BENGALURU — Food delivery company Zomato will buy SoftBank-backed Blinkit, a startup that promises rapid grocery deliveries, for 44.47 billion rupees ($569 million), in a deal announced Friday.
Blinkit, formerly Grofers, was one of the early stars of hyperlocal commerce in India. Set up in 2013, Grofers delivered orders from nearby stores. It was backed by SoftBank, Tiger Global Management and Sequoia Capital among others.
Following a slowdown in funding in 2015, which saw a number of hyperlocal startups such as Peppertap and Tinyowl close shop, Grofers adopted an inventory-led model, where it stocked up goods in its own fulfillment centers.
Grofers, however, struggled to scale amid stiff competition from BigBasket, India’s largest online grocery store that was bought by Tata Group. It changed track and adopted the instant delivery model last year and renamed itself Blinkit.
Blinkit’s turnover surged 18% year on year to 2.3 billion rupees in the financial year ending March 2022, Zomato said in a stock exchange filing on Friday.
Zomat invested $100 million in Blinkit for about a 10% stake in August 2021, and lent the cash-strapped startup another $150 million in March.
The acquisition of Blinkit demonstrates Zomato’s intention to enter grocery deliveries, a hotly contested sector where its archrivals Swiggy, Reliance Industries, the Tata Group, Amazon and Walmart’s Flipkart are fighting for market share.
The push to expand beyond its core food delivery business comes at a time when the company’s revenues have plateaued. Zomato clocked revenues of 12.5 billion rupees in the July-September quarter, 12 billion rupees in October-December and 12.8 billion rupees in January-March. .
Average monthly transacting customers remained almost flat at 15.7 million in the January-March quarter as against 15.5 million in July-September.
At 398 rupees, it’s average order value in the financial year ending March 2022 remained the same as the previous fiscal year. Meanwhile, its losses surged 1.5 times during this period to 12.22 billion rupees.
Zomato previously committed a $400 million investment to grow its quick commerce offerings. It bought stakes in logistics startup Shiprocket and Magicpin, a local deal discovery platform.
SoftBank-backed Swiggy has committed $700 million to grow its instant delivery business while Reliance Industries bought a 25.8% stake in instant delivery startup Dunzo for $200 million. Zepto, barely a year old, received a $360 million investment on its way to a $900 million valuation.
Quick commerce took off in India last year with grocery deliveries, and has since expanded to fashion, electronics and food.
Zomato is attempting instant food deliveries in less than 10 minutes.
Goyal recently said that Zomato’s foray into quick commerce was inevitable because “customers don’t want to plan, and they don’t want to wait.” Sorting restaurants by delivery time was one of the most used features on the Zomato app.
Deeming Zomato’s 30-minute average delivery time too slow, Goyal wrote that the time frame “will soon have to become obsolete.” The CEO later said, “If we don’t make it obsolete, someone else will.”