Published Online:September 2024
Product Name:The IUP Journal of Case Folio
Product Type:Article
Product Code:IJCF040924
Author Name:Achyut Telang and Gaurav Bhatt
Availability:YES
Subject/Domain:Management
Download Format:PDF
Pages:42-58
India-based Zomato was started in 2008 by Deepinder Goyal (Goyal) and Pankaj Chaddah as a restaurant aggregator and food delivery company with its headquarters in Haryana, India. After many rounds of successive funding, Zomato built its valuation. The company also grew, with operations expanding to different cities in India. Its growth was both organic and inorganic. In February 2018, Zomato crossed the $1 bn valuation. Goyal had tried to take Zomato into different businesses, like restaurant information, point of sale system, etc., but most of these failed. However, grocery delivery and quick commerce (Q-commerce) were areas he was not willing to give up on because of their potential. Quick commerce was a type of e-commerce wherein the focus was on delivering quickly—in around 10 minutes. With its popularity growing, there was a big race among the players to capture this attractive opportunity. Because of this, Zomato acquired Blinkit, a Q-commerce player. But the acquisition brought with it a host of issues for Goyal to handle. Zomato’s share price fell after the acquisition as investors were not happy with the decision. The investment in the acquisition was very high and running the business called for future cash burn. There were also challenges with regard to retaining customers while trying to reduce the discounts to keep up the earnings.
On June 24, 2022, India-based restaurant aggregator and food-delivery company Zomato announced the acquisition of India-based instant grocery startup Blinkit1 for $568.1 2mn3 in an all-stock deal. The acquisition marked Zomato’s entry into the highly competitive and flourishing Indian quick commerce (Q-commerce) industry. Q-commerce, a type of e-commerce in which the focus was on delivering quickly (in around 10 minutes), had been growing rapidly in India. The market size of Q-commerce had touched $2.4 bn in March 2024 and was projected to grow by 40-45% over the next three years.4 There was a big race among the players to capture this attractive opportunity. Multiple players like Blinkit,5 Swiggy,6 Instamart,7 Zepto,8 etc., were partnering with local vendors and capitalizing on technology for swift and capable transmission of products.