In a strategic move to capture the next wave of online shoppers, quick-commerce platform Blinkit is aggressively pushing its footprint into smaller cities across India. This expansion comes at a time when the quick-commerce landscape is witnessing intense competition, with players vying for dominance in the fast-growing market.

Blinkit’s decision to venture into smaller cities is driven by the significant untapped potential these markets offer. With increasing smartphone penetration and affordable internet access, a growing number of consumers in these regions are embracing online shopping for their everyday needs. Moreover, the cost of operations, including real estate and logistics, is generally lower in smaller cities, potentially leading to better returns on investment for Blinkit.

Zomato CEO Deepinder Goyal has emphasized the attractive return on investment (RoI) from these smaller markets. He mentioned that while the top eight cities currently contribute the majority (around 80%) of Blinkit’s revenue, the company foresees substantial growth opportunities in the less saturated smaller urban centers.

To facilitate its expansion, Blinkit is employing a strategy of setting up dark stores – small, delivery-only warehouses – in strategic locations within these smaller cities. These dark stores are crucial for enabling rapid delivery times, which is the core value proposition of quick commerce. By having localized inventory, Blinkit aims to significantly reduce the time taken to fulfill orders and enhance customer satisfaction.

Albinder Dhindsa, CEO of Blinkit, highlighted that increased competition in the quick-commerce space has, paradoxically, led to greater customer awareness and adoption of such services, even in newer markets. While this competition has put pressure on margin expansion in the short term due to increased marketing and customer acquisition costs, Blinkit believes that its focus on service quality will ultimately pay off in customer retention.

While the opportunities in smaller cities are promising, Blinkit will need to navigate certain challenges. These include educating new customers about the convenience of quick commerce, establishing robust supply chains in potentially less developed logistical landscapes, and facing competition from other players like Zepto and Swiggy Instamart who are also eyeing these markets.

Despite these hurdles, Blinkit is optimistic about its growth trajectory. The company plans to open a significant number of dark stores in smaller cities in the coming year. Zomato’s CFO, Akshant Goyal, noted that the economics of smaller cities, particularly from a payback and RoI perspective, appear attractive, leading to the decision to allocate a larger portion of new store openings to these regions compared to the previous year.

Blinkit’s aggressive push into smaller cities signals a crucial phase in the evolution of quick commerce in India. By tapping into these new markets, Blinkit aims to diversify its revenue streams and solidify its position in the national quick-commerce landscape. The coming months will be critical in observing how Blinkit adapts its strategies to cater to the unique demands and consumer behaviors of these smaller urban centers.

Key Highlights:

• Blinkit is expanding its quick-commerce operations into smaller cities in India, recognizing their untapped growth potential due to increasing internet penetration and lower operational costs.
• The company will utilize a network of strategically placed dark stores in these cities to ensure quick delivery times.
• This expansion occurs amidst intensifying competition in the quick-commerce sector, requiring Blinkit to focus on customer acquisition and building efficient supply chains.
• Zomato’s leadership believes that smaller cities offer attractive returns on investment for Blinkit’s expansion.