Zomato brings its adopted-child home ๐Ÿ‘€

Zomato brings its adopted-child home ๐Ÿ‘€

Whatโ€™s poppinโ€™ โ€” TechCrunch says Zomato has signed an agreement with the struggling grocery delivery player, Blinkit (earlier known as Grofers), to merge the operations of both companies โ€” in an all stock deal estimated to be worth over $700 million in value!

Folks closely watching the two businesses dance together for a while now are barely surprised. As the grocery delivery market in India exploded during COVID, and as Swiggy (Zomatoโ€™s food-delivery rival) launched its own product called Instamart, Zomato was forced to consider making a move here.

So at first, Zomato tried by itself โ€” but miserably failed more than one time. Swallowing losses, they cozied up to Grofers instead โ€” leading a mega round in the business, eventually raking up a 10% stake.

Meanwhile, Grofers, recognizing competition from players like Zepto and the looming shift to 10-minute grocery delivery across India, decided to make a pivot to 10-minute itself, rebranding to Blinkit.

However, the cash coffers quickly went dry, and Blinkit began to limp. Barely 6 months into the game, they were forced to shut 50 dark stores, lay off people, and even miss vendor payments. Total shitshow!

Hence, easy call for Zomato to bring them home and figure out a way to streamline costs. Also, if Zomato is serious about beating Swiggy and defending share in delivery, what better option do they have anyway?

Good sense? โ€” one loss making business buying another loss making business, using not cash but stock, in a game where nobody has ever made a profit? Pass!

Zomato stock was trading down 3.5% on the news โ€” that ought to tell you everything!