Fast commerce leader Blinkit is accelerating its expansion and expects to continue losing money as competition in India's instant delivery market intensifies.

The Zomato-owned company now aims to reach 2,000 dark stores (small warehouses in residential areas dedicated to servicing online orders) by December 2025, a year ahead of its previous guidance, while the number of dark stores by the end of the December quarter has surpassed 1,000 (beating the company's own performance forecasts by a quarter).

This acceleration resulted in a loss of Rs 103 crore ($11.9 million) in Q3FY25 as Blinkit added 368 stores and 1.3 million sq ft of warehousing space in the last two quarters.

JPMorgan believes the industry has entered "land grab mode" with companies adopting aggressive strategies in terms of store rentals, product discounts and loyalty programs. A number of other major players - including Zepto, the second-largest player in the fast commerce space - have also expanded their dark store networks "significantly ahead of schedule," the bank wrote in a note.

Quick commerce companies - which deliver groceries and other products to customers in 10 to 15 minutes - are eating into India's e-commerce market share, forcing established players to overhaul their supply chains to cope with changing consumer demands.

"As we continue to drive store expansion, our network may have to carry more underutilized stores, which will impact short-term profits in the next one or two quarters," Zomato chief financial officer Akshant Goyal said, adding that these The investments could lead to growth "significantly above 100%" in fiscal 2025 and 2026.

This strategic shift comes against a backdrop of increased competition. Zepto raised more than $1 billion last year, backed by Lightspeed, StrepStone and Glade Brook. Zomato had also raised $1 billion through a qualified institutional placement in November last year.

Flipkart also launched a quick commerce product last year and added more than 100 dark stores. Amazon started a quick commerce pilot in the South Asian market last month. Swiggy, which operates India's third-largest fast commerce platform, went public late last year, becoming the world's largest technology IPO in 2024.

“The biggest impact of increasing competition is increased customer awareness and adoption of quick commerce,” said Albinder Dhindsa, head of Blinkit. He compared it to the early days of food delivery, when increased competition led to customer acquisition across the industry. Investment increases.

While Blinkit's core customers remain loyal (accounting for a third of the platform's total order value in December), the company said competitive pressure has put profit expansion on hold. The company expects that its current store network investments will ultimately yield strong returns once the business scales.

The expansion comes as Zomato's core food delivery business grew 17% year-on-year in the latest quarter, while commerce grew faster at 120%.