|
|
|
Did Zomato buy Blinkit to offset its losses from online food delivery?
|
|
|
|
Top Stories |
|
|
|
|
IANS | 25 Jun, 2022
Online food delivery platform Zomato, which saw its stock tumbling below
its IPO price as India reopened and retail food industry came back on
track, had acquired quick-commerce grocery delivery platform Blinkit for
a whopping Rs 4,447 crore (about $568 million). Will this acquisition
change its future prospects?
Zomato already owned more
than 9 per cent stake in Blinkit (earlier Grofers). While the earlier
Blinkit deal was valued around $700 million, the drop in Zomato's share
price reduced it to $568 million.
Zomato's stock is hovering around Rs 70, after sliding to nearly Rs 50 (it opened at Rs 76 during its mega IPO last year).
According to market experts, Zomato is facing severe cash flow problems as its operational cost is running quite high.
Zomato
Founder and CEO Deepinder Goyal said on Friday that he is not getting
into the quick commerce market because growth in food delivery is now
saturating.
"Food delivery has a long runway ahead. In FY22, our
Adjusted Revenue grew by 109 per cent over FY21 and we expect healthy
growth to continue going forward," he noted.
According to him, quick commerce is a natural extension of Zomato's food delivery business.
"How
is it a natural extension? Because it is also a hyperlocal business,
just like food delivery. And, because it also caters to a need for quick
delivery of products for our customers. Quick commerce will help us
increase the customer wallet share spent on our platform and also drive
higher frequency and engagement from our customers," he said in a
company statement.
Zomato has grown at a CAGR of 86 per cent in
the last four years to an adjusted revenue of $710 million "while the
adjusted EBITDA margin has improved from (153 per cent) in FY19 to (18
per cent) in FY22".
The acquisition came as the quick commerce
(10-minute delivery) segment is brewing with new hope as people prefer
groceries and other home essentials at their doorsteps within no time
after making an online order.
Startups like Swiggy Instamart,
Zepto and Reliance-backed Dunzo, among others, are trying to defy the
current slowdown, as they add more goods and daily essentials to their
kitty and deliver them to their customers.
In December 2021, Swiggy announced to pour $700 million into Instamart.
Last month, 10-minute delivery platform Zepto raised $200 million, taking its valuation to around $900 million.
India's
quick commerce market is all set to witness 15 times growth by 2025,
reaching a market size of nearly $5.5 billion, according to
Bengaluru-based market research firm RedSeer.
The total
addressable market for quick commerce in India stands at $45 billion,
and urban areas are driving this market on the back of mid-high-income
households.
According to Akshant Goyal, Chief Financial Officer,
Zomato, their food business is trending towards profitability faster
than what they hadAthought at the time of the IPO last year.
"The
timeframe for overall Zomato profitability does not change in our
minds. In fact, we believe we will now get to profitability within the
same timelines (as we thought last year) but with a much larger
addressable market. We are also not envisaging any furtherAcapital raise
to get to profitability in this timeframe," he said.
Goyal said that as a food company, "we are already tapping into the large food delivery opportunity in India".
"Customers
(and data) are clearly signalling the macro trend that people are
moving to unplanned and spontaneous purchases. To add to this, monthly
order frequency on Blinkit app was 3.5x in May 2022, which is higher
than that of food delivery on Zomato," informed Goyal.
Blinkit's
gross order value (GOV) is fast catching up with Zomato's GOV in some
key markets, therefore indicating that quick commerce will add a
significant new addressable market to our business in the long term.
"In a sample market like Gurugram, Blinkit GOV is already 63 per cent of Zomato's food delivery GOV," Goyal added.
Quick
commerce naturally extends across multiple categories including beauty
and personal care, electronics, OTC pharma, stationery and other gift
items, among others.
The company said it will keep the Blinkit app and brand separate from Zomato.
"We
will explore ways in which Blinkit can benefit from Zomato's large
customer base (and vice versa in the long term). Post the deal closure,
we are going to start experimenting with various ideas that we have and
see which all bear fruit, including having the Blinkit tab on the Zomato
app," the company said.
|
|
|
|
|
|
|
|
|
|
|
|
|
Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
|
64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
|
|
Daily Poll |
|
|
PM Modi's recent US visit to redefine India-US bilateral relations |
|
|
|
|
|
Commented Stories |
|
|
|
|
|
|
|
|