Good News For Zomato Investors: Blinkit Hikes Commission On Orders, Zepto Follows Suit Ahead Of IPO – News18
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While Blinkit (owned by Zomato) has shifted to a variable commission model for brands and sellers, Zepto is gradually increasing commissions levied on users and brands to improve earnings.
Zepto CEO Aadit Palicha (left) and Zomato CEO Deepinder Goyal.
Zomato Share Price: Quick commerce players Zepto and Blinkit are making efforts to boost their earnings to lift investor sentiments. In their latest move, the e-commerce companies are raising commissions on each order.
While Blinkit (owned by Zomato) has shifted to a variable commission model for brands and sellers, Zepto is gradually increasing commissions levied on users and brands to improve profitability, according to a The Economic Times report citing people aware of the matter.
The development comes at a time when Zepto IPO is expected to be launched this year and Blikit is trying to boost investor sentiment amid a decline in its market capitalisation in the past few months.
The share price of Zomato has declined to Rs 223 on March 7, from Rs 302 on December 6 on the BSE amid overall market decline.
The aggressive expansion by the e-commerce companies of late has led to a rise in cash burns for the companies, thus denting market sentiment.
However, Flipkart’s Instamart and Flipkart Minutes have not changed their commissions yet, according to the ET report.
The report, citing sources, said the new structure is expected to increase Blinkit’s total take rate, or the percentage of the gross order value (GOV) that a platform retains as commission.
Zepto’s take rate has increased to 22-23 per cent and may rise further as it nears $4 billion gross sales next month on an annualised basis. In January, the company recorded annualised gross sales of $3 billion. The company’s valuations currently stands at $5 billion as per the last estimate.
Blinkit has also moved to variable commission system. Currently, the company follows a fixed rate system, under which it charges between 3 per cent and 18 per cent depending upon the category. However, from March 13, it will start charging rates as per the selling price of the items, even within the same category, according to the ET report citing Blinkit’s email to sellers.
While the increase in commission is focussed on improving financials, there is no letting up in terms of spending to corner market share. “It remains as intense as ever but now levers are being tapped to generate more cash, keeping in mind the broader market conditions. Zepto has secured the No.2 rank, but Blinkit still is the largest and continues to be aggressive as well,” according to the report citing a person aware of the goings-on.
Antitrust Cast Against Zomato, Swiggy, Zepto For Deep Discounts
The All India Consumer Products Distributors Federation (AICPDF) has filed an antitrust case against big fast-delivery businesses of Zomato, Swiggy and Zepto, calling for an investigation into alleged deep discounting practices, legal papers show.
The AICPDF represents 400,000 distributors as members supplying products of brands such as Nestle, Unilever, and Tata to 13 million retail shops across India.
India’s e-commerce sector has faced intense scrutiny over how products are priced online. An antitrust investigation last year found Amazon and Walmart’s Flipkart favour select sellers and resorted to “predatory pricing”, which hurts smaller retailers. The companies have denied the allegations.
Zomato Vs Zepto Verbal Spat
Recently, Zomato CEO Deepinder Goyal raised the issue of high cash burns in the e-commerce industry. In an interview, he said, “We think the total burn for all companies in quick commerce is around Rs 5,000 crore per quarter, conservatively speaking.”
Pointing out high cash burns by Zepto, the Zomato CEO added that “substantially more than half of this is by Zepto… compared to this, we’re burning very low numbers. Last quarter, Blinkit burned around Rs 35 crore per month on average.”
Responding to this, Zepto CEO Aadit Palicha in his social media post said, “This statement is verifiably untrue and it will be clear when we publicly file our financial statements.”
“Deepinder Goyal – whom I deeply respect as an entrepreneur – made an inaccurate statement about Zepto. His words were that Quick Commerce was burning 5,000 crores per quarter of which ‘substantially more than half of this is by Zepto’ – implying that we are losing substantially more than 2,500 crores per quarter,” Palicha said in a post on LinkedIn.
