Zepto has experienced a remarkable revenue increase, surpassing 1,200% in FY2023, with figures climbing to $251.7 million from $18.9 million in FY2022, as reported by Tracxn Technologies Ltd. However, the company faced a substantial decline in net profit, plummeting by 198% to $158.6 million year-over-year.
The quick commerce platform has heavily invested in advertising, significantly more than its competitors Blinkit and Instamart, in an effort to enhance brand recognition and drive business growth. According to research from PrivateCircle, a private market intelligence firm, KiranaKart Technologies Pvt Ltd, operating as Zepto, allocated Rs 215.82 crore towards advertising and promotional efforts in 2023. Meanwhile, Blinkit, owned by Zomato, spent Rs 188 crore on advertising. Zomato acquired Blinkit (formerly known as Grofers) in an all-stock deal valued at $569 million in August 2022.
Blinkit did see a notable increase in ad expenditure, rising by 34.4% from the previous year, compared to Zepto’s 23% growth in the same timeframe.
Data for the third player in the quick commerce sector, Swiggy Instamart, is not separately available. However, Swiggy Ltd, the parent company of Instamart, invested Rs 2,361.7 crore on advertisements and promotions in 2023. Swiggy, which is gearing up for its stock market debut, revealed in its Draft Red Herring Prospectus (DRHP) that its revenue from quick commerce operations surged by 444.84%, climbing from Rs 82 crore in FY2022 to Rs 451 crore in FY2023. This growth was driven by commissions from merchant partners, advertising revenue, and user fees.
In the realm of advertising, OTT platforms are expected to see a significant surge during the 2024 festive season, according to Havas Media Network.
Additionally, BigBasket, a Tata Group company, has recently ventured into the quick commerce space with its BBNow service, launching with the delivery of iPhone 16 models. Although BigBasket’s quick delivery division has been operational for around 2.5 years, it only shifted its focus from slotted deliveries to rapid deliveries in the past year. In 2023, BigBasket spent Rs 385.12 crore on advertising and promotions across its operations.
Mandar Shrikant Joshi, Angel Investor and President of M Strategy Global Investment Group, emphasized that quick commerce companies leverage data-driven strategies, including personalized offers, loyalty programs, hyperlocal targeting, and referral initiatives to enhance customer engagement. He noted that frequent notifications and innovative messaging improve the customer experience, which ultimately fosters long-term growth and market impact.
In a competitive landscape, Reliance Retail has begun offering quick commerce services via its JioMart platform in selected regions of Navi Mumbai and Bengaluru. Additionally, Flipkart launched its 10-minute delivery service, “Minutes,” in August.
Joshi remarked that these platforms have transitioned from merely offering fast deliveries to becoming significant advertising channels, with ad revenues accounting for 10-12% of overall food delivery revenues.
“The high profit margins on advertising (90-95%) and the adoption of biddable advertising models make quick commerce platforms appealing to brands, positioning them to compete with major players like Google and Amazon in the digital advertising realm,” he added.
Looking ahead, Redseer Strategy Consultants predicts a substantial 75-85% growth in the quick commerce market by FY2025, targeting a gross merchandise value (GMV) of $6 billion. Additionally, existing Monthly Transacting Users (MTUs) are expected to increase their spending on quick commerce by around 20%, driven by enhanced trust in the platforms and the development of new consumer habits, as well as exploration of innovative offerings, such as sustainable products and health-focused options.
