How many stores have come in new cities and how many cities are you present in today? And on Zomato Everyday - what didn't work? Is there another similar business or does Zomato Bistro fill that gap?
We're not sharing the data on cities, etc., at this point. But broadly, we are going into smaller cities every quarter. And incrementally, a larger portion of our new store expansion is happening in the non-top eight markets. On Zomato Everyday, for the markets we were in, the business was doing well, and we did see that it can make money in those markets. But given the overall size of that business, we didn't feel that it would move the needle for the food delivery business on an overall basis. Given that it's a more operational-intensive business, we just didn't see the value in continuing to run that. And Bistro, is a separate business. It's very early days. We don't have a point of view on whether that fills the gap.
How much improvement can you see on the commission side if you were to completely move to inventory model?
We haven't gotten to it yet. Once we get the approval, then we'll start evaluating it, whether we want to go down that path at all.
On Rapido trying to disrupt food delivery with subscriptions instead of commissions. Have you evaluated implementing this idea yourself?
So, we'll wait and watch Swapnil. We are not clear on how that model can make sense in the long run for all our stakeholders and us. Once it's out there in the market, we'll, of course, take a look and see if we need to change anything. But as of now, we don't have a point of view on that.
Contribution margin was maintained this quarter. In the face of competition, could we expect contribution margin to drop? Or should we expect contribution margin to be flat?
Aditya, it's very difficult to say, as I mentioned in the letter also. See, our business is affected very heavily by seasonality. So, the effect of competition with every change of season also shows a different aspect of the business. There is a lot of variability, which we are also not certain about and hence are unable to give guidance as to where it leads to.
Would it be fair to say that we'll be back on the path towards breakeven only once competition settles? Or are there other levers here to pull?
Aditya, there are too many moving parts here. And honestly, we're not thinking about our goals and targets in that form and shape. Just getting to breakeven is not enough anyway. So long term, we have to solve for much higher profitability than just that. We are at -2% margin today in terms of Adjusted EBITDA as a percentage of NOV. So, we are not deep in red. If we have a strong point of view on that, we would, of course, love to share that with everyone. But as we have said in the letter on this front, we don't want to stick our neck out and give any guidance at this point, given the multiple moving parts.
Any color on same-store growth in the top 8 cities - has it been trending on the upward direction or any signs of slowdown?
Gaurav, overall, it has been growing, and we haven't seen any slowdown. However, when we look at the numbers, it's a little bit different because we don't look at it at a store-wise level. We look at it at a particular area. So, a particular geography might actually have gotten multiple stores where it had a single store earlier. So, therefore, being able to provide actual numbers around it is much harder.
Hyperpure is currently doing some of the non-restaurant business for Blinkit. Could you highlight what is the level of working capital that's currently being deployed there?
We don't share that data, Ankur. It's different for different sellers, for different products. So yes, we don't disclose that data.
Given three quick commerce players of reasonable size and a couple of horizontals entering - how many such players can potentially exist in the market in the medium term?
We are worried about our own existence (laughs).
Can you give us some idea of how much your last mile delivery costs have gone up YoY?
Sorry, Abhisek, we can't share these details, these are like nuts and bolts of the business and competitively sensitive.
On competition in quick commerce - you expect it to intensify particularly from next-day delivery platforms. Is that an expectation or are you already seeing that play out? And where is this higher competition showing up? Your take rate and contribution margins are both quite stable quarter-on-quarter.
The impact of competition is visible in the lack of significant margin expansion that we would have otherwise expected. That is both because there are now more players in the market, and there is obviously more competition across categories to market to the same set of customers which is leading to some margin pressure, both in terms of being able to charge higher delivery fees in some geographies and also in being able to sell more of the higher-margin categories on the platform. So, the answer to your question is that the pressure that you are seeing is all in the lack of margin expansion.
On current quick commerce platforms - has competition continued to increase in the last two/three months? Has it been stable? Has it reduced?
The competition has been in different shapes and forms coming from both players, who are already in the quick commerce space and the new players that are trying to enter the quick commerce space. It's just different shapes and forms that it comes in, whether it is in terms of aggression in discounting or aggression from other players in marketing activity or aggression from other players in being able to offer free delivery or store expansion in certain geographies.
Have there been any meaningful challenges from a store rollout perspective? Competition for real estate, inflation in rental costs?
There has been significant competition for the same real estate in most of the cities that we are in.
In the last quarter, competition hasn't reduced in any way? And you have limited visibility on June quarter margin profile?
No, we have a fair bit of visibility and don't see any meaningful changes directionally. That's why we are saying that competitive intensity remains high, and therefore, the pressure on margin, that Albinder alluded to, stays. At least so far, we haven't seen any change.
On food delivery guidance of 20%+: in the quarter we have 16% year-over-year growth. Why 20%? Is 20% a realistic number at all to assume near term? Or is that a much longer path?
