THIS Is How Zepto & Blinkit Will Be Profitable | Explaining Quick Commerce
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- čas přidán 16. 04. 2024
- How do Zepto or Blinkit work? Founder of Zomato and the famous Shark from Shark Tank Deepinder Goyal recently declared that their quick-commerce brand Blinkit will be bigger than Zomato in one year. And Zepto also recently suggested that they could become as big as Dmart within the next 2 to 3 years.
While #QuickCommerce started out as a fad during COVID, it has certainly outlived the pandemic - Quick Commerce is now a multi-billion dollar market in India and companies like #Zepto and #Blinkit are leading the race.
But what still concerns experts are the massive losses that these #startups are seeing every year, which run into thousands of crores of rupees. However, Zepto and Blinkit both recently declared that they will be EBITDA profitable quite soon.
So how are these companies managing to turn Quick Commerce into a profitable business model? In this video, I explain the business model that Q-commerce works on, how it directly competes with brands like Flipkart and Amazon, and how their Dark Store model is going to be profitable.
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Must have invested a lot of time and effort behind researching and bringing insights. Great work. Could you please elaborate more on 'increasing dark store density per city' as a lever for growth of these companies? Please take this as an earnest request. SUBSCRIBED!
Increasing dark store density per city will bring down the distance between a dark store and the customer, which will then bring down the delivery time per order. Eventually, Zepto could potentially switch to salaried delivery agents paid monthly instead of per order. If one delivery agent costs Rs. 21,000 per month and the delivery time is brought down to under 10 minutes for all orders, then doing 3 orders per hour (including return time to store) with a 12 hour shift means 36 orders per day. At Rs. 21,000 per month or Rs. 700 per day, the cost per delivery will come down to Rs. 19.4. Then, the cost decreases exponentially as the time comes even further down - under 7 to 8 minutes also becomes a possibility.
I hope this answers your question, Ankit. Also, thanks for subscribing!
@@unravelled_shankar Great explanation! Thanks for taking the effort. XD
Hamari koi favorite nahi hai. Jo saste mein dega wo choose karenge 😂😂😂
Indeed, that's why Ashneer Grover calls us "The World's Most Spoilt Customers" I guess!
Ashneer is a businessman. He also looks for value for money. Vo bhi shark tank pe bargain karta hai. There is nothing "most spoiled" about looking for the best deals and reusing saved money for later 😎😎
Also groceries like salt, cauliflower are commodities, available everywhere. These quick commerce companies are selling salt, potatoes, eggs etc. and not making their own "high quality less sugar dairy free healthy" food products which have high margins.
@@equinoxgaming6699 Meanwhile Dominos: Bhai tum log udhar save karo aur mere yanha aake udao :D :D
Can't agree more. Valid point. Everyon wants a good deal to be cracked.Nothing wrong in it and it's in our indian gene😅@@equinoxgaming6699
This video had more insights than what was given by Zepto founders on Nikhil Kamath podcast. Keep it up!
Thanks a lot, Gaurav. This is really motivating for me. Please subscribe, I promise i'll keep bringing more good content to you!
@@unravelled_shankar Done :)
bass khana online becho ya kapda inke liye yahi business hai 😂😂😂😂 I wish india one day focus on innovation
Wo indians ke bas ka nahi he, sare ki sare IITians bus yahi stragey, consulting, web, mobile app, software ki Gand me ghuse he..Bhenchod dhang ki ek sadak with footpath, without potholes, without getting waterlogging ek city nahi he, no mechanical, electrical engineering innovations, extremely fifth rate infra in India...God save this country
do something of your own.
bhai tu bas ye krke dikhade maan jaaunga operations manage krna sabse mushkil kaam hai
Congratulations bro First viral video great work and great efforts
Thanks a lot, Aayush. I hope the video was worth your time!
Thank You soo much for making me understand this business mode...You have a knack of explaining things in a simple way
I'm glad that the video was helpful. Thanks for sharing the feedback. Please subscribe!
