Blinkit shuts some Gurugram dark stores for good as delivery workers strike

Some 2,500 Blinkit executives have been on strike in Gurugram since April 12 after the company slashed fixed pay-outs per delivery

Zomato-owned quick commerce firm Blinkit has permanently shut down some of its dark stores in Gurugram amid the ongoing strikes by many of its delivery workers in the region.

Blinkit informed its delivery workers of the development through a notification, which was seen by Business Standard, on its delivery partner app, which said the stores are being shut because the partners haven't been working at them for the past 3-4 days.

An estimated 2,500 Blinkit delivery executives have been on strike in Gurugram since April 12 after the company slashed fixed pay-outs per delivery for them, under recent changes in the delivery incentive structure.

Under the new structure, workers will receive Rs 15 for each delivery within a 1 km radius, against the prior Rs 25 rate. Furthermore, for any distance travelled over 1 km, workers would be compensated based on the additional distance between the range of Rs 10 to Rs 14 per km.

The company had confirmed that Noida and Gurugram were the areas majorly impacted by the strikes.

Queries sent to Blinkit did not elicit an immediate response.

Unlike food delivery where delivery workers deliver orders from restaurants, quick commerce operates using the ‘dark store’ model. These dark stores are large retail facilities that resemble a conventional supermarket but are not open to the public, and are operated by quick commerce firms.

The firm’s rival Swiggy Instamart had, in September last year, seen similar protests from its delivery workers in Chennai over a revised payment structure which cut delivery incentives and reduced fuel allowances.

BharatPe co-founder Ashneer Grover on Sunday took to Twitter to highlight challenges with the quick commerce model. The problem, according to him, is not about “Rs 15 for delivery against Rs 50.”

“Problem is that 10-minure delivery has no economics – low ticket size and low margin can never be solved through forced low delivery cost,” the Shark Tank India season 1 judge said in a tweet.

According to a report by ICICI Securities on Monday, Zomato has already lost 1 per cent in revenue from Blinkit in the first quarter of FY24.

“We estimate Blinkit was operating ~370 dark stores pan India as of Q3FY23. This implies that about 25 per cent of the dark stores are currently not operational. Given that at least 3-4 days’ sales have been lost, this implies a one per cent loss in revenue from Blinkit and around 0.15 per cent of consolidated revenue for Q1FY24,  already,” the report said.

However, a change in pay-out structure, the report says, would help Zomato put a leash on costs. “In our view, this would allow Blinkit to increase the delivery radius for its existing dark stores and thus improve its network coverage with limited capex spends,” it added.

Zomato acquired Blinkit back in August last year for Rs 4,447 crore via an all-stock deal. In the third quarter of FY23, the quick commerce firm reported an uptick in its gross order value (GOV) to Rs 1,749 crore, from Rs 1,482 crore in the previous quarter.

Nevertheless, market analysts still view the acquisition as a risky bet. Though Blinkit is scaling up well and improving on profitability, analysts say the space is still nascent for Zomato given the large number of players in the ecosystem.