Zomato's ad spends rise, says q-comm biz increasingly finding product-market fit in India

"Strong customer adoption is giving us the confidence to bring forward our store expansion plans, and acquire customers faster for existing and new stores," said Zomato's q-comm arm Blinkit's CEO.

By  Storyboard18Feb 3, 2025 1:45 PM
Zomato's ad spends rise, says q-comm biz increasingly finding product-market fit in India
(Representative Image: Ravi Sharma via Unsplash)

Zomato in an earnings update said that its quick-commerce platform Blinkit will get to its target of 2,000 stores by December 2025, much earlier than the company’s previous guidance of December 2026.

The food delivery and quick commerce major Zomato reported a 57 percent year-on-year (YoY) decline in quarterly profit after tax (PAT) at Rs 59 crore in the third quarter (Q3) of financial year 2024-25 (FY25), down from Rs 138 crore in the same period a year ago. It had reported a PAT of Rs 176 crore in Q2 FY25. Zomato’s revenue from operations rose 64 percent YoY to Rs 5,404 crore in Q3, up from Rs 3,288 crore a year ago. It had reported a revenue of Rs 4,799 crore in the previous quarter.

Total expenses for the Gurugram-based firm increased to Rs 5,533 crore in the quarter ended December, up from Rs 3,383 crore a year ago and Rs 4,783 crore a quarter ago. Expenses on advertising and sales promotion went northward, from Rs 421 crore in the quarter ending in September to Rs 521 crore in the quarter ending in December.

Zomato also highlighted how the sudden surge in competition has impacted business. According to Zomato, this heightened competition has led to a pause in margin expansion in the business, which is expected and should be temporary. The 2% quarter-on-quarter muted gross order value (GOV) growth in food delivery has been driven by broad based demand slowdown, Zomato said.

Zomato’s quick commerce arm Blinkit reported a (EBITDA) loss of Rs 103 crore in Q3FY25, a 16 percent increase year-on-year (YoY) from a loss of Rs 89 crore incurred during the same period last year. On a sequential basis, the adjusted EBITDA loss is significantly higher than Rs 8 crore recorded in Q2FY25.

Blinkit's revenue increased over 117 percent YoY to Rs 1,399 crore, up from Rs 644 crore in Q3 FY24. Blinkit reported a revenue of Rs 1,156 crore in the previous quarter. Meanwhile, its GOV for the quarter increased to Rs 7.798 crore in the December quarter, compared to Rs 3,542 crore in Q3 FY24 and Rs 6,132 crore in the previous quarter.

The management attributed the losses in the Quick Commerce business to pulling forward of the growth investments in the business that would have otherwise been made in a staggered manner.

Deepinder Goyal said, "The losses in our quick commerce business this quarter are largely on account of pulling forward the growth investments in the business that we would have otherwise made in a staggered manner over the next few quarters. As of now, it seems like we will get to our target of 2,000 stores by Dec 2025, much earlier than our previous guidance of Dec 2026."

Albinder Dhindsa, Blinkit's CEO said, "We remain confident in the quality of the business that we are building in the midst of these investments – indicated by the robust margin profile for the more mature parts of the business, as well as continued strong customer retention. The quick commerce business is increasingly finding product-market fit in India. Strong customer adoption is giving us the confidence to bring forward our store expansion plans, and acquire customers faster for existing and new stores."

Somdutta Singh, Founder and CEO Assiduus, says, "Blinkit's advertising model isn't just about impressions; it's about creating meaningful engagement. By leveraging granular data on consumer purchasing patterns, they're enabling brands to reach consumers precisely when they're most likely to make a purchase. The platform's average order value has dramatically increased from Rs 553 to Rs 635 in just a year, signaling a robust ecosystem for marketers seeking high-conversion touchpoints."

She adds, "The marketing adaptation in quick commerce is nothing short of remarkable. Brands are no longer thinking in broad, generic terms but are crafting super precise, time-sensitive campaigns. Marketers are prioritizing hyper-localized strategies that resonate with specific urban demographics, understanding that the modern consumer values convenience and instant gratification above all. The 130% year-on-year gross order value growth in Q1 FY25 is a testament to this strategic pivot."

First Published on Jan 21, 2025 7:52 AM

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