Bro this quick commerce is good for countries like India, where issues like hygiene and council approvals are not required. I have a better way to customise all these loopholes and also can explore international markets. It all requires VS and allocation of funds to create a DPL space. Anyways its always good to understand what's going on in other markets.
I completely agree, Hemant. Another factor that makes quick commerce viable in India and not in other countries is cheap labour. Getting delivery rates of less than $0.35 per order is simply not possible in other countries. Thanks for sharing your insights. Please subscribe!
Do it yourself and show it to the world 👍
Damn! Shankar. This is probably the MOST well-researched video I've seen on the Internet. This is what I pay my Internet Bill for. Great job brother.
I am really glad that you found it useful, Akshat. Thanks for sharing your feedback. Please subscribe for more!
Point to point explained in detail withing 16 minutes. Truly Commendable!
Thank you and All The Best!
Thanks, Suchit. I am glad you liked the explanation. Please subscribe to help me grow!
@@unravelled_shankar
Thanks. Already Subscribed!
No one is thinking about the stand-alone retailers ..what will these guys do ?
From one end D-mart is killing them and from other end these quick commerce companies.
They will make their real estates available as mini dark stores for rent.
I think these big companies can only target tier 1 cities. For rest 99% of the India, kirana stores are still the way to go. Also if one has a kirana store right around their house, they will mostly prefer to go get the items themselves, instead of purchasing them online.
Quick commerce is mainly targeting the top 5-10% Indian population which is not price sensitive, rest of the population will still be catered by local kirana stores!
The problem of competition Zepto, Blinkit, Instamart offering less price will always remain. These companies will reach IPO take money from public and return to investors. And then these companies will either cut size to maintain profit or die slow death. Swiggy IPO is coming soon 😄
You have some amazing content!! You are definitely gonna grow :)
Good luck!!!
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Really great video, visited your channel for the first time, subscribed! Thank you so much for the amazing content.
I'm glad you liked the content, Harshil. Thanks for subscribing!
I randomly came to your channel but found detailed explanation 🎉
Hats of to analysis and explanation
All the best keep going from Norway vlogs 🎉
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Very Informative Video Brother. Keep Doing. Subscribed✅️
Thanks for the feedback and for subscribing, Mayur. I really appreciate your support!
Underrated channel !!!
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Wonderful video mate, quality content.
Long time since I watched such a long video completely!
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@@unravelled_shankar wo toh already kar diya tha sirr
CRAZY VIDEO!!! Amazing research
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first time on your channel amazed from your making it simple skills keep it up
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Thank you for the analysis.Subscribed.Looking forward to learn a lot.
Thanks for subscribing, Ankit. I'm glad the video was worth your time!
Lovely Video Shankar! Subscribed 🚀
Thanks for subscribing, Pratik! I'm glad you liked the video.
Very insightful content. Thanks for making this video. Keep it up!!!
I am glad you found it insightful. I hope you have subscribed!
Very Insightful video, Shankar! Please keep posting such videos related to businesses! Eager to learn from this channel!
I am glad you found the video useful, Priyanshi. Thanks for sharing the feedback. Please subscribe for similar videos in the future!
Really appreciate the efforts you've put into this one, including all the graphics. As someone who's ordering from quick commerce every other day, it helped me understand the evolution I've observed in past 4 years, especially the increment in average order value. I myself have seen my expense in groceries increasing just to save on that 30 rs delivery charge and rather pay 5 rs by buying extra. They've tapped into consumer psychology well, it's time for consumers to be mindful and do conscious shopping than impulsive buys. Thank you once again!
Yes, their efforts are quite evident. Thanks for sharing your insights, Swapnil. I hope you have subscribed!
Bohut accha bole bhai! Bohut accha bana hai aapka mehnat dikh raha hai. Subscribed.
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What an informative video. I always thought how come these quick commerce platforms able to deliver things in just couple of min. Thanks for clearing each and every query of mine :) Subscribed
I am glad that you found the video informative, Lasya! Thanks for subscribing!
