A Deep Dive Into BlinkIt’s Business Model and Marketing Strategy

Quick Read

 

The BlinkIt business model thrives on diverse revenue streams including warehousing fees, advertising revenue, and customer charges, enabling significant profitability. Strategic use of dark stores enhances rapid delivery, setting BlinkIt apart from competitors. The company’s high average order value further boosts its market position, underscoring its successful business approach.

India’s quick commerce industry is booming, and BlinkIt has emerged as a leading player. Following its acquisition by Zomato in 2022, BlinkIt rapidly secured a 46% market share, generating an impressive ₹2,300 crore in revenue.

In this blog, we’ll explore the strategies that have propelled BlinkIt to the forefront of this highly competitive industry and how these strategies might be applied to other businesses.

 

Understanding the BlinkIt Business Model and Revenue Streams

To fully appreciate BlinkIt’s success, it’s important to understand the BlinkIt business model and the revenue streams it relies on. BlinkIt’s revenue comes primarily from three key sources:

1. Warehousing Services and Marketplace Commissions: Suppliers pay BlinkIt to showcase and market their products on the platform. This accounts for 11-13% of each order’s value, contributing about ₹72 for an average order of ₹600.
2. Advertising Revenue: Brands pay the company to prominently display their products within the app. This brings in an additional ₹21 per order at a 3.5% rate.
3. Customer Fees: These include charges for delivery, handling, and packaging, adding approximately ₹18 per order.

Together, these revenue streams form the core of BlinkIt’s revenue model, allowing the company to retain roughly ₹110 from a ₹600 order. Needless to say, this ‘take rate’ is a crucial aspect of the BlinkIt business model.

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Cost Structure in the BlinkIt Business Model

While BlinkIt’s revenue streams are robust, managing costs is equally important. The major cost components include:

• Last Mile Delivery: This represents the largest expense, accounting for about 7% of the order value, or ₹42 per order.
• Dark Store and Warehousing Costs: These costs amount to around 6.5% of the order value, or ₹39 per order.
• Other Variable Costs: Packaging, support, and payment processing are included here, totalling about 2%, or ₹12 per order.
• Customer Acquisition Costs: BlinkIt spends around ₹1.8 per order on discounts and promotions to attract new customers.

After considering these costs, BlinkIt earns a contribution margin of ₹15 per order. While this may seem modest, it is a key component of BlinkIt’s business model and is considered quite crucial for maintaining profitability in the competitive quick commerce industry.

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The Strategic Use of Dark Stores in the BlinkIt Business Model

A significant element of BlinkIt’s business model is its extensive use of dark stores. These mini-warehouses are strategically located within 1.5 to 3 kilometres of customers, allowing for rapid delivery.

Each dark store, typically between 2,500 and 4,000 square feet, can hold up to four times more SKUs (stock-keeping units) than a traditional neighbourhood shop.

This proximity enables BlinkIt to fulfil orders within 15-20 minutes, a key differentiator in the quick commerce market. Currently, BlinkIt operates 451 dark stores across 27 cities, which is a critical factor in the BlinkIt business model and gives the company an edge over competitors like Instamart, Zepto, and BigBasket.

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High Average Order Value: A Central Aspect of the BlinkIt Marketing Strategy

A crucial factor in BlinkIt’s success is its high average order value (AOV) – A metric that tracks the typical amount customers spend on each order.

Competitors like BigBasket and Zepto have AOVs ranging from ₹400 to ₹500, but BlinkIt’s AOV stands out at an impressive ₹635. This higher AOV translates into a greater contribution margin, making each delivery more profitable.

BlinkIt boosts its AOV by offering a wide variety of products, including electronics such as iPhones and PS5s, which are typically purchased from platforms like Amazon.This strategy not only boosts the AOV but also strengthens BlinkIt’s positioning as a one-stop marketplace. This approach is a key part of the BlinkIt marketing strategy, effectively leveraging consumer behaviour to drive higher sales.

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BlinkIt Digital Marketing Strategy and Promotion Efforts

The company’s growth is further propelled by a well-crafted BlinkIt digital marketing strategy. The company uses targeted ads and social media campaigns to boost brand visibility and foster customer engagement.

A critical component of the BlinkIt digital marketing strategy is the use of data-driven insights to personalise offers and promotions, ensuring customers receive relevant and timely communications.

Moreover, BlinkIt’s promotion strategy includes innovative campaigns around high-demand products like the iPhone and PS5. These campaigns not only boost sales but also solidify BlinkIt’s brand as a versatile marketplace. The BlinkIt’s marketing campaign approach is focused on building a strong brand presence, making BlinkIt the go-to platform for quick commerce needs.

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Conducting a BlinkIt SWOT Analysis

To better understand BlinkIt’s market position, a BlinkIt SWOT Analysis is essential:

• Strengths: Leading market share, extensive network of dark stores, and high average order value.
• Weaknesses: High operational costs and reliance on quick delivery for customer satisfaction.
• Opportunities: Expansion into new regions, leveraging Zomato’s customer base, and enhancing digital marketing efforts.
• Threats: Rising competition from other quick commerce players and the risk of market saturation.

This BlinkIt SWOT Analysis highlights both, the strengths that have propelled the company to the top and the challenges it must navigate to maintain its leadership.

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New Customer Acquisition: The Zomato Effect in the BlinkIt Marketing Strategy

BlinkIt’s expansion has been significantly aided by its integration with Zomato, India’s largest food delivery app. With over 100 million active users, Zomato provides BlinkIt with a vast potential customer base. Even converting a small percentage of Zomato users into BlinkIt customers could lead to substantial growth.

Interestingly, Zomato has chosen to keep the two apps separate, believing that super brands perform better than super apps in the Indian market. This decision allows BlinkIt to maintain its brand identity while benefiting from Zomato’s extensive user base, showcasing the strategic synergy in the BlinkIt marketing strategy.

 

Learnings from BlinkIt’s Business Strategy

BlinkIt’s journey to the top of India’s quick commerce industry is a masterclass in business strategy. By understanding and leveraging unit economics, optimising their supply chain with dark stores, and strategically acquiring new customers, BlinkIt has positioned itself as a leader in a highly competitive market.