New Delhi: Quick commerce platforms Blinkit and Zepto have increased their commission rates for brands and sellers as they push for profitability amid rising operational costs. The companies are adjusting their revenue models to sustain expansion and manage financial challenges in a highly competitive market.
Commission Hikes to Improve Margins
Zepto has gradually increased its commission rates for both brands and consumers to strengthen its unit economics. The move aligns with the company’s preparation for an initial public offering (IPO) later this year. Blinkit, on the other hand, has shifted to a variable commission model that ties commission rates to product prices.
Starting March 13, Blinkit’s new commission structure will apply different rates based on the selling price of products within the same category:
- 2% for products priced under Rs 500
- 6% for items between Rs 500 and Rs 700
- 18% for products costing Rs 1,200 and above
These commissions are applicable to marketplace transactions. However, brands and sellers also pay for additional services such as storage, warehousing, and deliveries. This raises the total share retained by quick commerce platforms to around 30-35% of the selling price.
Competitive Pressure and Investor Concerns
The quick commerce sector has seen rapid expansion, leading to increased cash burn. Investors remain cautious, particularly after a decline in market valuations for companies like Zomato, Blinkit’s parent firm, and Swiggy, which operates Instamart.
Zepto’s rising take rate, now at 22-23%, is expected to climb further as it nears an annualized $4 billion in gross sales. The company, last valued at $5 billion, had reported reaching $3 billion in gross sales in January.
Delivery Cost Optimization and Market Share Strategies
Both Blinkit and Zepto have expanded their network of dark stores to around 1,000 locations each. Zepto has also engaged in discussions with third-party fleet operators, including the Ola group, to reduce delivery expenses.
Meanwhile, Blinkit’s take rate for the October-December quarter stood at 17.9%, reflecting a slight decline from previous periods, according to Morgan Stanley. A report by Bernstein noted that Blinkit has a higher share of direct-to-consumer (D2C) brands, making up 39% of its portfolio, compared to 31% for Zepto and 33% for Instamart. The revised commission structures reflect the ongoing challenges in the quick commerce sector, where companies must balance growth, profitability, and investor expectations while managing operational costs.
