Quick commerce platforms Blinkit and Zepto are revising their commission structures to enhance revenue amidst growing competition and a focus on profitability.
Zepto has been gradually increasing commissions on both users and brands to improve its unit economics. Meanwhile, Blinkit has adopted a variable commission model for brands and sellers.
Competition leads to increased costs
The rapid expansion of quick commerce platforms has increased competition, resulting in higher cash burn. According to the news report, this financial pressure has unsettled investors, resulting in a drop in market value for publicly traded firms such as Zomato, Blinkit's parent company, and Swiggy, which operates Instamart.
Zepto's commission rate adjustments are consistent with its plans for an initial public offering (IPO) later this year. However, the stock market downturn since December has raised concerns among companies considering public offerings.
Blinkit's revised commission structure is expected to raise its total take rate, or the percentage of gross order value (GOV) retained as commission. Meanwhile, Zepto's take rate has risen to 22-23%, and it is expected to rise further as it approaches an annualized $4 billion gross sales run rate. Zepto, which was last valued at $5 billion, reported annualized gross sales of $3 billion in January, according to the report.
Expansion and cost optimization strategies
Zepto has nearly 1,000 dark stores, which matches Blinkit's footprint. It has also held discussions with third-party fleet operators, including the Ola group, to reduce delivery costs.
Previously, Blinkit had a fixed commission structure that ranged from 3% to 18%, depending on product category. However, beginning March 13, the platform will use a dynamic model in which commission rates are based on the selling price of items in the same category.
For example
- Products priced under Rs 500 will have a 2% commission.
- Items priced between Rs 500 and Rs 700 will be charged a 6% commission.
- A commission of 18% will be charged on products priced at or above Rs 1,200.
These commissions only apply to marketplace transactions. Furthermore, brands and sellers pay for storage, warehousing, and delivery, bringing the overall share retained by quick commerce platforms to 30-35 percent of the sale price. Larger brands with more negotiating power typically secure better terms.
Blinkit's Take Rate
According to Morgan Stanley, Blinkit's take rate for the October-December quarter was 17.9 percent, down 0.91 percentage point from the previous quarter and 0.24 percentage point year on year.
According to a recent report by brokerage firm Bernstein, quick commerce firms see higher take rates from direct-to-consumer (D2C) brands. According to their analysis:
- Blinkit has a higher proportion of new-age brands (39%).
- D2C brands account for 31% of Zepto's brand mix and 33% of Instamart's.
