Blinkit is the only quick commerce player in India simultaneously investing in deeper assortment, geographic expansion, and supply chain infrastructure. In contrast, its rivals are focused primarily on pricing or discounting, according to Eternal CEO Albinder Dhindsa.
In a shareholders’ letter, he pointed out that pricing-led growth requires sustained cash burn and pushes companies into a “systemic trap”. This is why multiple unnamed quick commerce players are struggling to balance growth and profitability.
Here’s a closer look at what Eternal’s management said during the company’s Q1 FY27 earnings call and shareholders’ letter.
1. Quick commerce price war may soon be over.
According to Eternal’s management, the quick commerce industry has reached the peak of competitive intensity, and there is little room for companies to continue offering subsidies without further deteriorating their losses.
“Q1 FY27 was the peak of competitive intensity that we have seen to date, both because the number of players was higher and everybody was more aggressive,” said Dhindsa.
He pointed out that while competition remains high, it has become more predictable, with most competitors relying on discounts to acquire customers.
“If you acquire customers mainly through discounts, then that’s what the business becomes,” said Eternal’s CEO.
Dhindsa argued that there’s no guarantee that customers will stay once the discounts are withdrawn if the platform has not created a differentiated value proposition.
“We don’t think this level of discounting is sustainable. We don’t expect this to continue beyond the near future,” the management said, adding that competitive pressure will likely reduce once discounting normalises.
2. Infrastructure, not pricing, is Blinkit’s long-term advantage.
During the earnings call, Dhindsa mentioned that Blinkit’s initial discount-led customer acquisition strategy had failed while it was expanding into South India. The growth improved only after it invested in infrastructure.
Over the last four years, Eternal has invested about Rs 3,000 crore to build Blinkit’s network of stores and warehouses.
The company plans to continue investing aggressively in larger stores, warehousing and supply chain infrastructure. As per the management, this would give the company a long-term competitive advantage rather than discount-led customer acquisition.
According to Eternal’s CEO, infrastructure-led growth builds operating leverage. Each new store, each new category, each new city adds capacity that serves more customers at lower marginal cost.
“There is a certain amount that we keep reinvesting back into making our product, prices more competitive, giving customers actual value, which then allows us to tap into deeper customer cohorts, which might be more price sensitive than the ones that we currently have. So that process will continue. As the platform…
Source link
Disclaimer
We strive to uphold the highest ethical standards in all of our reporting and coverage. We blogs.grocliq.com want to be transparent with our readers about any potential conflicts of interest that may arise in our work. It’s possible that some of the investors we feature may have connections to other businesses, including competitors or companies we write about. However, we want to assure our readers that this will not have any impact on the integrity or impartiality of our reporting. We are committed to delivering accurate, unbiased news and information to our audience, and we will continue to uphold our ethics and principles in all of our work. Thank you for your trust and support.
Website Upgradation is going on for any glitch kindly connect at [email protected]
