Unwrapping loyalty for market leaders in Quick Commerce

Short note: Welcome to Episode 12. I write about loyalty programs offered by the top 3 Quick commerce players (Blinkit, Swiggy Instamart and Zepto). Please email me at [email protected] or reply to this email with feedback. Enjoy reading and remember to spend time in the sun ☀️. I also started a second newsletter with ~500 word essays: Figuring Out.

For greater context (or interview prep), you can read through past newsletter editions: Zomato Q2 FY2025 earnings || Zomato Q3 FY 2025 earnings || Swiggy Q2 FY2025 earnings || Swiggy’s IPO || Overview of Quick Commerce in India.

Table of Contents

• Unwrapping loyalty

• Diving into app-level loyalty

• Conclusion

Unwrapping loyalty

i) In concept

Businesses have to fight for consumers- new and repeat. Acquiring new customers is costly and takes time. Serving repeat customers boost margins with lower customer acquisition cost (CAC). Even if the business just breaks even on the first order, subsequent orders from loyal users can build a profitable business.

Every business needs a healthy mix of new and repeat customers (and must combat churn). Users churn every month for a multitude of reasons including better quality products/ lower pricing/ better service/ easy accessibility. They can also churn for shiny new objects (new apps).

Customer loyalty is not one and done. Every user has to be continuously cared for and the product/ experience has to be constantly improved. This is a fierce battle that you eventually win in the long term if you survive the short term. It sucks but you sign up for it as a customer facing business.

In addition, businesses cannot easily identify which customers will be loyal in the long run. And so, businesses liberally slash prices, distribute rewards and offer a white glove experience to every consumer. Like Ogilvy said, “Half the money I spend on advertising is wasted; the trouble is I don't know which half”. 

ii) In quick commerce

Quick commerce offers a fascinating battleground for the minds and wallets of customers with the projected payoff in the billions of dollars. In H2 2024, the three industry leaders, Blinkit (via Zomato), Zepto and Swiggy Instamart filled their coffers and cranked up their efforts to scale faster.

A loyal customer base can accelerate a flywheel that allows QC platforms to keep costs low and rewards high. This encourages customers to order more in volume and value every month. This flywheel breaks if a platform has to continually attract new customers because of high user churn thereby driving up costs and lowering rewards.

Metrics including monthly order frequency, category cross-sell, AOV trends, customer retention rates, MAUs et al are indicative of loyalty but do not tell the full story. With heightened competitive intensity, these three players may start holding back on sharing even their self-selected data points.

Sharing quantitative trends helps analysts and investors, and is also useful for competitors (point of concern)- new and emerging.

Diving into app-level loyalty

i) Blinkit

The market leader does not offer a loyalty program. It’s not averse to customer love or loyalty--  it just has a differentiated GTM predicated on offering the widest product range with healthy unit economics. This commitment has drawn in 10.6M transacting customers served by 1,007 stores as of Q3 2025.

Its parent company Zomato has run wildly successful loyalty programs with Gold/ Pro/ Pro Plus, and now a relaunched Gold program. The rewards have swung from one extreme to the other and even now its positioning is uncertain and impact is unclear. 

If Blinkit decides to offer a loyalty program, it has to be clear about the scope. Is everyone enrolled for free from day one and do they earn rewards? Is it a paid program open to select cohorts that unlocks a delivery fee waiver? Perhaps, it chooses neither, and decides to unlock greater value in cost savings for every user till it occupies a similar/ higher market share % of an exponentially larger market 12-18 months in the future. 

The third path is an Amazonian ploy when confronted with margin pressure but the one I deem most likely to be followed. It unlocks operating leverage by enabling Blinkit to fulfill more orders with similar levels of capital expenditure. Additionally, ad targeting capabilities should only improve and a larger user base will aid monetisation.

ii) Swiggy Instamart

Swiggy offers an all-encompassing loyalty program: Swiggy One that offers benefits across food delivery, dining, hyperlocal couriers and quick commerce. Depending on the membership opt-in date, Swiggy One members enjoy free QC delivery above ₹99/ ₹199.

