Online delivery player Eternal reported a nearly 78% drop in fourth-quarter profit on Thursday as it opened more stores to expand its fast-growing quick commerce arm, which delivers items from milk to mobile phones within 15 minutes.
The company also said it will shut down Zomato Quick, which delivered food from nearby restaurants with the speed of quick commerce, just months after rolling the service out, citing "inconsistent customer experience."
Eternal, which officially changed its name from Zomato on March 20, reported a consolidated net profit of Rs 390 million ($4.6 million) in the quarter ended March 31, compared to Rs 1.75 billion a year ago.
Quick commerce, largely catering to the largest consumption category of groceries, has become a fiercely competitive space in India while growing at a blistering pace, with top players jostling for market share.
Eternal's quick commerce platform Blinkit competes with rival Swiggy's Instamart, which has a smaller market share, and start-up Zepto.
These companies have ramped up discounts and subsidized deliveries while pouring money into opening more stores.
"Our view is that competition is going to intensify further from here in the near term," Eternal said in a letter to shareholders, adding that even next-day delivery companies are competing for market share.
Revenue from Blinkit more than doubled year-on-year to Rs 17.09 billion, compared to Rs 7.69 billion a year earlier.
However, Blinkit's adjusted core loss widened to Rs 1.78 billion in the fourth quarter from Rs 370 million a year earlier as it added a record 294 stores in the quarter.
Meanwhile, Eternal's food delivery platform, Zomato, which earns the highest revenue by segment, has seen a slowdown in the past few months due to a "sluggish demand environment" and competition from quick commerce itself, which delivers packaged meals, Eternal said.
Adjusted revenue for Zomato grew 17% year-on-year to Rs 24.09 billion, below Eternal's forecast of 20% growth.
