Blinkit heralds a costly battle in India’s rapid commerce market

Zomato’s fast-commerce unit Blinkit is accelerating its expansion and expects continued losses as competition intensifies in India’s instant delivery market.

After surpassing 1,000 stores by the end of the December quarter (beating its forecast by a quarter), Blinkit now aims to reach 2,000 dark stores — small warehouses that serve only online orders at residences — by December 2025, a year ahead of previous guidance. ).

The acceleration led to a loss of Rs 103 crore ($11.9 million) in 2Q25 as Blinkit added 368 stores and 1.3 million square feet of warehouse space in the last two quarters.

JPMorgan believes the industry has entered “land grab mode” with companies implementing aggressive strategies around store leases, product discounts and loyalty programs. The bank noted that some other major players, including Zepto, the No. 2 player in flash commerce, are also running their dark store chains “significantly ahead” of the schedule.

Quick trade firms that deliver food and other products to customers within 10-15 minutes Cannibalizing e-commerce market share in Indiaforcing established players to overhaul their supply chains in response to changing consumer demands.

Zomato Chief Financial Officer Akshant Goyal said: “As we continue to drive store expansion, our networks may have to carry more unused store inventory, which will impact near-term earnings in the next quarter or two.” These investments are likely to result in growth “significantly above 100%” by FY25 and FY26, he added.

Strategic change occurs against the background of intensifying competition. Zepto, backed by Lightspeed, StrepStone and Glade Brook, raised over $1 billion last year. Zomato also collected 1 billion dollars last November through qualified institutional placement.

Flipkart too started trading fast introduced last year and added more than 100 dark stores. Amazon launched a rapid commerce pilot in the South Asian market last month. Swiggy, which operates India’s No. 3 e-commerce platform, listed late last year. The biggest tech IPO of 2024.

Albinder Dhindsa, who heads Blinkit, said, “The biggest impact of the intensifying competition has been the acceleration of customer awareness and adoption of fast commerce.” He compared it to the early days of food delivery, when increased competition led to higher customer acquisition investments in the industry.

While Blinkit’s core customers remain loyal — accounting for a third of the platform’s total order value in December — the firm said competitive pressure has caused a pause in margin expansion. The company expects that its current store chain investments will eventually generate strong returns once the business achieves greater scale.

The expansion comes as Zomato’s core food delivery business posted slower growth of 17% year-on-year compared to a brisk trade growth of 120% in the last quarter.