For the near term, we cannot commit to anything, and we don't know how that shapes out. On these three metrics, assortment, delivery times and affordability, we've not been able to actually make a meaningful dent on these three vectors despite us trying multiple things in the last one or two years. But the eventual answer in driving more growth is in actually breaking through one or more of these vectors. And 20%, therefore, is more a long-term 4-5 year CAGR guidance. Even in the past, we have stated that it's not an immediate every year growth guidance. Having said that, each of the last two / three years, the growth has been north of 20%. Whether we will get there in FY26, we don't know. But again, we are confident that there is potential in the market to grow at that pace over a more longer-term period.
The time taken for new stores in new cities to hit breakeven - does that remain unchanged compared to the average?
So far, we're not seeing any deterioration in the time stores are taking to ramp up to breakeven. It remains pretty consistent with the past.
A competitor seems to have mentioned that their GOV numbers include subscription fees and ad income. Your definition does not include that. How do you report ad income? And what percentage of take rate will be coming from ad income and customer fees?
Yes, we don't include any of these ancillary income streams in our GOV definition or NOV definition. And therefore, the ad income directly goes to our revenue. It's north of 4% of GOV today for us. On customer fees, about 3%.
On recent changes in reporting from GOV to NOV - how big of a difference could there be between F&V, packaged grocery or general merchandise between GOV to NOV in those categories?
So, it can vary a lot, Swapnil. In some of the more unbranded categories, like the ones you mentioned, the difference can be much, much higher than 20%. And that is why we felt the need to introduce this metric because increasingly our business is going to move more towards such categories. There could be categories where it is also 70% - 80%.
What would be the inventory days in the 1P model? I presume it would be 15-16 days if you were to do it completely on your own balance sheet. How do you see inventory-related investments going forward, especially if you start doing lower ordering frequency categories like electronics?
Swapnil, there is a chance that it happens. That, however, is usually offset by the fact that the categories that we want to do are not well solved in the marketplace model. Even when we are not holding the higher inventory, today when we work with sellers, we basically end up accepting a lot lower commissions on these categories because they are holding the inventory. The categories which we are keen to do ourselves, hopefully, are the ones where, even if you build the inventory, there is still a very healthy return on capital even after holding that inventory at a higher number of days. So yes, there's definitely a chance that the number of inventory days on books will go up as a result.
How do you look at your market share? In the shareholder's letter you said you'll aggressively look to grow market share in quick commerce. Are you able to maintain or gain market share in the last 1-2 quarters?
So our understanding is that even with the new competition, we have more or less maintained our market share over the last few quarters. The competitive intensity has been fairly high, but at the very least, we've maintained it.
Blinkit has a slightly different approach - you don't have private labels. You don't have the super saver or the max saver equivalent of your competitors. Any particular reason why?
Sachin, we don't think that from a customer perspective these use cases add a lot of value. And so, we don't do them.
As you're expanding into tier 2/tier 3 cities, how do you look at the appetite and the ability of consumers to pay? In food, you faced problems where you had to shut down business in a few cities. Do you see good appetite for quick commerce right now?
Yes. That is why we are expanding aggressively.
In EBITDA, there is an 'Others' where losses suddenly became INR 16 crore versus close to INR 1 crore in last quarter. Anything specific going on in experiments that has led to such a huge loss?
Yes, Sachin. So, all of our new initiatives, whether it is Bistro, Nugget, other B2B businesses, and one of the other small experiments that we are doing, all of that cost or losses are reflecting in the 'Others' segment.
Logically the losses in 'Others' could remain high for some point as you experiment, right?
That's right.
Other income has increased from INR 252 crore to INR 368 crore. Is it treasury or something else?
No, it's because of treasury. We raised money through the QIP in November last quarter. So, the full quarter impact of that is now leading to the higher income.
On food delivery, would transacting users be a primary growth vector for the next couple of years? Or are you looking to drive more through frequency?
No, even frequency increase is going to largely reflect in the monthly transacting customers going up because most of our consumers actually don't even transact every month today. So yes, from a tracking perspective, we expect to see the MTUs to continue to increase.
On investment priorities - now you've talked about growing market share aggressively. Any change in priorities from investment point of view?
No, Gaurav. No change in priorities. Even in the last quarter or the last two or three quarters since the time competition really started increasing, our approach has been fairly consistent in terms of the key focus areas we mentioned in our letter. So far, we haven't really seen any loss in business because of not being able to subsidize at the levels at which we are seeing the competition doing so in the market.
On shortage of last mile workers - how are you going to solve for that over the longer term? Will the cost of last mile go up structurally?
Yes, Gaurav, we do expect the supply to increase over medium to long term. The gig work economy is now multiple million large. Supply always catches up with some lag, and that's what we expect here as well over time. We will see the supply increase and therefore, this pressure should ease off.
Why is there a decline in the going-out business? And are the investments going to remain elevated? At what point do you think you will have to taper off the investments?
