-commerce grows in rural areas, it can adjust its product offering to focus on essential and affordable goods, such as basic groceries and household staples, to suit the needs of this segment.

Key Revenue Model Insights Using the India 1-2-3 Framework

India 1 Focus: Higher spending, premium products, and subscription models drive it’s profits in India 1.
India 2 Focus: Cost-sensitive consumers contribute to it’s revenue through frequent, smaller-value orders and delivery fees. Expanding dark stores in these regions ensures rapid service.
India 3 Opportunity: This segment presents future growth potential as internet penetration rises, but current revenue contribution remains low.

It’s revenue model is thus highly adaptable to India’s tiered economic landscape, focusing on premiumization for India 1, affordability for India 2, and potential future expansion into India 3. This segmentation allows it to optimize its operations, pricing, and service delivery across diverse consumer bases.

The Profit Puzzle: A Detailed Unit Economics Breakdown of Blinkit

Unit economics are a key measure of a company’s profitability per transaction, helping determine its long-term financial health. Blinkit operates in the competitive and high-cost quick-commerce sector, which places additional pressure on optimizing its unit economics. Below is a detailed breakdown of it’s major cost components and revenue streams:

1. Dark Stores

As of mid-2024, Blinkit operates approximately 400-500 dark stores. These are micro-warehouses located strategically across metropolitan cities such as Delhi, Mumbai, Bangalore, and Pune. The concept of dark stores is crucial for the 10-minute delivery model as it allows for:

Quick order fulfillment: By placing these stores in densely populated areas, Blinkit ensures that each store covers a 2-3 km delivery radius. This reduces delivery time significantly and helps meet customer expectations for fast service.
Cost Efficiency: Compared to full-sized supermarkets or warehouses, dark stores are smaller and designed specifically for fast picking and packing of orders. This optimized layout minimizes overhead costs and labor hours, enhancing operational efficiency.
Stocking and Replenishment: Each dark store maintains a curated inventory based on hyperlocal demand. Blinkit uses real-time data to ensure that the most in-demand products are stocked, avoiding overstocking or stockouts, which can incur additional costs.

2. Employees and Labor Structure

Blinkit’s workforce consists of around 30,000 delivery personnel and an additional 5,000 employees for back-end support, store operations, and management. The structure of its labor force is divided into:

Independent Contractors (Delivery Personnel): Most of Blinkit’s delivery workers are not full-time employees but independent contractors. This labor model gives Blinkit flexibility, allowing them to adjust to demand surges during peak times (such as weekends and holidays) without bearing fixed labor costs. By working on a per-order or per-delivery basis, Blinkit can maintain a variable cost structure, improving cost-efficiency.
In-store Staff and Management: While the delivery personnel are primarily independent contractors, Blinkit’s dark stores require in-house staff to manage inventory, pack orders, and oversee store operations. This team helps ensure orders are processed rapidly. However, staffing levels are optimized to balance labor costs with operational efficiency.

3. Delivery Costs

Delivery is at the heart of Blinkit’s quick-commerce model. The average cost per delivery for Blinkit typically falls between ₹50 to ₹70, influenced by several factors:

Location: Delivery costs in major metropolitan areas are generally higher due to traffic, congestion, and urban sprawl. Deliveries in Tier 2 cities may be cheaper but present challenges in volume and efficiency.
Order Size: Larger orders tend to reduce per-unit delivery costs since fixed costs like fuel and delivery time remain constant regardless of the order size.
Peak Hours: During high-demand periods, Blinkit incurs higher delivery costs due to additional compensation required for delivery partners (e.g., surge pricing). These periods are often offset by peak-hour surcharges on customers, ensuring that Blinkit’s margins aren’t heavily impacted.

To maintain competitive delivery fees, Blinkit implements strategies like batch deliveries (delivering multiple orders in a single trip) and AI-driven route optimization, ensuring that deliveries are completed in the shortest time possible.

How can Blinkit become more profitable than amazon and Zomato?

Groceries (Core Offering)

Groceries are the foundation of Blinkit’s service offerings and account for the majority of their order volumes. This category includes:

Vegetables and Fruits: Fresh produce, including seasonal and organic options, delivered quickly to ensure freshness.
Dairy Products: A wide range of dairy items such as milk, yogurt, paneer, and butter from various brands, including both local and national suppliers.
Pantry Staples: Essential items such as rice, wheat, pulses, oils, and spices. Blinkit ensures that these are regularly stocked in their dark stores to meet daily household needs.

The quick turnaround on grocery deliveries is one of it’s biggest selling points, particularly for urban dwellers looking for convenience in their busy schedules.

FMCG Products

Fast-moving consumer goods (FMCG) are a natural extension of Blinkit’s grocery service, including a wide range of:

Household Essentials: Cleaning supplies, detergents, kitchen cleaners, and disinfectants.
Personal Care Items: Shampoos, soaps, skincare products, and hygiene essentials.
Snacks and Packaged Foods: From chips and biscuits to instant noodles and breakfast cereals, Blinkit stocks a wide array of snacking options. This category is particularly popular for impulse buys or last-minute orders.

The variety and availability of FMCG products make Blinkit a comprehensive one-stop-shop for most household needs.

Cigarettes

Blinkit has started delivering Blinkit cigarettes in selected cities, responding to customer demand for quick delivery of tobacco products. This service has been rolled out carefully, considering legal compliance and regulations around the sale of tobacco products.

