Inside India’s $2.8 billion quick-commerce boom: Blinkit, Instamart, and Zepto eye lion’s share

Starting with the revolutionary concept of delivering grocery items within minutes, Zomato-owned Blinkit, the market leader in India’s ‘quick-commerce’ (Q-commerce) industry, has broadened its service range.

Today, Blinkit delivers not only groceries but also mixer-grinders, ceiling fans, and even printouts of important documents, all with remarkable speed.

This expansion into diverse product categories highlights the intense competition within the $2.8 billion market, with rivals like Swiggy’s Instamart and Zepto also vying for a larger market share.

Significant investments drive rapid growth

In a recent move, Zomato announced an infusion of Rs 300 crore into Blinkit, increasing its total investment in the company to Rs 2,300 crore since acquiring it in 2022.

While Zomato is heavily investing in Blinkit, Swiggy is preparing for an initial public offering (IPO), aiming to raise around $1.25 billion to bolster its Instamart services.

Meanwhile, Zepto, the only standalone quick-commerce platform in India, is also seeking to raise approximately $300 million, according to Indian media reports.

Factors fueling the rise of Q-commerce

The Covid-19 pandemic significantly accelerated the growth of the Q-commerce industry, as lockdowns and safety concerns kept people indoors.

The adoption of work-from-home models further fueled this trend, particularly among urban millennials and Gen-Z consumers who increasingly relied on these services.

A report by the Indian Institute of Management (IIM), Ahmedabad, indicated that the segment experienced rapid growth during the pandemic, setting the industry on a projected growth trajectory of 27.9% CAGR between FY22 and FY27.

As hybrid and remote working styles continue, Q-commerce services have become essential for this target consumer segment.

Expansion strategies reflect industry expectations

The leading players in the Q-commerce industry are pursuing aggressive expansion strategies to meet growing consumer demand.

Blinkit aims to nearly double the number of its dark stores—from 526 as of March 31 to 1,000 by the end of the fiscal year.

Dark stores serve as micro-warehouses from which goods are delivered. Additionally, Blinkit is expanding its stock-keeping units (SKUs) to include fashion, toys, fitness items, and more. Similarly, Zepto and Swiggy Instamart are diversifying their product offerings to capture a broader market.

Challenges and pathways to profitability

Profitability has been a significant challenge for the Q-commerce sector, but Blinkit is making strides towards changing this narrative.

The company reported a positive EBITDA for March, although it still posted a negative adjusted EBITDA of Rs 37 crore for the January-March quarter, a substantial improvement from the Rs 203 crore loss in the same period last year.

Kushal Bhatnagar, associate partner at Redseer Strategy Consultants, suggests that profitability for Q-commerce companies will stem from several factors.

These include increasing the average order value (AOV) through non-grocery expansions and high ASP SKUs, improving dark store utilization, growing ad revenues, and rising commissions as platforms gain buying power.

Forecasting a 40-45% Gross Market Value (GMV) CAGR for the Q-commerce space over the next three years, Bhatnagar said,

As a result, we expect Q-commerce contribution margins to reach +6-7% by the end of 2026.

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