Quick commerce platforms Blinkit and Zepto revise commission structures amidst rising competition and focus on profitability

New Delhi (The Uttam Hindu): As competition intensifies in the quick commerce sector, platforms Blinkit and Zepto are revising their commission structures to enhance revenue and improve profitability. According to reports, Zepto has been gradually raising commissions on both users and brands, aiming to strengthen its unit economics. Blinkit, on the other hand, is adopting a variable commission model for brands and sellers, as stated in a report by The Economic Times.

Rising competition and increasing costs

The rapid expansion of quick commerce platforms has escalated competition, resulting in higher operational costs. This surge in costs has raised concerns among investors and led to a dip in market value for publicly traded companies like Zomato (which owns Blinkit) and Swiggy, which operates Instamart.

Zepto’s adjustments to commission rates align with the company’s preparations for an initial public offering (IPO) later this year. However, a stock market downturn since December has caused uncertainty for businesses planning public listings.

Zepto and Blinkit’s revenue strategies

Blinkit’s revised commission structure is expected to increase its total take rate — the percentage of the gross order value (GOV) retained as commission. Meanwhile, Zepto’s take rate has climbed to 22-23 per cent, with further increases expected as it nears an annualized $4 billion gross sales run rate. Zepto, valued at $5 billion, reported hitting $3 billion in annualized gross sales in January, the report noted.

Zepto operates nearly 1,000 dark stores, a footprint similar to Blinkit’s. It has also entered discussions with third-party fleet operators, including the Ola group, to optimize delivery costs.

Blinkit’s new variable commission model

Previously, Blinkit had a fixed commission structure ranging from 3 per cent to 18 per cent, depending on the product category. However, starting March 13, the platform will implement a dynamic model where commission rates will vary based on the selling price of items within the same category. For example:

- Products priced under Rs 500 will incur a 2 per cent commission.

- Items priced between Rs 500 and Rs 700 will have a 6 per cent commission.

- Products costing Rs 1,200 and above will attract an 18 per cent commission.

These commissions are applicable only to marketplace transactions, and additional charges for storage, warehousing, and deliveries will further increase the overall share retained by the quick commerce platforms, reaching 30-35 per cent of the selling price. Larger brands with stronger negotiating power are more likely to secure favorable terms.

Blinkit’s take rate performance

According to Morgan Stanley, Blinkit’s take rate for the October-December quarter stood at 17.9 per cent, a decline of 0.91 percentage points from the previous quarter and a 0.24 percentage point drop year-on-year. A recent report by brokerage firm Bernstein pointed out that quick commerce firms tend to achieve higher take rates from direct-to-consumer (D2C) brands. Blinkit boasts a stronger mix of new-age brands, with 39 per cent of its portfolio comprising D2C brands. In comparison, Zepto and Instamart have 31 per cent and 33 per cent of their brand mix made up of D2C brands, respectively.