Zomato’s quick commerce unit Blinkit is accelerating its expansion and expects continued losses as competition intensifies in India’s instant delivery market.
Blinkit now aims to reach 2,000 dark stores – small warehouses in residential areas that exclusively service online orders – by December 2025, a year ahead of its previous guidance, after exceeding 1,000 stores by the end of December quarter (beating its own projection by one quarter).
This acceleration led to losses of 103 crore rupees ($11.9 million) in Q3FY25, as Blinkit added 368 stores and 1.3 million square feet of warehousing space in the last two quarters.
JPMorgan believes the industry has entered a “land grab mode,” with companies pursuing aggressive strategies around store rentals, product discounts and loyalty programs. The bank wrote in a note that some other major players — including Zepto, the No.2 player in quick commerce — are expanding their dark store networks “sharply ahead” of schedule as well.
Quick commerce firms — that deliver grocery and other products to customers within 10 to 15 minutes — are cannibalising e-commerce market share in India, forcing established players to overhaul supply chains in response to shifting consumer demands.
“As we continue to bring forward store expansion, our networks may have to carry a greater load of under-utilized stores which will impact near-term profits in the next one or two quarters,” said Akshant Goyal, Zomato’s chief financial officer. These investments, he added, will likely result in growth remaining “meaningfully above 100%” through FY25 and FY26.
The strategic shift comes amid intensifying competition. Zepto, backed by Lightspeed, StrepStone and Glade Brook, raised more than $1 billion last year. Zomato also raised $1 billion in November last year through a qualified institutional placement.
Flipkart also launched its quick commerce offering last year and has added more than 100 dark stores. Amazon began its quick commerce pilot in the South Asian market last month. And Swiggy, which operates the No.3 quick commerce platform in India, listed late last year in what was 2024’s largest tech IPO globally.
“The biggest impact of the intensifying competition has been the acceleration in customer awareness and adoption of quick commerce,” said Albinder Dhindsa, who leads Blinkit. He compared it to food delivery’s early days, when heightened competition led to higher customer acquisition investments across the industry.
While Blinkit’s core customers remain loyal – comprising one-third of platform gross order value in December – the firm said competitive pressure has led to a pause in margin expansion. The company expects its current store network investments to eventually yield strong returns once the business achieves greater scale.
The expansion comes as Zomato’s core food delivery business shows slower growth at 17% year-over-year in the latest quarter, compared to quick commerce growth of 120%.