Blinkit Expands into Home Services Market, Posing Direct Competition to Urban Company
Zomato's Blinkit takes on Urban Company in the battle of the home offerings: Who will come out on top?
2 March 2023
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Kunal Tyagi
Blinkit, which is owned by Zomato, is thinking about expanding into the domestic offerings market to compete with Urban Company.
The expansion coincides with Blinkit's ongoing efforts to diversify its product line, which caused a decline in its common order value between October and December.
Urban Business, which makes an average of 21-23% from each order of its services, now faces increased competition as a result of Blinkit's entrance into the domestic offerings market.
According to business insiders, Blinkit, a platform for quick transactions owned by Zomato, is considering options to diversify into the home offerings market. This would place Blinkit directly in competition with Urban Company and include services like arranging chefs, beauticians, and air conditioner maintenance. Deepinder Goyal, the creator of Zomato and an impartial director on the board of Urban Business, resigned in February in order to avoid any minor conflicts of interest.
Blinkit's entry into the home offerings sector coincides with the platform's ongoing growth of its products. The platform's common order value decreased sequentially from Rs 568 in the prior quarter to Rs 553 throughout the months of October through December. Blinkit's CEO, Albinder Dhindsa, explained the fall as a result of the business' expansion despite a slowdown in the macroeconomy.
Blinkit began delivering iPhones to consumers in Gurgaon minutes after they placed their purchase last year. According to Dhindsa, a growing number of use cases that the platform can support give it hope that the company will adapt in terms of its typical order size. The take rates, or commissions, for domestic items, however, are greater than for some of the products now offered by Blinkit.
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The rivalry for Accel-backed Urban Company has increased as a result of Blinkit and Walmart's Flipkart entering the home services sector. Flipkart recently announced its foray into the domestic services market with Jeeves. According to sources, Flipkart charges a comparable take fee to Urban Company, which makes an average of 21-23% from each order it processes. Blinkit, on the other hand, now makes between 5 and 10% on favorable items.
On Wednesday, Zomato's shares increased 2.8% in response to news that Blinkit had entered the domestic services market, pitting it against Urban Company. Zomato's business-adjusted EBITDA was excellent for January following its purchase of Blinkit. Blinkit's gross order percentage increased by 18% quarter over quarter in the third quarter, driven by a 21% increase in order volumes that made up for a decline in AOV.
The adjusted EBITDA loss for Blinkit decreased from Rs 259 crore in the second quarter to Rs 227 crore in the December quarter, increasing its profitability. Zomato's consolidated loss increased from Rs 63 crore a year earlier to Rs 347 crore in the third quarter. Notwithstanding this, Jefferies maintained its "buy" rating on the company with an unchanged rate objective of Rs. 100, and Credit Suisse maintained its upbeat perspective on Zomato.
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