Zepto leads ad spending surge in quick commerce, outpacing Blinkit
Zepto's revenue surged by more than 1200 percent in FY2023 to $251.7 million compared to $18.9 million in FY2022 as per the data by Tracxn Technologies Ltd. However, the net profit of the company declined by 198 percent to $158.6 million year-on-year
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Quick commerce platform Zepto has splashed out significant capital on advertisement expenses compared to rivals Blinkit and Instamart, aiming for business growth and brand presence. According to the data sourced by PrivateCircle Research, a private market intelligence platform, KiranaKart Technologies Pvt Ltd, operating as Zepto, shelled out Rs 215.82 crore on advertising and promotional activities in 2023. In contrast, Zomato-owned Blinkit spent Rs 188 crore on advertising. Zomato had acquired Blinkit (formerly Grofers) in a $569 million all-stock deal in August 2022.
Notably, Blinkit's ad spending increased by 34.4 percent compared to Zepto's 23 percent between 2022 and 2023.
Standalone data for the third leading player in the quick commerce space, Swiggy Instamart, is unavailable. However, Swiggy Ltd, the parent firm of Instamart, expended Rs 2,361.7 crore of capital on ads and promotions in 2023, according to PrivateCircle data. Swiggy, which is set to make a debut in the Indian stock market soon, mentioned in its Draft Red Herring Prospectus (DRHP), that its revenue from operation from quick commerce business increased by 444.84 percent--from Rs 82 crore in fiscal 2022 to Rs 451 crore in fiscal 2023--fueled by commission earned from merchant partners, advertising revenue and fees earned from users.
Zepto's revenue surged by more than 1200 percent in FY2023 to $251.7 million compared to $18.9 million in FY2022 as per the data by Tracxn Technologies Limited. However, the net profit of the company declined by 198 percent to $158.6 million year-on-year. On the other hand, Blinkit posted $432.9 million in revenue and a net profit of $1 billion in FY23.
Another entrant in quick commerce, also known as 10-minute delivery, is BigBasket's BBNow. Last month, the Tata Group company forayed into the quick commerce segment with the delivery of iPhone 16 variants. While BigBasket's quick delivery division has been operational for approximately 2.5 years, it was only in the past year that the company shifted its focus from slotted deliveries to quick delivery. BigBasket has spent Rs 385.12 crore in ads and promotions on a consolidated basis in 2023.
According to Mandar Shrikant Joshi – Angel Investor and President - M Strategy Global Investment Group, "Quick commerce firms use data-driven strategies, such as personalized offers, loyalty programs, hyperlocal targeting, and referral programs, to enhance customer engagement and optimize marketing. Frequent notifications and creative messaging boost customer experience, driving long-term growth and market influence".
Reliance Retail has also started offering quick commerce services through its e-commerce platform JioMart in select areas of Navi Mumbai and Bengaluru this month. Besides, Flipkart also rolled out its 10-minute delivery service 'Minutes' in August.
Joshi said such platforms have evolved from fast deliveries to major advertising hubs, with ad revenues contributing 10-12% to food delivery revenues.
"High advertising margins (90-95%) and adopting biddable advertising systems make them attractive to brands, positioning quick commerce to rival giants like Google and Amazon in the digital ad space," Joshi added.
Redseer Strategy Consultants, a global consultancy service firm, has projected a 75-85 percent growth in the Q-commerce market in FY 2025, with $6 billion GMV. Further, existing Monthly Transacting Users (MTUs) are expected to spend around 20% more on Q-commerce, driven by stronger trust and habit formation towards platforms, and experimentation with newer propositions, such as sustainable products, health focus, and cafe).
