What are the consequences of the Zomato & Blinkit Investement Acquisition Deal?

Zomato acquired Blinkit in a share swap deal, which is its strategy to invest in the quick commerce business. The acquisition was made for $570 million. This acquisition is an attempt to enter the grocery segment and cope with the threat from rival Swiggy’s success in instant grocery delivery. As a part of the deal, Zomato issued up to 629 million shares, accounting for an equity stake of 6.88%.  

Blinkit is expected to make the business more defensible. Zomato spent $8 million on acquiring Blinkit’s warehousing and ancillary services; however, it has not acquired B2B segment as it is strategically out of their range. Both the companies will have the separate apps and continue to improve the strategies to improve their customer base. For instance, peak delivery times can also be a complementary for the quick commerce.

Zomato will reportedly get access to Blinkit’s technology, which includes a network of dark stores, real-time inventory management, and an order management system. Analysts believe that it is a long-term gain as Zomato will be able to solidify its place in the Delivery market. 

Blinkit has led its dark stores from 450 to 400 in the last few months, but with this acquisition, Zomato can now focus on reviving these dark stores and making them more efficient. The move may also help Zomato to cut down its cash burn rate, which has been a concern for investors in recent times. 

Overall, the consequences of Zomato’s Blinkit acquisition are not yet clear, but it seems like a positive move for the company. Only time will tell if this was a good strategic move or not. Analysts believe that this quick commerce may face competition from the players like Reliance Retail, Tata’s BigBasket, Flipkart Quick, and Instamart.