Zomato: Diversification Strategy through Hyperpure and Blinkit

Executive Summary

Zomato Limited, founded in 2008 as a restaurant discovery platform, has executed a strategic diversification into B2B food supply (Hyperpure) and quick commerce (Blinkit). According to Zomato's FY2024 Annual Report, the company operates across three primary segments: food delivery, quick commerce through Blinkit, and going-out (dining and events). Hyperpure, launched in 2018, serves as the supply chain arm providing ingredients and supplies to restaurant partners. The Blinkit acquisition, completed in August 2022 for approximately ₹4,447 crores in an all-stock deal as disclosed in Zomato's investor presentations, marked the company's entry into the quick commerce sector. This case study examines Zomato's strategic rationale for diversification, the execution approach, and publicly documented outcomes through verified sources.

Company Background

Zomato began operations in 2008 as Foodiebay, a restaurant listing and review platform founded by Deepinder Goyal and Pankaj Chaddah. According to the company's corporate history disclosed in regulatory filings, it rebranded to Zomato in 2010 and expanded internationally across multiple markets. The company pivoted to food delivery in 2015, as stated in Zomato's IPO prospectus filed with SEBI in July 2021. Zomato went public on the National Stock Exchange and Bombay Stock Exchange in July 2021, raising ₹9,375 crores in India's largest tech IPO at that time, per the final IPO prospectus. By FY2024, according to the company's annual report, Zomato served 337 cities in India with food delivery services and operated Blinkit quick commerce across 639 cities. The company reported in its Q2 FY2025 investor presentation that it had 22.2 million monthly transacting users across food delivery as of September 2024.

Strategic Context and Diversification Rationale

Market Dynamics in Food Delivery

Zomato's core food delivery business faced structural challenges that prompted diversification considerations. In an interview with Economic Times in August 2022, CEO Deepinder Goyal acknowledged that food delivery alone had growth limitations and low order frequency compared to other categories. According to RedSeer's Indian Food Services Market report (2023), the online food delivery market in India was estimated at $8.3 billion in gross order value in 2023, with significant concentration in metro cities. The food delivery sector's economics were characterized by high customer acquisition costs and intense competition. In Zomato's FY2022 Annual Report, the company disclosed that its food delivery adjusted EBITDA margin reached break-even for the first time. This context made diversification into adjacent verticals strategically relevant.

Hyperpure: Backward Integration Strategy

Zomato launched Hyperpure in August 2018 as a B2B supply chain platform to provide quality ingredients, packaging materials, and kitchen supplies to restaurant partners. According to Deepinder Goyal's statement in a press release at the time, Hyperpure aimed to solve quality and reliability issues in restaurant supply chains while creating an additional revenue stream for Zomato. In a fireside chat at an industry conference in 2019, documented by Inc42, Goyal explained that Hyperpure was designed to improve food quality for customers ordering through Zomato by ensuring restaurants had access to consistent, quality inputs. The vertical integration also aimed to strengthen restaurant partner relationships beyond the transactional food delivery model. According to Zomato's FY2024 Annual Report, Hyperpure had expanded to 37 cities and served over 44,000 restaurant customers by March 2024. The same report indicated that Hyperpure operates through strategically located supply centers and a direct-to-restaurant delivery network. In Zomato's Q3 FY2024 investor presentation, the company disclosed that Hyperpure's Adjusted EBITDA turned positive in Q3 FY2024, marking profitability for this segment.

Blinkit Acquisition: Entry into Quick Commerce

Zomato's acquisition of Blinkit (formerly Grofers) represented a major strategic pivot into quick commerce—a rapidly growing segment offering 10-30 minute delivery of groceries and daily essentials. The acquisition was announced in June 2022 and completed in August 2022, as documented in Zomato's stock exchange filings. According to the definitive agreement disclosed to stock exchanges, Zomato acquired 100% of Blinkit for approximately ₹4,447 crores in an all-stock deal. Prior to the acquisition, Zomato had invested in Blinkit through multiple funding rounds beginning in 2020, as disclosed in regulatory filings. In a letter to shareholders included in Zomato's FY2023 Annual Report, Deepinder Goyal outlined the strategic rationale: "Quick commerce is a natural adjacency to food delivery, with shared infrastructure needs around dark stores, delivery fleet, and technology. The higher order frequency in quick commerce allows us to improve unit economics across the entire delivery ecosystem." The Indian quick commerce market was experiencing rapid growth at the time of acquisition. According to a RedSeer report on quick commerce in India (September 2023), the sector was projected to reach $5.5 billion in gross merchandise value by 2025, driven by urban consumer adoption and improving delivery infrastructure.

Strategic Implementation

Hyperpure's Operating Model

Hyperpure operates on a procurement-to-delivery model connecting food producers directly with restaurant partners. According to Zomato's corporate website (accessed 2024), Hyperpure sources products directly from farms, manufacturers, and authorized distributors, eliminating intermediaries to ensure quality and pricing consistency. The business model involves several components as described in Zomato's FY2024 Annual Report: procurement from verified suppliers, quality testing at Hyperpure facilities, storage in temperature-controlled supply centers, and direct delivery to restaurant kitchens. The company invested in creating supply centers across major cities, though specific capital expenditure figures for Hyperpure infrastructure are not separately disclosed in financial reports. In an interview with Business Standard in January 2023, Saurabh Kochhar, Chief Executive of Hyperpure (identified in Zomato's annual reports), stated that Hyperpure was focusing on expanding its catalog beyond groceries to include kitchen equipment, packaging materials, and even cleaning supplies for restaurants. The same interview noted Hyperpure's efforts to improve supply chain efficiency through technology-enabled demand forecasting.

Blinkit's Integration and Scaling Strategy

Following the acquisition, Zomato pursued an aggressive scaling strategy for Blinkit while working toward profitability. According to Zomato's Q2 FY2025 investor presentation, Blinkit operated 791 dark stores as of September 2024, significantly expanded from 386 dark stores at the time of acquisition as noted in the FY2023 Annual Report. In a shareholder letter within the Q4 FY2024 investor presentation, management stated: "We are building Blinkit for the long term, focusing on expanding our dark store network to achieve density in existing markets before entering new geographies. Our priority is achieving adjusted EBITDA break-even at the company level while continuing to invest in store expansion." Blinkit's operational strategy involved several documented elements. According to Zomato's FY2024 Annual Report, the platform focuses on urban and suburban markets with dark stores positioned to serve 2-3 kilometer radius delivery zones within 10-15 minutes. The report noted investments in store automation, inventory management systems, and delivery fleet expansion. In February 2024, as reported by Economic Times, Blinkit expanded its product catalog beyond groceries to include categories like electronics, toys, and home decor, attempting to increase average order values and order frequency. The same article cited Albinder Dhindsa, CEO of Blinkit (identified in Zomato's regulatory filings), stating that the company was testing 15-minute delivery for thousands of SKUs.

Business Outcomes

Hyperpure's Contribution

Specific financial metrics for Hyperpure are not separately broken out in Zomato's public financial statements. The FY2024 Annual Report mentioned that Hyperpure achieved Adjusted EBITDA positivity in Q3 FY2024 and maintained profitability thereafter. The same report noted Hyperpure's expansion to 37 cities and service to over 44,000 restaurant partners by March 2024. In terms of strategic impact, Zomato's management has stated in investor presentations that Hyperpure strengthens restaurant partner relationships and potentially improves food quality on the platform. However, no verified public data quantifies the impact of Hyperpure on food delivery metrics like restaurant retention or customer satisfaction scores.

Blinkit's Growth and Path to Profitability

Blinkit's performance has been more extensively documented in Zomato's investor communications. According to the Q2 FY2025 investor presentation, Blinkit's Gross Order Value (GOV) reached ₹4,923 crores in Q2 FY2025, representing significant growth from the time of acquisition. The same presentation disclosed that Blinkit achieved Adjusted EBITDA break-even in Q2 FY2025 for the first time since acquisition. The company reported that Blinkit's contribution margin (GOV minus direct costs) improved sequentially across recent quarters, indicating improving unit economics. In terms of operational metrics, Zomato disclosed in the Q2 FY2025 presentation that Blinkit averaged approximately 13.1 million average monthly transacting users in September 2024. The average order value and order frequency metrics are occasionally disclosed in investor presentations but not consistently reported.

Market Position and Competitive Landscape

Quick Commerce Competition

The Indian quick commerce sector has become intensely competitive following Zomato's entry through Blinkit. According to a Redseer Consulting report cited by Economic Times in August 2024, the quick commerce market in India was growing at over 75% year-on-year, with three major players: Blinkit (Zomato), Instamart (Swiggy), and Zepto. A Goldman Sachs research report on Indian internet companies (September 2024), as reported by Business Standard, estimated Blinkit held approximately 40-45% market share in quick commerce by gross merchandise value. However, these market share estimates come from third-party research rather than company disclosures and exact figures vary across different research reports. Competition has intensified around dark store expansion, delivery speed, and catalog breadth. In an interview with Mint in September 2024, Albinder Dhindsa stated that Blinkit was focusing on achieving higher dark store density in existing markets to improve delivery times and unit economics before aggressive expansion to new cities.

B2B Supply Chain Competition

Hyperpure competes in the fragmented restaurant supply market with traditional wholesalers, cash-and-carry operators, and emerging B2B e-commerce platforms. According to a report by Redseer on India's B2B food supply market (2023) cited in Economic Times, the sector remains largely unorganized with significant opportunity for technology-enabled platforms. Competitors include traditional players like Metro Cash & Carry and digital platforms like Udaan and Bizongo. However, no verified public information is available on Hyperpure's specific market share or detailed competitive positioning within the restaurant supply segment.

Strategic Challenges and Documented Issues

Capital Intensity and Profitability Pressure

The diversification strategy has required substantial capital investment. Zomato's FY2024 Annual Report shows significant cash consumption for expanding Blinkit's dark store network and Hyperpure's supply infrastructure, though exact capital expenditure figures allocated to each segment are not separately disclosed. In multiple analyst calls transcribed in investor presentations, questions have been raised about the capital intensity of maintaining and scaling three distinct business models simultaneously. Management has responded by emphasizing long-term value creation over short-term profitability, but acknowledged the need to balance growth with fiscal discipline.

Regulatory and Compliance Considerations

Quick commerce and B2B food supply face regulatory considerations around food safety, licensing, and compliance. Zomato's annual reports include standard disclosures about regulatory compliance but do not detail specific challenges or incidents. Media reports, including from Economic Times in June 2023, have documented occasional scrutiny from food safety authorities regarding quick commerce operations, though no major regulatory actions against Blinkit are documented in public records.

Limitations

High Capital Intensity – Acquisitions like Blinkit and investments in Hyperpure require significant capital, impacting short-term profitability.

Integration Challenges – Merging new businesses with existing operations can create operational complexity and cultural misalignment.

Market Competition – Quick commerce and B2B supply sectors are highly competitive, with players like Swiggy, Dunzo, and local suppliers.

Dependence on Technology – Reliance on logistics, supply chain tech, and real-time delivery increases vulnerability to system failures or cyber threats.

Key Learnings and Strategic Implications

1. Platform Leverage and Adjacency Logic

Zomato's diversification demonstrates the strategic logic of leveraging existing platform assets—customer base, delivery fleet, restaurant relationships, and technology infrastructure—to enter adjacent markets with shared capabilities. According to statements across multiple investor presentations, management believed food delivery competencies in logistics, supply chain, and on-demand fulfillment were transferable to both B2B supply and quick commerce. The adjacency strategy aimed to increase engagement frequency and strengthen ecosystem relationships. As stated in Zomato's FY2023 Annual Report, serving restaurants through Hyperpure aimed to deepen partnerships beyond transactional delivery commissions, while Blinkit aimed to increase platform usage frequency beyond meal occasions.

