Blinkit: Zomato will start Blinkit integration after deal approval

Food delivery app plans to start integration Blinkit on several fronts following the approval of the proposed acquisition, senior executives said in a conference call on Saturday. The company said Blinkit’s markdown was driven by macroeconomic factors.

Somato board
agreed to acquire fast-paced commerce startup Blinkit for 4,447 crore ($570 million) in a stock deal on Friday.

During a call with analysts and shareholders, Zomato executives indicated that customers and the integration of the shipping fleet will be priorities once the deal closes. Zomato may consider porting Blinkit to the Zomato app.

“We will be experimenting with different ways to integrate the two customer bases, or rather make sure we can leverage Zomato’s customer base to grow Blinkit’s business,” Zomato CFO Akshant Goyal said. “After the transaction is completed, we will check these things, and if it makes sense to use both brands in the same application, then why not? So, we have a few ideas in our head, and we will experiment and see what works. eventually. “Using Zomato’s food delivery customer base to cross-sell fast commerce will be a big part of “realizing synergy,” he said.

“Once the deal closes, we will start experimenting with the various ideas we have and see which ones come to fruition, including the Blinkit tab in the Zomato app,” Zomato Founder and Managing Director said. Deepinder Goyal he wrote in a letter to shareholders on Friday.

“As they say, experiment a lot and keep what works. This remains our main motto,” he said.

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According to Zomato, the markdown in Blinkit's valuation is due to macroeconomic factors.ETtech

Blinkit became a unicorn– A privately held company with a valuation of $1 billion or more – last year following a $120 million funding round from Zomato and New York-based investment firm Tiger Global.
Zomato invested $100 million in Blinkit when she worked as Grofers before the food delivery company was listed on the Indian stock exchanges last year.

“If you compare the size of the business (Blinkit) today, it is very similar to the size of the business last year, although the format was different then, and you can argue that the growth prospects were different,” said Zomato CFO Akshant Goyal. “The discount you see is essentially due to our adjustment to the new reality we all live in today, where valuations have been adjusted for all growing businesses.”

The transaction is subject to the usual approval, including the approval of 75% of the shareholders voting in favor of the decision. The deal is expected to close by early August, Zomato told BSE after a board meeting on Friday.

Advertising revenue

Zomato expects both the target group and revenue potential of Blinkit to be higher than its food delivery business. Although the target groups of Zomato and Blinkit overlap, senior users who are not yet using the food delivery service use Blinkit, according to CFO Goyal.

“I think there will be a lot of overlap between the user base, but there will be a new demographic or a new user base that will be a quick commerce buyer or user, which may not be the case with food delivery,” he said.

In his letter, CEO Goyal said he would argue that fast shopping ad revenue would be higher than food delivery, “given the much larger digital ad budgets for consumer products and brands.”

Blinkit CEO Albinder Dhindsa said that the general grocery segment, including fresh produce, accounts for 70% of total sales. The company raised its take rate from 7.5% in January to 14.5% in May 2022. The take rate is the fee charged by a marketplace for a transaction on its platform.

“We have increased the fees we can charge because thresholds were set in some areas beyond which the volume allowed us to do so,” Dhindsa said. “We also saw an increase in advertising revenue, as well as shipping costs paid by customers. All three of these other factors contributed to the increase in the value of the indicator.”

The company managed to retain 60% of its customers in the value-oriented segment of its previous model.

“Most of the users we have come from areas where we became unserviceable once we limited our service to a 10-minute delivery,” he said.

Expanding to over 450 dark shops dedicated to fulfilling orders, they have since dwindled to 400 due to limited circulation and other problems. Of these, 200 work in partnership with local vendors. For now, he plans to focus on 15 cities and improve the business of these dark shops. Blinkit’s total order value (GOV) is already around 63% of the GOV of Zomato food delivery in Gurugram, the company says.

The purchase of Blinkit is expected to help Zomato, which has always strived for fast trading, significantly strengthen its position in the field of ultra-fast food delivery. Rival
Swiggy committed at least $700 million for its fast commerce business within Instamart, while the sector also has other well-funded startups such as Zepto,

Retail Support Dunzoand BigBasket, owned by Tata.