Swiggy is attempting to premiumise its loyalty program with the introduction of a One BLCK membership program. Thus far, the differentiation between the legacy program and the premium program is insignificant to compel an upgrade for a QC user.

The delivery waiver helps but it hasn’t done enough to solve for the AOV mismatch with Instamart’s AOV (₹499) versus Blinkit’s AOV (₹660 in Q2, ₹707 in Q3). Even if AOV mismatch can be attributed to category and product level availability, the superapp should have enabled greater QC penetration with its captive food delivery/ dining/ hyperlocal courier users.

Swiggy’s attempt to go beyond its superapp identity with its constellation of single use case apps (Instamart, Snacc and Pyng) can help it build a stronger QC first loyalty program if it chooses that path. Arguably, the Swiggy One program offers the greatest value in the industry and the company has beefed it up beyond core use cases with partner tie-ups.

It is likely that One’s collective success will hold the company back from looking at a loyal Instamart user with a fresh lens. Quick commerce is a unique high frequency use case with a larger addressable market (vis a vis food delivery), but it’s hard to break what works in favour of the unknown.

iii) Zepto

Zepto’s loyalty program Zepto Pass encapsulates what consumers want most- free delivery (fee waiver above ₹99) + great discounts. It is a great first stab at a loyalty program and has allegedly been taken by 6 million customers (as of November 2024).

Zepto’s hyperscaling efforts in the last year have been enabled by this program and a $1.35 billion fundraise. The program’s longevity is tied to the burn that Zepto can afford in its growth phase. Once discounts are pared back and a higher threshold is established for free delivery, the true loyalty of Zepto Pass users will be tested. Beyond its core benefits, it has some way to go and can learn from Swiggy’s partnerships.

If the company can make the math work, Zepto Pass will be a no-brainer for QC users. It offers phenomenal value and easily rivals Swiggy One on a standalone QC loyalty program basis.

Conclusion

Counterintuitively, Blinkit sans loyalty program is the market leader. Zepto Pass has achieved great user opt-in in just a year of its launch. Swiggy One is the most comprehensive program but is hamstrung by the company’s Superapp focus (standalone app launches are too recent).

Loyalty is hard and a loyalty program is hard to run sustainably. A company has to be committed to run the program with a specific intent and should not waver because of market cycles. If a loyalty program is established with a baseline net burn, it should continue down that path. The market will inevitably change and forcing the program to become revenue accretive may leave the program in limbo and its customers in disgust.

Potentially, the worst outcome for a loyalty program is one in which it inspires no strong feelings- good or bad. It is not a good sign if a user is unaffected by its devaluation and if the renewal fee is continually heavily subsidised to maintain vanity metrics (member retention %).

I have seen this cycle in parts with the Swiggy One, Zomato Gold and Zepto Pass programs (90%+ fee subsidisation/ free membership extensions). It ceases to engender loyalty and the program eventually fades in the background unless the company chooses to revive it and engage with its clientele.

In an ideal world, a loyalty program builds a community that orders more often and stays loyal inspite of the eventual offering degradation. The community stays because it has grown to care for the company and knows the company will still offer more value than everyone else. It is hard to build and harder still for a standalone QC company because it does not have a core cash cow business to subsidise this community build-out. This is where Blinkit (via Zomato) and Instamart (via Swiggy) have an edge over Zepto.

Arjun’s picks

• The 5 Types of Wealth by Sahil Bloom: Legitimately looking forward to reading this book.

• DeepSeek FAQ by Ben Thompson: Great read on all things DeepSeek that erased ~$600B from Nvidia’s market cap last week

• Newsletter link here: Selflessly linking my own newsletter. I dare you to read just one essay, If you knew you couldn’t fail.

• Tariffs by Trump: Tariffs delayed in Canada and Mexico, in force for China. Keep an eye on this.

Investment Disclaimer: I am invested in Zomato (and Blinkit by extension). Shared for informational/ entertainment purposes only. Nothing I write above is an endorsement or paid promotion or financial advice. Do your own research. Thank you.