Blinkit, Zepto hike commissions to boost revenue amid tough competition

Blinkit and Zepto are increasing commissions on sellers and brands to boost revenue amid fierce competition and rising costs, as both platforms push for profitability and market dominance

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Quick commerce platforms Blinkit and Zepto are revising their commission structures to enhance revenue amidst growing competition and a focus on profitability.  

 

Zepto has been gradually increasing commissions on both users and brands to improve its unit economics. Meanwhile, Blinkit has transitioned to a variable commission model for brands and sellers, according to a report by The Economic Times.

 

Competition leading to higher costs  

The rapid expansion of quick commerce platforms has intensified competition, driving up cash burn. This financial pressure has unsettled investors, contributing to a drop in market value for publicly traded firms such as Zomato, the parent company of Blinkit, and Swiggy, which operates Instamart, according to the news report.

 

Zepto’s adjustments in commission rates align with its preparation for an initial public offering (IPO) later this year. However, the stock market downturn since December has raised concerns for companies planning public listings.  

 

Blinkit’s revised commission structure is expected to increase its total take rate — the percentage of gross order value (GOV) retained as commission. Meanwhile, Zepto’s take rate has climbed to 22-23 per cent and is projected to rise further as it nears an annualised $4 billion gross sales run rate. Zepto, last valued at $5 billion, reported reaching $3 billion in annualised gross sales in January, the report said.  READ: FMCG distributors file petition with CCI against Blinkit, Zepto, Instamart

 

Expansion and cost optimisation strategies  

Zepto has nearly 1,000 dark stores, matching Blinkit’s footprint. Additionally, it has held talks with third-party fleet operators, including the Ola group, to optimise delivery costs.

 

Previously, Blinkit had a fixed commission structure ranging from 3 per cent to 18 per cent, depending on the product category. However, starting March 13, the platform will implement a dynamic model where commission rates will be based on the selling price of items within the same category.   

For instance:  

- Products priced under Rs 500 will have a 2 per cent commission.  

- Items priced between Rs 500 and Rs 700 will be charged a 6 per cent commission.  

- Products costing Rs 1,200 and above will attract an 18 per cent commission.  

 

These commissions apply only to marketplace transactions. In addition, brands and sellers incur charges for storage, warehousing, and deliveries, increasing the overall share retained by quick commerce platforms to 30-35 per cent of the selling price. Larger brands with greater negotiating power tend to secure more favourable terms, The Economic Times mentioned.

 

Blinkit’s take rate

According to Morgan Stanley, Blinkit’s take rate for the October-December quarter stood at 17.9 per cent, reflecting a 0.91 percentage point decline from the previous quarter and a 0.24 percentage point drop year-on-year.  

A recent report by brokerage firm Bernstein highlighted that quick commerce firms achieve higher take rates from direct-to-consumer (D2C) brands. Their analysis found that:  

- Blinkit has a stronger mix of new-age brands, comprising 39 per cent of its portfolio.  

- Zepto and Instamart have 31 per cent, and 33 per cent of their brand mix made up of D2C brands, respectively.