Zomato to invest $400 million in quick commerce; sets up NBFC

Food tech giant Zomato is bullish on India’s aggressively growing quick commerce segment and will invest $400 million over next two years in the category. The company said that the business growth in one of its portfolio companies, Blinkit (formerly Grofers) is driving this investment confidence.

 
On February 4, Business Today reported that Zomato will  shortly announce a further investment in quick-commerce start-up, Blinkit. Sources had informed BT that the deal could value Blinkit at $1.5 billion valuation, a significant jump from it's existing $1 billion valuation.
 
“Blinkit is the closest to how we all know the quick commerce business today. Blinkit pioneered 10-minute grocery delivery in India post our $100 million investment in August 2021. Since then, the platform has scaled rapidly to $450 million annual run rate GMV (January 2022 annualised) and now operates with 400+ dark stores across 20 cities in India. 100 per cent of Blinkit’s business now is in quick commerce format with a median delivery time of ~12 minutes. Delightful customer experience is leading to high customer retention, ordering frequency and willingness to pay for the service," the company said in its Q3 earnings report.

The food delivery major further said that it is very bullish on the product-market fit along with unit economics for the quick commerce segment.

“It reminds us of the food delivery category a few years ago when many platforms competed over a large and growing market but ultimately only the few who delivered exceptional experience to their customers survived. We are becoming increasingly confident in our decision to invest behind market leadership here with healthy unit economics. As a result, we are updating the upper bound of our potential investments in this category to $400 million cash over the next two years,” Zomato said in its release.
 
Meanwhile, Zomato has also said that it is in the process of setting up a NBFC (non-banking finance company).

"We are in the process of setting-up our own non-banking financial company (NBFC) which will allow us to extend short term credit to our ecosystem – our delivery partners, customers and restaurant partners. We believe we can add significant value to, and improve the experience of, our platform partners with this initiative without requiring Zomato to allocate significant capital. Over the next few years, our focus will remain creating a great experience for our stakeholders and helping to grow our overall ecosystem rather than optimising for revenues or profits,” Zomato noted.