Eternal's quick commerce arm Blinkit's expansion into Meghalaya has hit a road block
Meghalaya's Khasi Hills Autonomous District Council (KHADC) rejected the company’s bid to secure a mandatory trading licence to operate within the state on June 25
The tribal council is of the view that Blinkit’s quick commerce business could disrupt local retail industry within the state
Eternal’s quick commerce arm Blinkit’s expansion into Meghalaya has hit a road block.
As per a report by PTI, Meghalaya’s Khasi Hills Autonomous District Council (KHADC) rejected the company’s bid to secure a mandatory trading licence to operate within the state on June 25.
The tribal council is of the view that Blinkit’s quick commerce business could disrupt local retail industry within the state. In its argument, the local body has alleged that Blinkit’s operating model could threaten the livelihoods of more than 4,000 neighbourhood grocery stores within its jurisdiction in Shillong.
“The executive committee would not issue a trading licence to any platform whose business model threatens indigenous traders and small businesses,” KHADC’s CEO Winston Tony Lyngdoh told PTI.
Blinkit is said to have secured a No Objection Certificate (NOC) from the Dorbar Shnong and Rangbah Shnong of Nongrim Hills. However, he added that the company’s application for a trading licence had not yet reached his office for consideration.
Queries sent by Inc42 to Eternal regarding the development did not elicit any response till the time of publishing.
The council also noted that it had previously refused licences to similar app-based delivery platforms, including Swiggy Instamart, citing concerns over their impact on neighbourhood retailers.
The decision was opposed by KHADC’s leader of opposition Titosstarwell Chyne.
“Trading license is for the trade, but this amendment which they have brought is regarding their employees, is regarding the labour. I failed to get the explanation of the difference between the employees and the labour. But yes, in the last few years, a labour license was issued by the district council. But later on, after the state government brought that new labour act, the government took over. So after that, we have got the direction from the state government that we cannot continue with the labour license,” he said in an interview with IANS.
The council’s concerns reflect broader regulatory scrutiny surrounding the sector. Last year, the All India Consumer Products Distributors Federation (AICPDF) filed an antitrust complaint with the Competition Commission of India (CCI) against Blinkit, Zepto and Swiggy Instamart, alleging predatory pricing, deep discounting, preferential treatment to select sellers and other unfair competitive practices that disadvantage neighbourhood kirana stores and traditional distributors.
The industry body is reportedly examining Blinkit’s inventory-led operating model. The CCI is examining the complaint, and no findings of wrongdoing have been made till date.
For context, Blinkit operates an inventory-led model, under which it owns and stocks inventory at its network of dark stores instead of functioning solely as a marketplace connecting buyers and sellers.
The model enables faster deliveries as well as a sizable improvement in its margins and top line. However, it has also drawn criticism from traditional retailers, who argue that deep discounts and rapid doorstep delivery make it difficult for small neighbourhood stores to compete.
Blinkit is the market leader in the quick commerce arena as of now. As per ex-CEO Deepinder Goyal, Blinkit accounts for nearly half of India’s quick commerce market by net order value.
However, increasing traction of Swiggy Instamart and Zepto as well as increased investments from ecommerce majors Amazon and Flipkart is intensifying competition at the moment.
Blinkit is rapidly expanding beyond top cities into non metro markets. While the bulk of revenue still comes from major metros, the quick commerce giant is aggressively scaling its dark store footprint in smaller cities.
On the financial front, Blinkit’s adjusted EBITDA jumped more than ninefold to ₹37 Cr in the March quarter from ₹4 Cr in the preceding quarter, while net order value surged 95.4% YoY to ₹14,386 Cr.
While parent Eternal reported a 4.5X jump in quarterly net profit to ₹174 Cr, while operating revenue nearly tripled to ₹17,292 Cr.
Shares of Eternal ended today’s trading session 0.04% higher at ₹279.85 on the BSE.
Source: Inc42 - Startups