Quick Delivery: The inclusion of cigarettes as part of its inventory is part of it’s strategy to cater to all customer needs, especially for those who want the convenience of home delivery for small, frequently needed items.
Restricted Sales: Blinkit ensures it complies with local laws regarding the sale of tobacco. Age verification mechanisms are in place during delivery to ensure only eligible buyers receive these products.

This addition has further expanded Blinkit’s ability to provide a complete, on-demand service for various consumer requirements.

Medicines and Health Supplies

To meet the rising demand for quick access to basic health products, Blinkit offers:

Over-the-Counter Medicines: Basic medications like painkillers, cold and flu tablets, and antacids, which do not require a prescription.
Health Supplements: Multivitamins, protein powders, and wellness products.
First-Aid Kits: Essential first-aid items, including bandages, antiseptics, and thermometers.
Hygiene Supplies: Masks, hand sanitizers, and gloves, especially in demand post-COVID-19.

Blinkit’s entry into the health supplies market is aimed at offering convenience in case of urgent or last-minute medical needs.

Electronics and Stationery

Another recent expansion is Blinkit’s move into basic electronics and office supplies:

Basic Electronics: Products like phone chargers, earphones, USB cables, and power banks are now available, catering to customers needing quick replacements for everyday tech items.
Stationery: With the increase in remote work and schooling, Blinkit has added stationery products such as pens, notebooks, calculators, and printer paper to its inventory.
Office Supplies: Items like staplers, sticky notes, and folders cater to both home-office setups and businesses needing last-minute supplies.

Revenue report

FY21 (April 2020 – March 2021):

Total Revenue: Blinkit (then Grofers) generated ₹2,700 crore in revenue. This included income from marketplace commissions, advertising, and delivery services.
Marketplace commissions: ₹115.52 crore, a 16.6% growth from FY20.Advertising revenue: ₹77 crore, a 24.4% YoY growth.
Delivery services: ₹64.33 crore, a 28.1% increase from FY20.
Expenses: Total expenditures amounted to ₹3,299 crore, with significant costs in FMCG product procurement (₹2,340 crore), employee benefits (₹372 crore), and technology (₹58.4 crore).
- It reduced marketing costs by over 80%, lowering customer acquisition expenses significantly.
Net Loss: ₹557.8 crore, a 39% reduction from FY20’s ₹916 crore loss. This marked an improvement in operating efficiency, but overall losses were still high due to stock procurement and payroll costs.

FY22 (April 2021 – March 2022):

Total Revenue: ₹2,324 crore, a slight decline (5.7%) compared to FY21 due to shifts in the business model

Commission income: Grew to ₹147 crore (up 27.8% YoY).
- Advertising income: Declined slightly to ₹71 crore (down 7.8%).
- Delivery services: ₹70 crore, reflecting modest growth (7.7%).
Expenses: Expenditures rose sharply to ₹4,072 crore (up 23.4% YoY), driven by increased advertising costs (₹280 crore), manpower expenses (₹358 crore), and procurement (₹2,362 crore).

Net Loss: ₹1,440 crore, a 2.58x increase in losses due to rising operating costs and flat growth in gross merchandise value (GMV).
FY23 (April 2022 – March 2023):

Total Revenue: It’s operating revenue tripled to ₹724 crore, marking a significant recovery compared to FY22
- Marketplace commissions: Grew to ₹404.5 crore, representing a 2.75x increase from the previous year.
- It’s business model pivot to quick commerce led to increased revenue from advertising and supporting services, though its GMV remained stagnant.
Expenses: Total expenses reached ₹1,939 crore, up from ₹1,236 crore in FY22. Key cost drivers were delivery and related charges (₹565.8 crore) and employee expenses.
Net Loss: Losses for FY23 stood at ₹1,078.9 crore, up 8.2% from FY22. However, the company reduced its expenses per rupee of revenue to ₹2.52, showing improvement in cost management.

Blinkit Share Name: A Key Detail for Investors

Although Blinkit itself doesn’t trade independently, it is wholly owned by Zomato, whose ticker symbol is ZOMATO on both the NSE and BSE.

Blinkit Share Price: Latest Updates and Insights

Blinkit, formerly known as Grofers, is rapidly becoming a key player in the Indian quick-commerce market. As a part of Zomato’s growing portfolio, Blinkit share doesn’t have a direct listing on the stock exchange. Investors interested in Blinkit share must track Zomato’s stock price, as Blinkit share operates under Zomato after their acquisition in 2022. For real-time updates, it’s crucial to follow Zomato’s stock performance on platforms like NSE and BSE. Keeping an eye on market trends, Zomato‘s quarterly reports, and Blinkit share price can give valuable insights into its potential impact on Zomato’s share price.

Blinkit Customer Care Number: Hassle-Free Support for Your Queries

Blinkit is committed to providing top-tier customer service to ensure a seamless shopping experience. Whether you need assistance with an order, delivery, or any other service-related queries, Blinkit customer care number is available to help. You can reach Blinkit customer service by calling 1800-208-8888. Their support team is available 24/7, ensuring that customers receive timely help with issues like order tracking, refunds, or cancellations.

For any business or delivery-related inquiries, Blinkit also offers email support and chat features within their mobile app for a more streamlined experience.

Conclusion

Blinkit’s model of quick commerce has the potential to reshape how consumers think about grocery and essentials delivery in India. Although it faces hurdles related to profitability and operational scalability, its commitment to technology, customer service, and expansion will likely help it emerge as a key player in India’s fast-growing quick commerce sector.