Really great content. Looking for more to come. I suggest taking new industries and giving insights on unit economics of market leaders. Thanks
Thanks for the suggestion, Abhinav. I hope you have subscribed!
Insightful!
Thanks, Suhana! I hope you have subscribed.
Quite insightful. Easily understood quick commerce business.
I'm glad you liked it, Shivani. Please subscribe for more insightful videos in the future!
Great video ...keep working on same kind of content 👍
Thanks, Anuj! Please subscribe so I can bring that content to you.
It's a category business and it seems like, the they are adding great categories thus far. The other operating revenue model is to offer Bigger version of the same product, and make the smaller version as Out of stock. For example: Haldiram Namkeen with the price of 45 is out of stock, vs the same product is available in higher weight / price version.
That's an excellent insight, Shubham. You are right, this does happen a lot of times. Thanks for sharing this. I hope you have subscribed!
Very insightful information... subscribed it
Thanks for watching the video and subscribing, Nishant!
Amazing video! One can only think about the research you must haved done to put this together in such a comprehensive manner. Could you start giving a bit of citations or links in the video or in the description as it would help inquisitive people such as myself to read further
I am glad you liked the video, Kush. Yes, I will start adding references in the description as well. Thanks for the suggestion!
Good quality content - seems like have done good amt of work before making the video
Really appreciated!!
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u made it understand so well
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Proud to see this in my recommendations. Loved the analysis, Shankar! Godspeed!
Well, I wasn't expecting this either! Thanks, Mrinal. I am glad you liked the analysis!
Very well explained. Kudos to your narration👌👌
I am glad you liked the explanation, Sandeep. Please subscribe!
Good work man!
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Great Research Bro. I have been doing research on this myself for the last 2+ weeks so i know how much effort actually goes into doing this.
I am glad you found the research was good, Ashit. Please subscribe to help me grow!
Such detailed and awesome video! Thank you so much for this. Can you also please share all the sites/blogs et. you used to do the case study
I am glad you liked the video, Aman. Please subscribe to help me grow my channel. Yes, I will add the sources to the description shortly!
@@unravelled_shankar Yes I have already subscribed and shared the video to my friends as we are doing a case study on quick commerce (this is the best overall video I have found).
Great content ! Subscribed
Thanks for subscribing. I'm glad you liked the video!
Appreciate the effort.
Meticulous video. Respect 👍🏻
I'm glad you liked it, Lokesh. Please subscribe!
very well explained, keep sharing such videos. Thank you !
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Great vidoe🖤
Thanks!
Would loved to have seen a stat about inflation during the period in which avg order value increased rather than absolute numbers because the avg order value will always increase when costs rise even if the profit margins are the same
Thanks for sharing this insight, Sharan. Inflation in India was around 4.38% last year, while the AOV increased by almost 100 rupees. The effect of inflation on profit margins vs rising AOV is going to be negligible.
I hope you have subscribed!
So much information explained perfectly 👏
I am glad you found it useful, Nathan. Please subscribe!
I will definetly share this video to more folks, this is very informative. Do you know how their inbound works? Do they get these stocks directly from sellers to their Dark stores?
(Subscribed to your LinkedIn)
Thanks for sharing the video. I am glad that you found it useful, Ranjeeth.
I tried hard to find out how they manage the logistics and inventory fulfillment to their dark stores, but I could not find the information - I think it is not available in the public domain (trade secrets).
Quality content.
Thanks Nishant, please subscribe to help me grow!
What about the pending 3% of market share? How is it distributed between other quick commerce companies?
That's an excellent question! It is distributed among other, smaller players like Dunzo that have a very small market share - not enough data on that to report specific percentages among them. I hope that answers your question. Please subscribe!
Very insightful video
Thanks, Vara! Please subscribe for more insightful videos.
Great Insights.
Thanks, Rachit. Subscribe for more insights in the future!
great work. Very detailed and informative
Thanks, Raminder. For more informative content, please subscribe!
