Blinkit, the quick commerce platform owned by Zomato, has revised its commission structure, shifting from a fixed model to a variable one. This change directly impacts sellers under its marketplace model, where commission rates will now be based on product prices rather than categories. The move is aimed at improving Blinkit’s take rate, which declined to 17.9% in the October-December quarter of FY25.
Previously, Blinkit charged a fixed commission between 3% and 18%, depending on the product category. However, under the new system, sellers will pay commissions ranging from 2% to 18%, with higher-priced products incurring higher fees. For example, products priced below ₹500 will have a 2% commission, while those above ₹1,200 will attract an 18% commission.
This move aligns Blinkit’s revenue model closer to that of traditional e-commerce platforms, where variable commissions are the norm. In addition to platform commissions, sellers must pay fees such as inwarding charges, storage fees, fulfillment fees, and return fees. This has raised concerns among sellers, who claim that the total cost can reach 50% of product prices when factoring in GST. Some fear that this shift may drive away smaller sellers, similar to the high churn rate seen in e-commerce.
The timing of this change is crucial, as Blinkit faces fierce competition from rivals like Swiggy Instamart. Blinkit is also aggressively expanding its operations, having added 216 new dark stores in Q3 FY25. The shift to a variable commission model is seen as a strategy to counter declining profitability while maintaining its leadership in the quick commerce space.
1. Blinkit’s Business Model and Operations
1.1 Working Model
Blinkit operates on a marketplace model, where third-party sellers list their products on the platform, and Blinkit facilitates order fulfillment. Unlike its competitors, which follow a purchase order model and maintain inventory, Blinkit acts as an intermediary between buyers and sellers, similar to e-commerce giants like Amazon and Flipkart.
1.2 Revenue Model
Blinkit generates revenue through platform commissions, fulfillment fees, storage fees, and other service charges. The company previously followed a fixed commission structure, charging sellers a percentage of the sale price based on product categories. However, with the recent shift to a variable commission model, Blinkit aims to boost its take rate by adjusting fees based on product price.
1.3 Funding and Growth
Blinkit was acquired by Zomato in 2022 in a deal worth ₹4,447 crore. Post-acquisition, Blinkit has aggressively expanded its operations, increasing its network of dark stores to improve delivery speed. In Q3 FY25, it added 216 dark stores, bringing the total count to 1,007. The company plans to expand further, aiming to reach 2,000 dark stores by Q3 FY26.
1.4 Founders and Leadership
Blinkit was founded by Albinder Dhindsa in 2013 as Grofers, initially focusing on online grocery delivery. Over the years, the company pivoted to the quick commerce model, rebranding as Blinkit in 2021. Dhindsa continues to lead the company as CEO, steering its strategy in the highly competitive quick commerce market.
1.5 Services and Offerings
Blinkit offers a range of products, including groceries, household essentials, personal care items, electronics, and more. The company has positioned itself as a 10-minute delivery platform, leveraging its extensive network of dark stores to ensure rapid fulfillment.
2. The Shift To Variable Commission Model
2.1 Why The Change?
Blinkit’s take rate declined to 17.9% in Q3 FY25, down by approximately 1% from the previous quarter. As competition in quick commerce intensifies, Blinkit is finding it difficult to increase delivery fees. The shift to a variable commission model allows the company to optimize its revenue from high-value orders without raising delivery charges.
2.2 How The New Commission Model Works
Under the previous system, commission rates ranged between 3% and 18%, irrespective of the selling price. Now, Blinkit has introduced a tiered structure where commissions increase with product prices:
- Below ₹500: 2%
- ₹500 – ₹700: 6%
- ₹700 – ₹900: 13%
- ₹900 – ₹1,200: 16%
- Above ₹1,200: 18%
These new rates are set to take effect from next week, although implementation dates vary by product category.
3. Industry Impact and Seller Reactions
3.1 Comparison With E-Commerce
E-commerce platforms like Amazon and Flipkart have long used variable commission structures. Blinkit’s move brings it closer to these platforms, making its revenue model more sustainable in the long run. However, it also increases the financial burden on sellers, particularly those dealing in high-value products.
3.2 Seller Concerns
Sellers on Blinkit now face multiple fees, including platform commissions, inwarding fees, storage charges, fulfillment fees, return fees, and inventory removal fees. These additional costs can push the total takeaway to 30-40% of a product’s price, and with GST, it can reach 50% in some cases.
One seller expressed concerns that the new model could push out smaller businesses, similar to what happened in traditional e-commerce. Another seller noted that while Blinkit’s platform commission is similar to e-commerce, other fees make it more expensive.
5. Learning for Startups and Entrepreneurs
5.1 Revenue Optimization Strategies
Blinkit’s shift to a variable commission model highlights the importance of adapting revenue strategies based on business needs. Startups should regularly evaluate their pricing structures to ensure profitability while maintaining competitiveness.
5.2 Balancing Seller and Platform Interests
Sustaining a marketplace requires a delicate balance between platform profitability and seller incentives. Blinkit’s new model may improve take rates, but it also risks losing smaller sellers. Startups in similar models must ensure that pricing structures remain attractive for all stakeholders.
5.3 Competition-Driven Adaptations
As seen in Blinkit’s case, competition can force businesses to rethink their revenue models. Entrepreneurs must be flexible and ready to pivot when market conditions demand it.
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