Zomato Will Invest $400M in Quick Commerce

Zomato has reiterated its focus on the quick-commerce segment and announced an additional $400 million investment in the space over the next two years.

The company also expanded to 180 new cities, bringing its total presence in India to over 700.

Zomato’s adjusted revenue — a combination of revenue from operations and customer delivery charges — increased 78 percent year on year. On New Year’s Eve, the company saw a massive increase in food order volumes, resulting in gross order value (GOV) of $18 million, 78 percent higher than the same day last year.

According to Zomato, unit economics in its food delivery business have improved with scale over the years. According to the report, the contribution margin (as a percentage of GOV) has steadily improved from a negative 15% in 2019 to 1% today. “A 5% contribution margin in our food delivery business (at the current scale) should get us to Ebitda break-even (covering all common corporate costs as well).”

The company announced a $225 million investment in Blinkit (formerly Grofers), Shiprocket, and Magicpin, and that Blinkit has rapidly scaled its operations in the buzzy quick-commerce space. Based on January sales, it has an annual gross merchandise value run rate of $450 million, with over 400 dark stores in 20 Indian cities.

According to Zomato, the category has a “huge addressable market” and is “synergistic to its food delivery business.”

Zomato also announced plans to establish a non-banking financial company that would allow it to extend short-term credit to its restaurant partners, delivery partners, and even customers.

Zomato Wings was launched in November of last year to assist restaurants in obtaining funding by acting as a conduit between restaurant, cloud kitchen businesses, and investors.