Great content, no one explained in such detail, you just got a loyal subscriber!❤
Thanks for watching and for subscribing, Anirudh. I'm glad it was worth your time!
Hi, thanks for the video. I have a clarification to male. At 9:14, you mentioned that on increasing AOV to 700, the fixed costs remain at 30rs. But since you earlier mentioned that fixed costs are 10%, the new fixed cost for the new AOV should be 10% of 700 which is 70rs and not 30rs. This is what i understood. Request your clarification for the same!
That's a great question, Prabhav! Sorry if this was not clear, but the fixed costs largely remain the same not as a percentage but as an amount. The increase in fixed costs would be marginal if the AOV is increased to Rs. 700 - it is not directly proportional to the AOV and it will not always be 10% of whatever the AOV is. At Rs. 700, the fixed cost will likely remain Rs. 30, which is less than 5% of the AOV.
In case you still have a question, please do let me know. Also, please subscribe!
@@unravelled_shankar i get it. the fixed costs are named FIXED for this exact reason, it would remain the same for different order values. Understood. Thanks!
@@PrabhavGupta-gq5pu Exactly!
Fixed costs remain fixed irrespective of the increase in revenue but only upto a certain extent representing it as a % is not apt.😊
@@anshikarastogi5036 You are right, Anshika. That is why I tried to assign an estimated value to it as well in the video, but it is difficult to quantify it since the data on variation is not publicly available.
great work brother
Thank you so much 😀
absolutely amazing content ......goldmine each and evrything was broken to simpler terms .....should we invest in zepto or blinkit....how could we as a retail investor invest ?
Thanks, Ritam. I am glad you found it useful. I think we will have to wait for Zepto's IPO, or you can also invest in Zomato!
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You earned a subscriber ❤!
Thanks, Pawan!
wow incredible content bro
Thanks, Param. I hope you have subscribed!
Great video man
Thanks, I hope you have subscribed!
great video
'
Thanks! I hope you have subscribed!
This quick commerce is increasing road accidents! It would fade away
I hope not!
Great content!
But what about local businesses and general store owners.
They will be running in loss.
Yes, unfortunately, big retail chains like DMart and Blinkit are already affecting the sales of local general stores. It's the other side of the coin.
I hope you have subscribed, Kanak!
Can you make similar video on co working space businesses?
Coming soon, Nikita. Please subscribe so you know when it’s here!
Good video 🔥
Thanks, Madhav. I hope you have subscribed!
But what i think is they should increase there delivery time to 10 minutes to 30 minutes
Time doesnt impact the buying decision that much
It will help them to open less dark store , less inventory , and there will be less fixed cost
This can help them achieving more profit
Thanks for sharing the insights!
Awesome analysis😊
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This channel will be skyrocket🎉🎉🎉
Thanks. Please subscribe to help me get there, Surya!
well made
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Great Video , just a tip . Improve your bg
Thanks for the feedback, Ridam. I hope you have subscribed, too!
Increasing Ticket sizes will decrease the frequency of orders
That's an interesting insight, Aman. Let's see how it unfolds!
Great content
Thanks, I hope you have subscribed as well, Gowtham!
Zepto is doing 1 billion 'rupees' or 'dollars' of sale, with just 330 dark stores?
It is an insane number tbh.
It's 1 billion USD of sales in a year (annualized) and not rupees. I agree, the numbers are insane! I hope you have subscribed.
Lets see world performance, recently name Getir, in Uk and some European countries working on same business model was closed. They have made a mistake on not adapting new categories quickly on their business.
Positive sides in Indian market:
1)Having a cheaper delivery cost than UK because of not having a MSP for all.
Briefly, delivery driver’s salary is approximately 2.5 lakhs monthly.
2)Indian consumer’s buying power is increased
3) very big market than western countries.
4) Advertising advantage is much more higher than westerners particularly in this segment.
Negative sides:
1)there are many other competitors like D-mart, Reliance and many more who have already started their own delivery services. It will affect dark store sales.
