Blinkit: A Deep Dive into the Quick Commerce Business Model

Quick commerce, or q-commerce, has revolutionized the way we receive goods, offering near-instant delivery that makes traditional e-commerce look slow in comparison.

Quick commerce (q-commerce) is experiencing a decline globally, yet it has gained significant momentum in India. Companies like Blinkit, Zepto, and Instamart are at the forefront of this innovation. I recently delved into the business models of these q-commerce giants to understand on who is doing better and how they operate and manage to deliver items within minutes.

Blinkit holds a 40% market share in the Indian q-commerce space, followed by Instamart at 37% and Zepto at 20%. The remaining market is occupied by smaller players like JioMart. But before all that if you are not able paint a clear picture on what is Q-commerce, what is the metric they track, how are they even earning money in the first place. Let me take Blinkit for this case. Here you go:

1. What is Quick Commerce?

Quick commerce (q-commerce) refers to the rapid delivery of items, typically within minutes, unlike traditional e-commerce where deliveries can take several days.

2. Blinkit’s Approach to Q-Commerce

Blinkit specializes in delivering a variety of items, including groceries, electronics, bag, water bottle, RO, gifts, and daily essentials like fruits and milk, directly to your doorstep within minutes. This service aims to simplify daily chores with its speed and convenience.

3. How Do They Deliver So Quickly?

Blinkit employs a network of dark stores—essentially warehouses and micro-fulfillment centers located near customers. The items you see available in the app are stocked in these nearby dark stores, enabling rapid delivery.

Blinkit’s Business Model

Blinkit operates on a franchise model. Franchise owners (FOs) need a property of 1,500-3,000 square feet to set up a dark store. Blinkit stocks the items somewhere around 1000 to 7000 depending upon the location, while the FO hires staff for inventory management, Inbound and Outbound activities. Blinkit refers to these employees as Partners and can assist with hiring them. Delivery partners, provided by Blinkit, who handles the last-mile delivery for the FO.

4. Scale of Q-Commerce in India

Blinkit operates over 450 dark stores across India. For comparison, Zepto has around 350 dark stores, and Swiggy’s Instamart boasts approximately 480 dark stores. Dark stores are strategically located near to your house within the reach so that it can be delivered in few mins.

These stores are strategically placed based on local demand, with inventory adjusted according to customer searches.

5. Measuring Success in Q-Commerce

Success in q-commerce can be gauged by the Average Order Value (AOV)—the average amount spent per order. Blinkit’s AOV stands at ₹635, Instamart’s at ₹490, and Zepto’s at ₹430, indicating Blinkit is leading in this metric.

Revenue Model

Blinkit’s revenue comes from three main sources:

• Advertising: The largest revenue stream, Blinkit has build a self-service ad product that allows brands to target customers and track ad performance.

• Brand Collaborations and Margins: Collaborations with various brands add to the revenue. Blinkit has recently been collaborating with brands like Mokabara for bags, boAt for electronics and others etc.

• Delivery Fees: Blinkit charges delivery fees based on distance and package weight.

For franchise owners, revenue is based on a percentage of monthly sales, with higher sales generating more income. And Blinkit recently told that 70% of the dark stores are operating positive.

Delivery partners earn on a per-order basis, with payouts varying by distance and package weight, recently adjusted from ₹25 to ₹10 per order.

Blinkit’s innovative approach to q-commerce, leveraging dark stores and a robust franchise model, has positioned it as a leader in rapid delivery services. As the market evolves, Blinkit’s ability to adapt and refine its business and revenue models will be crucial in maintaining its competitive edge. Just imagine you ordering a TV or AC or Fridge and getting it deliver within few minutes and q-commerce is already marching towards it.