Blinkit, Zepto hike commissions to boost per-order revenue
What's the story
Top quick commerce platforms Blinkit and Zepto are raising the commissions they charge. The move comes as they look to boost revenue amid cut-throat competition and a push for profitability.
According to market dynamics, Zepto has been gradually increasing commissions on users and brands. Meanwhile, Blinkit has adopted a variable commission model for brands and sellers.
Cash burn
Quick commerce firms face increased cash burn
The aggressive growth of quick commerce companies has led to higher cash burn, which has affected investor sentiment.
This has caused a dip in the market cap of publicly listed companies like Zomato and Swiggy, which runs the Instamart platform.
Despite the commission structure changes by Zepto and Blinkit, other players like Instamart and Flipkart Minutes have not changed their commission model.
IPO plans
Zepto's rising take rate and IPO plans
Zepto's rising take rate, now at 22-23%, is part of its strategy to bolster unit economics ahead of an initial public offering (IPO) this year.
Despite a major fall in stock markets since December, raising concerns among companies looking to go public, Zepto is undeterred in its IPO ambitions.
The company's net fee structure benefits existing users over new ones as part of its wider push toward operating profitability ahead of the IPO.
Commission structure
Blinkit's new commission structure explained
Blinkit's current commission system has a fixed rate between 3% and 18%, depending on the category.
However, from March 13, Blinkit will introduce a variable rate according to the selling price of items in the same category.
For example, items priced under ₹500 will have a 2% commission, items between ₹500 and ₹700 will be charged a 6% commission, and those priced between ₹1,200 and above will have an 18% commission.
Market share
Take rate and market share
Blinkit's product and category mix on its marketplace has evolved a lot since the introduction of fixed commission rates.
A senior executive told The Economic Times that despite thousands of SKUs with higher ASPs, Blinkit's take rates didn't improve even when AOVs increased due to how the rate for a particular category was decided.
Despite Zepto securing the No.2 rank in the quick commerce sector, Blinkit remains aggressive as it continues to be the largest player in this field.