Blinkit, a quick commerce delivery service, closes down around 50 of its dark stores around the country, affecting hundreds of its employees, including dark store managers, selectors, and delivery staff. It comes as the corporation seeks ways to cut its burn rate amidst a cash constraint.
According to sources, Blinkit has also delayed payments to vendors for at least the last two months. Two Blinkit dark store managers acknowledged that the company’s payments had been delayed by an extra ten days. The corporation has also asked stores to cover a greater 6-7 km radius, up from the previous 2-3 km.
Currently, there does not appear to be a profitable venture for rapid commerce companies. It’s unlikely that they’ll be able to boost their finances from operations until they start charging users a delivery fee or offer some form of membership subscription plan. And it could be one of the reasons why investors are reluctant to put additional money into the company right now,” a prominent venture capital executive stated.
Blinkit and the StoryÂ
Blinkist is an online grocery delivery service. However, they were not always known as BlinkIt. Instead, they were earlier Grofers, and they were among the early investors with a sizable market share in the online grocery delivery industry. However, a new competitor, Zepto, threw down the gauntlet last year and dramatically transformed the game. They promised to deliver groceries in under 10 minutes and delivered on time.
Grofers had no choice but to follow after. So, to remain competitive, they changed their name to BlinkIt, shut down operations in a few cities, and then spent millions trying to impact the market. However, the company also spent a lot of money in the process. So much so that rumours now indicate that they are cutting off employees and postponing vendor payments. They’re also borrowing $100 million from Zomato (an investor) and using price increases, which means charging a premium for speedy deliveries during peak loads. It is unprecedented, especially in a new market.
Blinkit Layoffs
Blinkit has laid off most of its employees in places such as Mumbai, Hyderabad, and Kolkata, in fields such as riders, pickers, and store managers. The company currently employs over 2,000 individuals and has a ground staff of 30,000. The layoff is affecting close to 5% of the overall strength.
According to the insiders, Blinkit, which spent Rs 600 crore between November and February to expand its company and recruit consumers in the cash-hungry and deep-discounted food delivery industry, is now aiming to cut costs and has decreased its cash burn.
Following around 40 dark stores in the last few months, the company now has close to 445 dark stores. In the previous few months, the company has also received complaints on social media. It is for promising lightning-fast grocery delivery and then failing to deliver on those claims several times. Customers claim that their orders had marks as complete delivery. It is even though they did not receive them within the time frame.
Zomato and Blinkit are expected to unite in a share swap
According to multiple people briefed on the situation, online food delivery platform Zomato is in talks to buy Blinkit. It will be in a share swap deal. It comes after Zomato invested $100 million in the Gurugram rapid commerce firm Blinkit last year, acquiring a 10% share in the Albinder Dhindsa-led Blinkit. Since Zomato’s investment in Blinkit, the merger earn as a possible consequence.
According to people, while the purchase details are still in process, there are expectations of a 10:1 ratio. It values Blinkit at roughly $700-800 million according to Zomato’s current market cap. And it is a lesser valuation than Blinkit’s previous $1 billion estimations.
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