In a strategic move to increase revenue per order, Zomato's parent company Eternal raised platform fees for all customers but limited targeted subsidies to select segments, showing a recalibration aimed at sustainable growth despite challenges in its quick-commerce arm, Blinkit.
- Zomato platform fee up 19%, applies to all users.
- Discounts targeted to select price-sensitive customer cohorts.
- Blinkit growth forecast lowered from 100% to 70-80% for FY27.
What happened
During Eternal’s Q4FY26 earnings call, CFO Akshant Goyal detailed a platform fee hike that affects all Zomato users, increasing the fee to Rs 14.90. This fee now makes up approximately 4-5% of the average order value. However, discounts and subsidies are not universal; they are selectively applied to users who are more price sensitive or located in growth regions. This marks a strategic pivot to grow revenue per order while managing costs.
The quarter also saw Blinkit’s growth projections scaled back significantly, with expectations now set in the 70-80% range for FY27 instead of the previously anticipated 100%. CEO Albinder Singh Dhindsa highlighted the challenges posed by intense competition and discount-led growth focused on low-margin items, underscoring a renewed emphasis on sustainable, quality growth. Additionally, leadership changes included Deepinder Goyal stepping down as CEO with Albinder assuming the role.
Why it matters
The raise in platform fees for all users, coupled with targeted discounts only for select customers, signals a shift in Zomato’s monetization approach. By increasing revenue from every transaction but only subsidizing certain segments, Eternal aims to enhance profitability while still supporting growth in key areas. This model raises questions about fairness and regulatory oversight as no public criteria for subsidy eligibility have been provided.
Blinkit’s lowered growth expectations reflect the tough competitive landscape in India’s quick-commerce sector. The company’s commitment to prioritizing long-term profitability over aggressive discounting suggests a maturation of the market and a push towards sustainable operations. The leadership transition within Eternal also highlights potential changes in strategic execution amid evolving market conditions.
What to watch next
Observers should monitor how the dual pricing strategy affects user retention and order volumes in different regions over the next quarters, especially whether the selective subsidies succeed in driving growth without eroding margins. Regulatory bodies might also keep a closer eye on the discriminating fee and discount system as consumer impact becomes clearer.
Blinkit’s performance will be critical to Eternal’s overall growth narrative. The company’s ability to maintain quality growth and avoid a return to discount wars will be key indicators for investors and market watchers. Leadership decisions by Albinder Singh Dhindsa, coupled with operational shifts such as the transfer of District’s tech stack, will also provide signals on Eternal’s strategic direction moving forward.