Quick commerce cash burn surges as players chase growth

The monthly cash burn for quick commerce companies has gone up dramatically, industry executives said, as platforms aggressively push for growth and customer acquisition.

Listed firms Zomato– which operates Blinkit and Swiggy– which has Swiggy Instamart, as well as Zepto are feeling the heat as the market senses continued pressure on the profitability prospects of quick commerce sector.

“Quick commerce players are heavily investing in infrastructure, including dark stores, cold chains, and specialised inventory systems, to support rapid deliveries. They are aggressively acquiring customers through steep discounts and promotional offers, while also incurring high last-mile delivery costs to meet 10-15 minute delivery promises. Labour expenses for warehouse staff and dedicated delivery personnel, along with significant investments in real-time inventory tracking and route optimisation, further add to the financial burden. Essentially, quick commerce is prioritising growth over profitability, effectively buying market share in an emerging segment,” noted Ishan Tanna, Equity Reasearch Analyst at Ashika Institutional Equity.

Industry executives note that heavy discounts, free deliveries, and rider incentives have significantly contributed to cash burn, while maintaining dark stores and ensuring ultra-fast deliveries further strained profitability.

“The recent losses in the quick commerce divisions of Swiggy and Zomato highlight the capital-intensive nature of the industry, driven by aggressive customer acquisition strategies, high operational costs, and intense competition. Heavy discounts, free deliveries, and rider incentives have significantly contributed to cash burn, while maintaining dark stores and ensuring ultra-fast deliveries further strain profitability. Additionally, price wars between major players like Zepto, Blinkit (Zomato), and Instamart (Swiggy) have kept margins razor-thin, delaying the path to sustainability,” noted Bajaj Broking Research.

Cutting cash burn and market stability

Industry experts believe that cash burn will moderate. “Given the reaction by public market investors to the mounting losses of listed quick commerce firms like Swiggy, which booked ₹799 crore in losses for the October-December quarter, and Zepto’s likely IPO, the next fiscal could see moderation in cash burn for the sector,” an executive said in anonymity.

In the December quarter, Swiggy Instamart reported an adjusted Ebitda loss of ₹578 crore, compared to ₹358 crore in Q2 of this fiscal. Blinkit posted an adjusted Ebitda loss of ₹103 crore against ₹8 crore in July-September quarter. While for Zepto loss for FY24 remained flat at ₹1,248 crore, against ₹ 1,272 crore in the year-ago period.

The cash burn coincides with heavy fundraising by the top three players — Zomato-owned Blinkit, Zepto and Swiggy Instamart. While Zomato has infused ₹1,500 crore in its quick commerce arm Blinkit, Zepto has raised ₹100 crore in recent months.

“For Zepto’s upcoming IPO, the losses in the sector could lead to increased investor scrutiny regarding its profitability roadmap. While Zepto has shown promising growth, its valuation may face downward pressure unless it can convincingly demonstrate a clearer path to positive margins. That said, if it differentiates itself with superior unit economics and efficient operations, it could still attract strong market interest. Overall, while quick commerce remains a high-growth sector, its long-term success will depend on strategic cost management and a shift toward sustainable business models,” noted Bajaj Broking Research.

“Zepto’s IPO will be a litmus test for market confidence in quick commerce. While its leaner cost structure and disciplined cash burn set it apart, public market investors today demand clearer visibility on sustainable profitability, not just growth narratives.

Aggresive growth plans

All the quick commerce players— Instamart, Blinkit and Zepto are aggressively expanding their dark store networks . Apart from Zepto, ecommerce giants Amazon and Flipkart have also joined the 10-minute delivery race and launched their own quick delivery platforms, i.e., Tez and Minutes.

Blinkit is opening new 216 stores and Instamart is setting up 96 at various locations. They even brought in heavy discounts to attract customers and added more product categories like clothing, personal electronics, beauty, fashion, among others.

On the other hand, the IPO-bound Zepto has also expanded its network in tier 2 cities, and currently operates over 600 dark stores. It had initially planned to increase its store count to 700 by March 2025, which has reportedly been increased to 1,200.