Zomato Is At Ease Because The Blinkit Strike Had No Major Impact On The Company’s Finances.

Recently, the food delivery service Zomato said it had modified the Blinkit business’ compensation structure to serve its delivery partners better. It further asserted that the present interruptions wouldn’t significantly affect the company’s operations or financial results. The company believes the event does not signify any disclosure in regulation 30 of the SEBI (LODR), 2015, because these disruptions and changes have no material impact on the company’s operations or financial performance (meaningfully less than a 1% revenue impact).

The apparent reason behind the strike by Blinkit employees.

The decision, according to Zomato’s petition with the exchanges, was undertaken to embrace customer feel and surge down cancellation/order rejection frauds by a few delivery partners in the system. These modifications are occasionally made if necessary. 

Some problems that have been encountered by delivery personnel.  

The delivery partners of the rapid commerce platform Blinkit are protesting the firm’s decision to reduce the payment for each delivery. The firm has decreased the compensation for each delivery from the previous Rs 25 to Rs 15. Several delivery partners in the Delhi-NCR region have protested as a result. The delivery partners believe that this will significantly lower their pay. In addition, delivery executives expressed concern that the new structure’s distance-based component will limit their income because Blinkit dark shops only operate within a 2-3 km radius. 

The delivery executives were interested in working again, but not at the reduced pay scale. Even if the charge has decreased, they can’t provide for Blinkit. They hope the company will return to the previous structure and not cut salaries. Delivery guys are still employed by establishments that have not switched over to the new method.

The individual stated that drivers who started working at this location after August, despite paying an onboarding fee of Rs 1,600–1,700, have not yet received a bag or raincoat from the company. Some delivery guys said he frequently works 13 to 14 hours daily, making 30 to 40 deliveries. Under the former pay structure, this equated to around Rs 1,500–1,600 per day with incentives.

The daily cost of petrol is Rs 300, whilst the meal price is Rs 100–150. Additionally, they lose about 10% of their sales when paying with cash on delivery. According to him, the higher distribution would cause incomes to drop by 250–300 rupees, leaving less money for savings.

Blinkit only reportedly allows delivery personnel to keep up to Rs 500 for cash on delivery orders. Once you have Rs 500, use the app to send money to Blinkit. They have to deposit it first since they don’t always have enough money in their bank accounts to accomplish it. Then, they send the money to a local company owner who operates an internet transfer into their funds since they are unable to keep going to the bank. According to a delivery partner, the proprietor of the shop would charge us Rs 10 for each Rs 100 they received in their accounts. 

The attempts made by the company to restore the smooth functioning of the firm.

To safeguard the safety of both our shop staff and the delivery partners, the company had to close several of our locations temporarily. Most of these stores have resumed business, according to the corporate filing. Zomato shares were up 3.75% from their previous close, trading at Rs 55.30 on the NSE. With an 80 rupee target price, brokerage company UBS has kept its buy recommendation on Zomato. According to the study, Zomato is reversing share loss as a result of the subscription relaunch, revisions to the delivery fee, and promotions. 

A view of competition.

The brokerage also noted that Swiggy had increased its market share over the previous six months as a result of more noticeable hikes in Zomato’s delivery rates.

Disclosure.

Though this point in time, Zomato’s performance is not much affected by the Blinkit protest, but these attempts by employees can have a significant impact on company performance shortly. Companies like Zomato and Blinkit, which heavily depend upon the pool of delivery executives, may see harsh conditions if the protest continues for a lengthier period of time, as it may jeopardise the operations of the firm.