Blinkit, Zepto Change Fee Models to Improve Margins and Cut Costs

The Indian quick commerce competition intensifies as platforms make modifications to commission structure to enhance their economic efficiency. Blinkit and Zepto function as prominent market participants who choose diverging yet purposeful plans to curb their increasing operational expenses.

Zepto's Commission Hike Tied to IPO Ambitions

The company established a system to increase commissions that matches its strategy for its future Initial Public Offering. Since its last valuation as a $5 billion firm, the company achieved its goal of $3 billion annual gross sales and plans to reach $4 billion within the next period.

According to sources,  Zepto imposed commission increases because the company grows larger while its bottom line gets constant attention. Existing user fees for Zepto now exceed new customer fees because the company utilizes this method to extract maximum profit from its established clientele. Before the IPO date, CEO Aadit Palicha conducted meetings to present pricing changes to investment fund members.

The company operates a network of nearly 1,000 dark stores and pursues collaboration with Ola and other third-party delivery service operators to decrease operational expenses. The firm wants to reduce delivery costs to the most basic level possible. Zepto discusses the matter for delivering specific bulk orders through external platforms.

Blinkit Shifts to Dynamic Commission Model

The Blinkit platform will switch to a flexible commission system which begins operation March 13. Under this new approach, seekers must pay commissions reflecting actual product prices rather than the former structured rates which spanned between 3% to 18%.

• The fee rate for items below Rs 500 will amount to 2%.
• The fee for goods priced between Rs 500-700 will amount to 6%.
• When products exceed Rs 1,200 in value, the commission fee rate becomes 18%.
• The updated fee structure for Blinkit strives to link commission rates to product value, which will produce better margin outcomes. 

New product categories and category distributions on the marketplace have experienced major shifts because of the implementation of fixed commission rates. The conversion rate stayed unchanged even though Blinkit acquired thousands of high-ASP SKUs because its take rate strategy remained tied to past category rate decisions as per reports.

The pricing strategy changes performed by Zepto and Blinkit remain absent from competitors such as Swiggy Instamart and Flipkart Minutes. Quick commerce platforms face a severe cash burn situation that strategic price adjustments might help sustain growth while building confidence with investors.

Also Read: