No material revenue impact from Blinkit strike: Zomato

Food delivery platform Zomato on Wednesday said the recent strike by Blinkit delivery partners has "no material impact" on the operations and financial performance of the company.

Blinkit delivery partners went on strike last week after the Zomato-owned company made changes to its delivery incentive structure.

In a stock exchange filing, Zomato said its quick commerce platform Blinkit had to shut some stores for a few days to "ensure safety" of its employees at stores and the delivery partners. "Most of these stores have now resumed operations," the company said.

"Over the last few days we have made changes in the delivery partner payout structure with respect to the Blinkit business to address the needs of delivery partners, improve customer experience and reduce cancellation/ order rejection frauds by few delivery partners in the system. Such changes are done from time to time, as needed," Zomato said.

Blinkit is reportedly trying to move from a fixed-fee model of ₹25 per delivery to a hybrid pricing structure of ₹15 per delivery and a supplementary incentive based on distance covered.

Zomato said these disruptions and changes have no material impact on the operations and financial performance of the company, meaningfully less than 1% revenue impact. "Hence we believe that this event does not warrant any disclosure under regulation 30 of the SEBI (LODR) Regulations, 2015," it added.

On Monday, domestic brokerage ICICI Securities said that Blinkit has lost 1% of its revenue due to the recent strike by its delivery partners in Delhi-NCR. Blinkit was operating around 370 dark stores pan-India as of Q3 FY23.

"We think the change in delivery fee structure indicates Zomato's efforts towards cost control. In our view, this would allow Blinkit to increase the delivery radius for their existing dark stores and thus improve its network coverage with limited capex spends," said ICICI Securities. This type of strike is unavoidable in the quick commerce sector, given the large exposure to an urban ‘blue-collared’ workforce, the brokerage added.

Zomato acquired Blinkit, formerly called Grofers, a 10-minute grocery delivery startup, in a $568 million deal last year.

While Blinkit reported around a 1.3 times rise in revenue in Q3 FY23, Motilal Oswal sees the acquisition of Blinkit as an additional risk for Zomato. "Though the business is scaling up well and improving on profitability, we see this acquisition as an incremental risk for Zomato. Quick commerce is still in its early days and is highly competitive. Moreover, it is difficult to rationalize the delivery fleet due to time constraints in quick commerce. The incremental cash burn coming from Blinkit is also not well received by investors," the brokerage said in a note.

"We see the space as still nascent for Zomato given the large number of players in the ecosystem," it added.