Zomato Says Most Blinkit Stores Resumed Operations After Wage Protests, Shutdown

Indian food delivery firm Zomato said on Wednesday most stores of its grocery unit Blinkit had resumed operations after being shut due to wage protests, sending its shares up as much as 5 percent.

The disruptions had less than a 1 percent impact on Zomato's revenue, the Gurgaon-based company said in a regulatory filing. Blinkit, which Zomato bought last year for $550 million (roughly Rs. 4,506 Crore), accounted for 12.7 percent of Zomato's total revenue in the third quarter.

Zomato had shut down some stores for a few days to ensure the safety of its employees at stores and the delivery partners after it made changes to the payout structure of Blinkit delivery partners, it said.

Blinkit has around 400 stores in India, of which 50 were shut, mostly in and around New Delhi, on Friday, as employees pushed demands for better wages.

The changes to pay were made to "address the needs of delivery partners, improve customer experience and reduce cancellation/order rejection frauds by few delivery partners in the system," Zomato said on Wednesday. 

Blinkit competes with other big delivery firms, including top retailer Reliance-backed Dunzo, Tata's BigBasket, and SoftBank-backed Swiggy in India's fast-growing grocery market.

On Monday, around 50 Blinkit stores were shut as bike riders stopped work in protest to push demands for better wages. Zomato in an email had said it had introduced a new structure for riders that compensates them based on their effort and was engaging with them to reopen the shut stores.

To take advantage of the trend for "quick commerce" that delivers goods within minutes to those in urgent need of supplies or just impulse shopping, Zomato last year bought Blinkit for $550 million (roughly Rs. 4,506 Crore).

Blinkit has around 400 stores in India, of which 50 were shut, mostly in and around New Delhi, on Friday, a source with direct knowledge said.

Videos on social media showed hundreds of Blinkit bike riders protesting and raising slogans against the introduction of a payment structure they say will reduce their per-order earnings. The Blinkit app on Friday showed several of its stores were "temporarily unavailable" in New Delhi.

At one Blinkit store in Noida, a security staff officer told Reuters no delivery riders had picked up orders since April 11 and the store was shut.

© Thomson Reuters 2023