2) consumers buying power of any area should be properly analysed before opening a new dark store because it will affect after long time.
3) Dark store business model is not for Indian customers, they are always ready to go and buy from stores. Location doesn’t matter for all.
4) Ineffective location gives trouble to delivery drivers cost way more than assume.
These insights are great, Keval. Thanks for sharing them. I hope you have subscribed!
If they add fashion and clothes , how ll they will manage the returns
Reports say that they are currently working on it. Likely, the same delivery staff will also do returns as well!
Hi brother. Zomato founder said that, Blinkit will become larger than Zomato within some years. On what basis they are saying this? Means blinkit will have more products than Zomato?
No, it likely means that the revenue of Blinkit will surpass that of Zomato. I hope you have subscribed!
@@unravelled_shankarexactly
But increasing SKUs will also increase fixed costs because inventory is going up
I see why one would think that. But, as I said, rent is almost nothing as a percentage of revenue and the increase in fixed costs (if any) would be marginal, not proportional to the increase in AOV or SKUs. I hope that clears your concern, Neha. Please subscribe!
i think star bazaar would be a much much better place to buy goods, than zepto or blinkit.
Very Informative. Can you also share some insights about the G Fresh Super Mart.
Coming soon, Hitesh. I hope you have subscribed!
Why can t they sell to customer direct through dark store also as a shop , it will be help them generating two way revenue
The logistics then become difficult because turning dark stores into regular departmental stores will need much more space as I already explained in the video. I hope this answers your question.
blinkit was my fav and i wasa never on zepto
so yah downloading it today
and also why the hell this channel is damn underaatted - 3 k only - subscribe to this guy folks
I am glad you liked the video, Dev. Let me know what you think of Zepto. Thanks for the feedback. I really appreciate it!
What about increase in fix cost more SKU more space and more employee
While the fixed cost will increase, it would not be proportional, Nikhil. The increase in fixed costs would be marginal compared to the increase in AOV and overall revenue - hence the name "Fixed" costs. I hope this helps!
Also, please subscribe :)
I got a Blink it ad before starting this video
Ironic! I hope that you subscribe, Abhishek!
Stores per city is not the right metric to understand density. Should look at store per unit area. All cities are not same
That's right, Rahul. Store per unit area would indeed be a more accurate metric than store per city, but I could not find the data on it. Please subscribe!
I thinks theres a slight mistake, In an avg order value of 700 the fixed cost shall be 70 and not 30.
I understand the confusion, Debadutta. However, the fixed costs are called "fixed" for a reason - they do not increase proportionally as a percentage of the AOV but remain fixed. I hope that clears up the confusion. If you liked the video, please subscribe!
@@unravelled_shankar in the 300 rupee order you took 10 percent of revenue as fixed cost, thus this confusion arises, is the fixed cost be a fixed percent of revenue
why your subs are soo low?...your content is next level
Thanks for the feedback. Please subscribe to help me fix that!
Nice Video Mate. I watched The Whole Video, With A Mindset Of Koi Bada Channel Ka Video Hoga.
Later comments Pada tho dekha first viral video hai apka.
Keep Growing Buddy. All The Best.
Thanks a lot, Manoj. I hope you have subscribed!
8:01 - How does $1 Billion sales = ₹8,000 Cr / 330 dark stores = 24 Cr ~18 Cr convert to 1.8 Cr sales per store annually? It should be 1.8 Cr sales per month per store.
Please correct or explain this!
I'm sorry for not making it clear in the video, Aniket. Yes, it's 1.8 crore rupees per month per store or roughly 24 crore rupees per year per store. It is not 1.8 Cr sales per store "annually". Thanks for pointing this out. I hope you have subscribed!
@@unravelled_shankar Thanks for clarifying!
good explanation
Thanks, Akash. Please subscribe!
@@unravelled_shankar i have subscribed u will grow just be consistent your content is nice just make all videos like this with simple and easy explanation
I did not get the math at 8:00? 1 billion dollar of annual sales at 330 dark stores leaves to roughly 25 crore revenue per store. Were you wanting to refer to monthly data there?
