Why investors want Quick commerce in their cart

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Why investors want Quick commerce in their cart

Mumbai: Quick commerce has changed the way consumers shop with 10-minute deliveries becoming the norm, at least in the metros, and investors pouring big money into the space at high valuations.Young player Zepto, founded by two college dropouts in 2021, saw its valuation soar five times $7 billion from $1.4 billion in just two years even as former rival Dunzo perished.Eternal’s Blinkit, Swiggy’s Instamart and Zepto lead the market for quick deliveries with a combined share of over 90% led by Blinkit while Tata’s BigBasket, Flipkart Minutes and Amazon Now lag with a collective share of 5-7%, said Satish Meena, adviser at Datum Intelligence.Analysts at Morgan Stanley have raised bets on the space — the total addressable market for rapid deliveries is estimated to widen to $57 billion by 2030 against initial projections of $42 billion, they said in a report published earlier this year.Delivering ValueZepto, which just raised $450 million from a clutch of investors led by US pension fund Calpers, is now valued more than older startups such as Oyo and Meesho.

Last year, Goldman Sachs ascribed Blinkit an implied valuation of $13 billion compared to $2 billion in March 2023 and higher than that of parent Eternal’s core food delivery business Zomato. UBS, it is understood, had pegged Blinkit’s enterprise value at $15.4 billion in 2024. Blinkit, which has been driving Eternal’s growth, was acquired by the company in a $568-million fire sale in 2022.Blinkit leads the quick commerce market with a close to 50% share.

Swiggy accounts for around a quarter of the pie, with Zepto close on its heels with a share of 20-23%, analysts said. “Blinkit’s execution is superior. All the high-paying households are with them,” said Meena. In a Jan report, Bernstein estimated Instamart’s valuation at $6.8 billion, nearly the same as food delivery.Losing MoneyButRevenues RisingAlthough quick commerce businesses are losing money, revenues have surged with more consumers taking to rapid deliveries.

Blinkit’s adjusted revenue increased to Rs 9,891 crore in the Sept quarter from Rs 1,156 crore a year ago. Year-on-year, its net order value surged 137% to Rs 11,679 crore in Q2, a 10-quarter high, Eternal said in a letter to shareholders.“While absolute losses decreased, the reduction in loss/margin expansion was below our expectations. This was largely driven by our investments to drive higher growth and (net order value) market share opportunistically in the quarter,” said Blinkit, which moved to an inventory-based model that analysts said will only boost its revenues going ahead.Instamart’s adjusted revenue rose to Rs 859 crore in the June quarter from Rs 403 crore a year ago, while the gross order value doubled to Rs 5,655 crore. “Given the rapid growth and massive potential, competitive intensity remains fairly high in general from both Q-comm-only and Q-comm-also players,” Swiggy said. In FY24, Zepto’s revenues more than doubled to Rs 4,498 crore, showed the latest regulatory filings.With quick commerce taking a share from e-commerce players, Flipkart and Amazon have also forayed into the space but are lagging the three big players.

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