So, the decline on top line is seasonal. If you look at year-on-year growth, the GOV of going-out is still growing by more than 100%. And on profitability, we are at -2 to -2.5% of Adjusted EBITDA as a percentage of NOV. And at least in the near term, we expect this business to remain in that range while we invest in transition of customers from different platforms, Paytm, Zomato, etc. to the new District app. And we're also investing a little bit in supply creation in some parts of the going-out business. So, that investment phase will continue for the next year or so. And hence, we are not expecting this business to become profitable in that time frame. But at the same time, we don't expect that losses will go up from here as well.
On food delivery - Zomato Quick has been shut down and delivery time reduction was one of three growth vectors. What is the path to lowering delivery times without Quick?
Yes, Vijit, so Quick was an attempt to bring down the delivery time from the average, let's say, 30 minutes for the platform to 10 minutes. What we've realized is that it is extremely hard, and we don't see any incrementality in demand if we do that in the business given that customer experience is poor. But our view is that we should try and bring that 30 minutes down to maybe 20-25 minutes over time by making our overall logistic fleet delivery system more efficient. And those are the gains we want to chase now.
Competition in Blinkit seems to have only really affected you in terms of ability to charge those higher delivery fees?
No, it's across the board. It's more than that. Every part of the business becomes more expensive once there is the level of competition that we are seeing today. Last mile delivery becomes expensive, marketing costs go up, real estate and so on. Contribution margin remaining flat doesn't mean that competition has eased, it's relative versus the expectation. In this business where stores get to breakeven in a matter of few months, in the absence of competition, we would have expected the business to be fairly profitable by now.
The INR 1,000 crore of working capital comment - is this essentially 15 days of working capital? And as you grow into broader categories like toys and long-tail items, how does that change working capital thinking?
Vijit, most of those categories, which are high assortment remain on a marketplace even today. So, the sellers sell on the platform, so that doesn't have any working capital impact for us. That was more an example of even if we were to take our entire business.
The MTC growth was quite nice, but you've referenced competition a lot. Are you seeing any loss of customer wallet share in existing areas where store density is going up because of competition?
Not yet, Ankur.
In terms of the NOV to GOV ratio, there was a slight uptake this quarter. Is that just seasonality or moderating subsidies in the ecosystem?
That was seasonality because OND quarter is fairly festive heavy, which has a lot of unorganized items, which are sold in the market during that time.
Can you highlight whether this rider availability problem will need a commission-based solution?
No, it's not a function of the commercial model with the delivery partners. As I mentioned in response to an earlier question, it's just a temporary supply/demand mismatch, because of the rapid expansion of e-commerce in the last three / four months. And usually, summer is a season where we anyways see a slight supply crunch on the delivery partner side. So, this time, that got sort of compounded in some ways because of rapid quick commerce expansion across the board.
Typically, Q1 is usually strong for food delivery. Can you highlight if you've seen any meaningful seasonal pickup in April so far?
Yes, seasonally, this (Q1FY26) is a better quarter. And so far, nothing surprising. We're trending as per the expectations we have from this quarter.
Why have you chosen not to do private labels?
We didn't answer it, but it's a strategic choice that we have. We work with a lot of brands, and we feel that they are better equipped to create and sell products that customers need. We would like to be in the business that we do best, which is operating as a platform.
Expansion is coming at a time when there are subsidies being offered. How much demand over-estimation do you think is happening? Is that a worry for you?
Gaurav, somebody had asked earlier also. We've taken a different view on how we want to grow our market. I don't think all quick commerce is the same. And the other players might be taking decisions or going into markets, which we don't have any idea about, like, what is the kind of economics they have or what is the kind of customer demand that they're able to serve. The customer segments, by the way, for different quick commerce players could also be different. So, it's not like we'll be able to address all the customer segments that exist today in the market.
Your marketing spends going up - what did you spend on? More performance marketing or BTL/ATL?
Across the board, Abhisek.
Other income went up but your taxation has actually come down. You've talked about some unabsorbed depreciation. Is that saving recurring?
So Abhisek, that comment is not related to this quarter. That comment was related to the time when we started providing for this tax where we said that the unabsorbed depreciation is finished. So therefore, our treasury income will become taxable. The drop in tax that you see this quarter is specifically because the amount of tax that we provided for, in the previous quarters was a little higher, but the actual tax to be paid, came out a little lower, and therefore, there was that adjustment that was made in Q4.
In a scenario where you're moving out sellers from Hyperpure, does this business not become like a private label in the future?
So Abhisek, first of all, that's a B2B business. When Albinder and we are talking about not doing private labels, that's more from a B2C perspective. And yes, if there's any change in business model in the future, we'll have to see whether we want to still continue to build the B2B business outside of restaurants or not.
My understanding was that a lot of competitors, particularly new entrants, were trying to move slotted delivery customers into quick commerce. Has something changed there leading to this cautious return?
No, so for the next-day delivery business, there are two things here. One is their focus on building quick commerce, but what we wanted to highlight in the letter also is that even their next-day delivery business is shrinking in terms of the delivery timelines. And on Amazon, Flipkart, now you can see a lot of products actually get delivered on the same day in four to six hours. So, that is also in some ways going to compete with the quick commerce business that we have at some point. These are two separate things. Nothing has changed.