Zomato-owned quick commerce platform Blinkit has already lost 1% of revenue due to the ongoing strike by its delivery partners in Delhi-NCR, according to ICICI Securities.

Blinkit delivery executives went on strike last week, demanding the rollback of recent changes made to delivery incentive structures in the national capital region.

According to ICICI Securities, Blinkit was operating around 370 dark stores pan-India as of Q3 FY23. "This implies around 25% of the dark stores are currently not operational. Given that at least 3-4 days' sales have already been lost, this implies around 1% loss in revenue from Blinkit and around 0.15% of consolidated revenue for Q1FY24 – already," the brokerage notes.

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 travelled. This, according to delivery executives, will significantly cut their earnings potential.

"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," says ICICI Securities.

The brokerage further says this type of strike is unavoidable in the quick commerce sector given the large exposure to an urban 'blue-collared' workforce.

Meanwhile, Delhi BJP leader Kapil Mishra extended his support to Blinkit delivery executives. In a tweet, Mishra said that Blinkit is doing an "injustice" to workers. He urged the company to implement the old payment structure.

"Given that the strike (at Blinkit) is happening in the national capital and has already garnered political attention, we think the company should try to resolve the issue at the earliest," says ICICI Securities.

This, according to the brokerage, could be through a combination of clearer communication on the expected change in earnings for delivery executives or some concessions on the delivery fee.

ICICI Securities estimates Zomato's food delivery gross order value to remain flat sequentially in Q4 FY23 despite Zomato Gold activation. "Our view is restrained given a seasonally weaker quarter and online consumption fatigue trends. We estimate 1% QoQ decline in food ordering AOV as delivery fees have been waived for Gold members. We estimate food ordering contribution margin to remain stable QoQ as restaurant take rate improvements may offset delivery subsidy increases. We estimate Hyperpure business (B2B) to grow 26% QoQ and Blinkit to grow 30% QoQ led by an increase in geographical reach. Overall, we estimate adjusted revenue growth of 9.5% QoQ and 68% YoY and flattish consolidated EBITDA QoQ in Q4FY23E, indicating sustainable growth in new businesses," the brokerage says, maintaining 'BUY' rating on Zomato with a target price of ₹65.

The temporary shutdown of Blinkit has led to longer delivery time on rival apps like Zepto and Swiggy's Instamart as quick commerce platforms struggle to meet the high demand in Delhi, Gurugram, Noida, and other adjoining areas.

Fortune India last week reported that quick commerce companies — Blinkit, Zepto, and Swiggy Instamart — offer the lowest discounts of 7-11% due to their focus on convenience and faster delivery over value. Blinkit offers the highest discount at 11%, according to foreign brokerage Jefferies. Instamart is close at 10%, while Zepto and Dunzo had a 7% discount.

Blinkit Gurgaon

Blinkit strike causes 1% revenue loss in 3-4 days: ICICI Securities