He also pointed out that Blinkit’s near-term margins appear to have stabilised. “It feels like margins have bottomed out,” Dhindsa said. As roughly a year’s worth of new dark stores begin maturing, he expects both percentage margins and absolute losses to improve.
That said, he noted that margin gains won’t be smooth. “There could be some bumps along the way if the competitive intensity goes up again.”
Dhindsa’s comments come at a time when the 10-minute delivery space has seen the entry of multiple players, over the last year. The new entrants include larger, cash-rich ecommerce companies such as Walmart-owned Flipkart and Amazon India.
“The opportunity in front of us is massive, which means that the competition in this space is also very high. We see an influx of new players in this segment every now and then, and we see varying aggression by existing competitors, depending on their balance sheet and near-term growth objectives. Under no circumstances, will we let go of our market position here, and lose sight of the size of the prize in the long term,” Dhindsa wrote in a letter to the shareholders of Blinkit’s parent company, Eternal.
For the April-June quarter, Blinkit reported a 140% year-on-year jump in gross order value (GOV) to Rs 11,821 crore, effectively taking its annualised GOV run rate to around $5.5 billion.
At the same time, the quick commerce company, which competes with Zepto, Swiggy Instamart, BigBasket, JioMart and others, reported adjusted operating losses of Rs 162 crore for the first quarter.
“The long term profitability of the business is not a concern. Despite the investments in long term infrastructure and high competition, a large portion of our business is already profitable with some cities at over 2.5% adjusted Ebitda margin (as a % of net order value). Getting to these margins in some cities so early in this business, is a testament to the feasibility of our long term guidance of 5-6% margin,” Dhindsa noted, adding that in the near-term, loss margins have bottomed out.
