Flipkart Slows Down 'Minutes' Expansion to Reduce Cash Burn Ahead of IPO

While quick commerce start-ups are burning cash due to rapid expansion amid intense competition, Walmart-owned e-commerce giant Flipkart has come out with a way to reduce its burn rate. The company is reportedly planning to curb the expansion of its 10-minute delivery service platform, ‘Minutes’.

According to The Economic Times report, Flipkart Minutes is likely to be operational in around eight cities only. It believes that more than 90% of quick commerce orders originate from the top eight markets, which includes Delhi-NCR, Mumbai, and Bengaluru.

Currently, Minutes is present in 14 cities with a network of over 300 dark stores or mini warehouses across India. In addition, the company also aims to expand its dark store network to 500-550 by October this year. However, Flipkart is under pressure to reduce its cash burn of approximately $40 million per month in a bid to launch of its IPO.

Flipkart is expected to go public in India next year with a valuation target of around $60 billion, Business Standard had reported. The Bengaluru-based firm was last valued at approximately $36 billion.

Quick Commerce Cash Burn

Indian quick commerce companies, including new entrants are burning cash to nearly Rs 1,300-Rs 1,500 crore on monthly basis. The number reveals how rapidly a company spends its money before generating positive cash flow.

Swiggy and Zomato have been spending more on their quick commerce arms ‘Instamart’ and ‘Blinkit’, respectively, to compete with Zepto --- which raised over a billion dollars in funding last year.

Hence, to stand strong and face the heated competition, both Swiggy and Zomato aggressively expanded their dark store networks, with Blinkit opening new 216 stores and Instamart setting up 96 at various locations. They even brought heavy discounts to attract customers and added more product categories like clothing, personal electronics, beauty, fashion, among others.

On the other hand, the IPO-bound Zepto has also expanded its network in tier 2 cities, and currently operates over 600 dark stores across the country. Reportedly, Zepto CEO Aadit Palicha has plans to increase the dark store number to 1,200 by March 2025.

As per reports, the company has burned around Rs 250 cash per month in October and November due to the increase in expenses. The start-up has made a huge investment in operations, marketing and customer acquisition.