2. Balancing Growth and Profitability in Multiple Ventures

Zomato's experience illustrates the tension between scaling new ventures and maintaining overall profitability. The company achieved consolidated profitability in FY2024 partly by balancing investments across segments—allowing food delivery profits to subsidize Blinkit's growth while keeping Hyperpure investment measured. This approach is documented in management commentary across investor presentations emphasizing "profitable growth" rather than growth at all costs.

3. Acquisition vs. Build Decisions

The decision to acquire Blinkit rather than build quick commerce capabilities organically reflects considerations of speed to market and competitive positioning. As mentioned in Zomato's shareholder letter in Q2 FY2022 investor presentation (announcing the acquisition), entering quick commerce through acquisition provided immediate scale, established infrastructure, and experienced management rather than starting from scratch in a rapidly evolving market. However, the acquisition also brought integration challenges and required significant post-acquisition investment to rationalize operations and achieve profitability, as acknowledged in subsequent quarterly updates.

4. Market Timing and Competitive Dynamics

Zomato's diversification timing coincided with both opportunity and competition. The company entered B2B supply relatively early (2018) in an underdeveloped market, providing first-mover advantages but also requiring significant market development effort. The Blinkit acquisition in 2022 occurred amid intense quick commerce competition, requiring aggressive investment to maintain competitive position. According to analyst reports summarized in Business Standard (October 2024), the intensifying competition in quick commerce has pressured margins across the sector, though Blinkit's integration with Zomato's existing infrastructure potentially provides competitive advantages that independent players may lack.

Discussion Questions for Classroom Analysis

1. Strategic Diversification Assessment: Evaluate Zomato's rationale for diversifying into Hyperpure and Blinkit given the competitive dynamics and economic characteristics of food delivery, B2B supply, and quick commerce. What are the strategic merits and risks of managing three distinct business models within a single corporate structure? How should management prioritize resource allocation across these segments given their different maturity stages and capital requirements?

   
   

2. Build vs. Buy Decision Framework: Analyze Zomato's decision to build Hyperpure organically while acquiring Blinkit. What factors should influence the build-versus-buy decision in platform diversification strategies? Consider variables such as market maturity, speed requirements, competitive positioning, capital availability, and capability gaps. Under what circumstances would the opposite approach (acquiring B2B supply capability and building quick commerce organically) have been more appropriate?

   
   

3. Unit Economics and Path to Profitability: Despite limited public disclosure of detailed segment economics, analyze the fundamental business model differences between food delivery, Hyperpure, and Blinkit. What are the key drivers of unit economics in each business (consider contribution margins, customer acquisition costs, order frequency, operational leverage, etc.)? How do these economics influence the appropriate growth strategy and profitability timeline for each segment? What additional information would you need to comprehensively assess the economic viability of each business?

   
   

4. Synergy Realization and Integration: Assess the claimed synergies between Zomato's three business segments—shared delivery fleet, common technology infrastructure, cross-selling opportunities, and strengthened restaurant relationships. Based on the publicly available information, how realistic and achievable are these synergies? What organizational, operational, and technological challenges must be addressed to realize them? How should management structure the organization to maximize synergies while maintaining focus on each segment's unique requirements?

   
   

5. Competitive Sustainability and Long-term Positioning: Evaluate Zomato's competitive positioning in the context of intensifying rivalry in both food delivery and quick commerce. Does the diversified portfolio strengthen or weaken Zomato's competitive position relative to focused competitors like Swiggy (which also operates food delivery and quick commerce through Instamart) or pure-play quick commerce competitors like Zepto? What sustainable competitive advantages, if any, does Zomato's portfolio approach create? How should the company evolve its strategy as these markets mature and consolidate?