Food delivery application is planning to launch integrated blinkit The approval of the proposed acquisition follows on several fronts, top officials said in a conference call on Saturday. The company said the decline in Blinkit’s valuation was due to macroeconomic factors.

zomato board
Acquired Acquisition of Accelerated Commerce Startup Blinkit 4,447 crore ($570 million) in an all-stock deal on Friday.

During the analyst and shareholder call, Zomato executives indicated that once the transaction is closed, the priorities will be customer and delivery fleet integration. Zomato may consider moving Blinkit to the Zomato app.

Zomato CFO Akshat Goel said, “We will experiment with different ways to integrate the two customer bases or ensure that we are able to leverage Zomato’s customer base for the growth of the Blinkit business.” “Once the transaction is done, we will test these things and if it really makes sense to have both the brands on the same app, then why not? So we have many ideas in our mind and we will experiment and Will see if that works eventually.” Using Zomato’s food delivery customer base to cross-sell quick commerce “Synergy is going to be a big part of Ehsaas,” he said.

“Once the deal closes, we are going to start experimenting with different ideas that we have and see what all bears fruit, including the Blinkit tab on the Zomato app,” said Zomato founder and MD. Deepinder Goyal wrote in a letter to shareholders on Friday.

“As they say, experiment a lot and keep what works. This is our guiding motto,” he had said.

blinkit had become a unicornThis follows last year’s $120 million funding round from Zomato and New York-based investment firm Tiger Global — a privately held company with a valuation of $1 billion or more.
Zomato invests $100 million in Blinkit When it was operating as Grofers before the food delivery company was listed on Indian exchanges last year.

Zomato CFO Akshat Goel said, “If you compare the size of the business today (Blinkit), it is very similar to the size of the business last year, although then the format was different and the growth prospects were different.” “The discounts you’re seeing are essentially in our minds adjusting to the new reality we all live in today, where valuations have been corrected for all growth businesses.”

The transaction is subject to customary approval, with 75% of shareholders voting on the decision. The transaction is expected to close in early August, Zomato had told BSE after the board meeting on Friday.

advertising revenue

Zomato expects Blinkit’s target group as well as ad revenue potential to be higher than that of its food delivery business. CFO Goel said that while there is overlap in the target groups of Zomato and Blinkit, older users who are not yet using the food delivery service are using Blinkit.

“I think there will be a huge overlap between the user base, but there will be a new demographic or a new user base that will be a customer or a user of Instant Commerce which may not be the case with food delivery,” he said.

In his letter, CEO Goyal said he would argue that ad sales revenue in Accelerated Commerce would exceed that of food delivery “given the very large digital ad spend budgets of consumer packaged goods and brands.”

Blinkit CEO Albinder Dhindsa said on the call that the total grocery segment, including Taza, accounted for 70% of the total sales. The company has increased its ‘take’ rates from 7.5% in January to 14.5% in May 2022. Take rate is the commission charged by a marketplace for transactions on its platform.

“We have an increase in commission that we have been able to charge because some areas have started thresholding, after which volumes have allowed us to be able to do that,” Dhindsa said. “We saw an increase in ad revenue as well as customer-paid delivery fees. All three of these other factors contributed to the increase in metric value.”

The company has been able to retain 60% of the consumers of its earlier model’s value-centric segment.

“Most of the user drops that we have are from areas where we became unusable, once we limited our service to 10-minute deliveries,” he said.

After expanding to over 450 dark stores dedicated to fulfilling orders, these have been reduced to 400 due to limited traction and other issues. Of this, 200 are working in partnership with local vendors. It plans to focus on those 15 cities for now and improve the business of these dark stores. The Gross Order Value (GOV) of Blinkit is already around 63% of Zomato’s food delivery GOV in Gurugram, the company said.

The Blinkit purchase is expected to help Zomato – which has been bullish on quick commerce – significantly consolidate its position in the ultra-fast grocery delivery space. Rival
Swiggy has allocated at least $700 million For its instant commerce business under Instamart, while the sector has also seen other well funded startups like Zepto,

retail supported Dunzoand Tata-owned BigBasket.