Eternal Ltd., the parent of Zomato and Blinkit, said the June quarter marked the highest level of competition it has seen in quick commerce and that it does not expect the current level of discounting to continue beyond the near future.
The company's management said competitors are relying mainly on product subsidies and discounted delivery charges, but believes there is limited room for those promotions to deepen because doing so would increase losses.
Speaking during the company's earnings call after announcing its June-quarter results, Chief Executive Officer of Blinkit Albinder Singh Dhindsa said the June quarter marked the highest level of competition the company has experienced.
"So far, it was the peak of competitive intensity that we have seen till date, both because number of players are higher and everybody was more aggressive," Dhindsa said.
He said the competitive environment has become more predictable because most rivals are competing through grocery subsidies and lower delivery fees.
"We don't think that there is a lot of wiggle room for people to go much, much deeper than what they are currently going because that would balloon losses fairly significantly. So that's what we mean by it is fairly predictable now," he said.
The comments come after Eternal reported June-quarter results in which Blinkit's net order value rose 86% year-on-year to Rs 17,132 crore, while adjusted Ebitda turned positive at Rs 102 crore.
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Chief Financial Officer Akshant Goyal said Eternal does not expect the current level of discounting to continue for long.
"We don't think this level of discounting is sustainable. We expect this to not continue beyond the near future," Goyal said.
He added that as Blinkit's scale increases, the company would choose how much of its operating gains to pass on to customers instead of matching aggressive discounts offered by rivals.
"Even with that, the prices can come off with scale, but that's then a choice that we make to pass on the benefits of scale to customers rather than actually trying to compete with price on someone else," Goyal said.
The management also explained why it remains focused on expanding infrastructure rather than relying on discounts to drive growth.
Dhindsa said Blinkit is fundamentally a supply-led business and warned that platforms built around subsidies could struggle to retain customers once promotions are withdrawn.
Goyal said Eternal had tested a discount-led strategy in several markets while expanding Blinkit but found that strengthening infrastructure delivered better results over time.
"Our initial approach... was, let's start discounting and get customers. And over time, the investment will pay off. And that didn't work for us," Goyal said.
He said investments in infrastructure eventually helped Blinkit become the leading player by net order value in most of those markets.
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