An exception is Blinkit, which is backed by parent Eternal’s $2 billion war chest and plans to expand its network to 3,000 stores from 1,544 dark stores as of June 30. Rivals Swiggy and Zepto, with cash reserves of $600-700 million each, have slowed down.
Swiggy’s Instamart added just 42 dark stores in the June quarter and has 1,062 such micro warehouses on its network, while Zepto paused expansion after reaching around 1,000 stores. ET reported earlier that Flipkart Minutes was also proceeding cautiously on this count.
Quick commerce players had been spending heavily for the past year on scaling up in a market that is expected to more than triple in the next two to three years. However, this growth and expansion push has led to significant cash burn. The quick commerce market is estimated to expand to $30 billion by 2027-28 from $8.2 billion in 2024-25, as per BNP Paribas.
“Last year, quick commerce companies entered a land-grab mode… offers for commercial spaces were frothy and these stores take a few months to mature and break even. For a lot of new stores, there is still time before they mature and the competition is easing off… so a lot of negotiations have started off,” said a Gurgaon-based quick commerce executive, who did not wish to be identified.
Rents for such commercial spaces in central locations are higher than for warehouses operated outside city limits by ecommerce companies such as Amazon and Flipkart.
In their recent earnings, both Blinkit and Instamart highlighted that most of their growth came from larger cities and that they can continue to grow without adding a large number of new stores.
“Even in this quarter when we opened (in) a lot more cities, less than 5% of the overall growth came from the expansion areas that we were not serving earlier,” said Blinkit CEO Albinder Dhindsa.
During the June quarter, the company’s gross order value increased 140% year-on-year to Rs 11,821 crore.
Also Read: Eternal’s Q1 net profit falls 90%, revenue up 70% on Blinkit surge
Amitesh Jha, CEO of Swiggy’s Instamart, also said that in terms of the network footprint, the company was at a level where it was comfortable with the growth headroom. “Our next network expansion will be based on the need for the existing geographies and it will not be necessarily to expand into the white spaces. The overall expansion is such that it will allow us to grow 100% without the addition of a lot of stores,” Jha said.
Instamart is currently present in 124 cities, and in the April-June period it clocked Rs 5,655 crore, up 107% year-on-year.
Zepto, which is preparing for an initial public offering (IPO), has also been taking several measures to cut its cash burn. The company has $700-750 million in cash, according to people in the know. It is expected to soon close a $250-300 million primary capital funding from General Catalyst and Avenir Growth.
Queries sent to Blinkit, Zepto and Swiggy remained unanswered till press time.
Analysts said that while a slowdown in expansion may result in near-term margin expansion for some players, it puts them at risk in the medium-to-long term if competitors densify aggressively.
Also Read: Elcid Investments invests Rs 7.5 crore in Zepto at $5.9 billion valuation
“The measured approach may expose companies to further pressure if network reach or delivery speeds begin to lag in the rapidly growing segment,” an analyst with a domestic brokerage firm said on condition of anonymity.
However, analysts have also underscored the importance of retaining cash reserves.
“In our view, (Swiggy’s) quick commerce contribution margins should improve sharply in the coming quarters with improvement in average throughput per store… cash balance is already down from around $1 billion in Q3FY25 to $620 million after Q1FY26,” HSBC Global Research said in a note on Friday. “If capital expenditure and working capital investments do not fall sharply in the coming quarters, we worry cash exhaustion could continue to be significant.”