I'm sorry for not making it clear. Yes, it's 1.8 crore rupees per month per store, or roughly 25 crore rupees per year per store. Thanks for pointing this out. I hope you have subscribed!
Bro I subscribed your channel now i want this kind of video please
Thanks Om, i'm glad you liked the video. In case you would like to watch similar videos, I recommend checking out other videos on my channel. I'm sure you'll find them interesting!
bhai btw how much time u invested in writing script
It took about 10 days. If you liked the effort, please subscribe!
Good Video 😊😊 Can You Make One For Gamers/Gaming community
Coming soon! Please subscribe in the meantime.
@@unravelled_shankar already subscribed ;)))))
dude while ur video was soo we researched, its ironic how u said that if the Avg order value increases from 300 to 700 the business gets profitable as if thats just a software glitch that needs to be fixed, not to mention u fail to take into account the fact tht the money needed to get people to increase AOV would mean that the profitablity line also shifts up
Thanks for sharing this insight, Ishan. Sorry if it came across like that - while you are correct that they would need money to increase the AOV, it would be incorrect to assume it would hit the profitability. The money spent on adding new categories is an investment that would start paying results as soon as those new categories start selling in dark stores - that is more revenue.
Instead, it would be appropriate to say that they would need initial capital to expand into these categories - something which they are already taking care of by getting more funding (Zepto is expected to close another round of funding soon).
While increasing the AOV is indeed tough, they are managing to do it anyhow - I already shared the numbers in the video. I hope this adds some clarity. Please subscribe!
@@unravelled_shankar Hey thanks for responding, ur logic here looks very circular tbh ; i mean if the new categories are added wouldnt that also increase the cost of storage and inventory, not to mention the issue that higher ticket orders are definitely limited to cities where real estate is expensive, while its tru that its cheaper to hold a dark store, wouldnt the space start becoming an issue at some point, i mean their is a reason why amazon and flipkart keeps their fulfiment centers outside cities
I understand where you're coming from, but remember that because of the high order volume the revenue per square foot will still remain very high. This will mean that rent will continue to be a minuscule part of their fixed costs - at most, it could increase from to 12%. Moreover, unlike Amazon and Flipkart their gold is not to become the everything store (at least for now). Their goal is to increase the SKUs until they hit profitability.
Dmart is running profitably and Zepto may reach the scale but impossible to become profitable even in the next 5-6 years.
Thanks for sharing these insights, Malik. I hope you liked the video!
0:47 pe Ronit Roy ka bhai bhi aata hai
😂
I have never ordered goods above 500 on blinkit. Means I’m below average 😣
Or maybe your buying preferences are different, Dipyaman. Also, please subscribe!
Don't underestimate bigbasket in this segment
Agreed. BigBasket has been capturing market share with BBnow as well, Chandni. Also, please subscribe!
Subscribed becasue you asked!
Thanks, Nitin. I really appreciate it!
Does increasing the average order value not completely diminsh the "Convinience" portion out of quick commerce? Who plans/needs 700 Rs worth of grocery still remains a mystery to me and keeps me thinking what do the investors think while investing in these startups.
That is an excellent question! You're missing the point if you think it is Rs. 700 worth of ONLY groceries. That is precisely what Quick Commerce companies are growing out of - they are adding more categories so people use these apps for things OTHER THAN groceries, like personal care, makeup, and electronics. When you take into account all these other categories, Rs. 700 is realizable quite easily.
Moreover, as I mentioned in the video, these Quick Commerce companies are already successfully increasing the average order value - all of them are about to cross Rs. 500 AOV now or have already crossed it, up from about Rs. 350 a year ago!
BLINKIT.
8:12 less than ka symbol < hota hai
Yes, I understand and I realized the mistake only once the video was uploaded. I will take care of this moving forward, Kunal. Thanks for sharing the feedback. Please subscribe!