The Indian Federation of App-Based Transport Workers (IFAT) has called on Blinkit, a quick-commerce unicorn owned by Zomato, to reconsider its recent pay cuts for delivery drivers. The national general secretary of IFAT, Shaik Salauddin, argued that the pay cuts risk the livelihoods of workers and undermine their hard work and dedication. Salauddin reported that around 600 delivery workers had met with company officials on April 14 to find a solution, but the company refused to reverse the pay cut.

Blinkit Cuts Delivery Workers’ Wages by More than Half

Blinkit an instant delivery service recently reduced the wages of its delivery workers from INR 50 to INR 14 per order, sparking protests across Delhi NCR. According to IFAT, more than 50% of Blinkit’s 200 dark stores in Delhi, Gurugram, Faridabad, Ghaziabad, Noida, and Greater Noida have shut down since April 13. Last week, a BJP spokesperson from Haryana, Yashpal Batra, met with a local industry body in Gurugram, which represented protesting Blinkit workers, giving the whole chain of events a political dimension.

Blinkit Justifies Pay Cut

Blinkit justified the pay cut, stating that it had introduced a new payout structure that compensates delivery workers based on their effort to deliver an order. The company also claimed that this payout structure is optional, and its teams are on the ground to answer any questions from partners. However, IFAT reported that Blinkit used to pay INR 50 per order to early batches of delivery workers, while newer workers received INR 25 per order. The industry body added that the startup also offered incentives and fuel charges that could reach INR 1,400 per week in some cases, on top of delivery payouts.

Incentives Gradually Taper Out

IFAT argued that delivery workers are protesting because these incentives have gradually tapered out. Salauddin condemned Blinkit’s unilateral decision to cut wages and called on the company to reconsider its stance. Industry experts have also been sharing their opinions on the viability of the whole quick-commerce model, including Blinkit’s (erstwhile Grofers) ex-CFO and BharatPe cofounder Ashneer Grover.

Experts Weigh In

Grover left Blinkit in 2017 but took to Twitter to express doubt about the business model. He stated that the problem with Blinkit is not the reduction of delivery payment from INR 50 to INR 15 but that 10-minute deliveries have no economics. He argued that low ticket size and low margins can never be resolved through forced low delivery costs. Grover highlighted the Blinkit journey: 90 Min (bull run) —> Next day (bear run) —> 10 Min (bull run) —> ??

Zomato’s Q3 FY23 Financials

Zomato’s Q3 FY23 financials show that Blinkit’s order volume increased 21% QoQ to 3.16 Cr, while the average order value (AOV) decreased by 2.6% to INR 553. Zomato founder Albinder Dhindsa noted that AOV is essential, but the company can still build a profitable business at an AOV 20% lower than the current level.

Conclusion

Blinkit’s recent pay cut for delivery workers has sparked protests and criticism from industry experts and workers’ organizations. While the company has introduced a new payout structure that compensates workers based on their effort to deliver an order, industry bodies argue that this move undermines