Raids On Zepto, Blinkit: The Ugly Side Of Dark Stores

Haste makes waste – the old adage fits perfectly for modern quick commerce apps. Behind the shine of 10-minute deliveries, there’s a murkier layer — as recent raids on Zepto and Blinkit dark stores and quick cafe kitchens have revealed.

Earlier this week, the Food and Drug Authority (FDA) Maharashtra suspended the food business licence of Blinkit’s dark store in Pune’s Balewadi, citing regulatory as well as food security violations. And before this, Zepto was on the end of a similar raid in Mumbai — though that order has now been revoked.

But what exactly goes on inside a dark store or a quick cafe kitchen and are the likes of Zepto, Blinkit, Instamart and others keeping up with the rules? Let’s take a look, but before that, here are our top stories from this past week:

• Decoding The Sovereign AI Dream: In the current business environment for AI, which is heavily influenced by geopolitics, India needs to have a robust strategy around sovereign AI tech and homegrown LLMs. But what’s the ground reality?
• Mainstreet’s Folly: Despite raising about $2 Mn from noted angels, Mainstreet never left the cashburn mode, and the once-hyped sneaker reseller and marketplace soon found itself hitting a wall. Here’s how the cookie crumbled
• Reels Vs OTT Platforms: Can micro dramas or reel shows become the next big thing in India? Reelies cofounder Anshuman Misraa certainly thinks so as the startup is looking to jump on this bandwagon

Spotlight Falls On Zepto, Blinkit Dark Stores

The quick commerce trinity – Blinkit, Instamart and Zepto – have often faced severe backlash on social media platforms, where customers raised concerns around dark patterns, expired or out-of-date products or even decaying items being delivered.

With the Indian quick commerce market projected to hit $40 Bn by 2030, dark stores are struggling to keep the pace. From lack of proper training to the on-ground workforce to missing out on frequent audits in these stores, brands are losing value, customers and credibility.

Inc42 spoke to food safety department officials in Maharashtra to understand exactly what went wrong at Zepto, for instance, which led to the raid on its Dharavi facility.

A government official told Inc42 that several products had fungal growth and the cold storage area was not maintained properly. Lack of storage temperature facilities resulted in stagnant water around the cold storage area, the official added. Several edible products were stored near stagnant water and the warehouse contained expired products.

“Nearly 11 kinds of food products were destroyed by the authorities due to expired consumption dates,” the official added.

In a similar vein, last year, Telangana food safety department raided a Blinkit warehouse and found the premises to be “disorganised, unhygienic and dusty”. Authorities seized edible items which either did not comply with food safety norms or had expired licences.

Neither Blinkit, Zepto nor Instamart — the three biggest quick commerce players — responded to questions from Inc42 on their food safety and hygiene standards.

What’s The Legal Obligation? 

Every food business in India needs to adhere to the Food Safety and Standards (Licensing and Registration of Food Businesses) Regulations 2011, which govern the storage and handling of food items as well as their manufacturing.

The rules state that the establishment and the persons handling food items should conform to the sanitary and hygienic requirement, food safety measures and other standards, while it is the responsibility of the food business operator to ensure adherence to necessary requirements.

As a part of this rule set, packaged raw material must be checked for ‘expiry date’/ ‘best before’/ ‘use by’ date, packaging integrity and storage conditions. There should be adequate time for the customer to consume the product before it hits the expiration date.

The law also mandates it for the food business to have cold storage facilities for raw, processed/packed food according to the type and requirement. It also states that the time and temperature of the food items shall be controlled for the safety and sustainability of the product.

On the contrary, there have been several instances when perishable food items like meat, eggs, dairy products like cheese, milk and cream, fruits and vegetables are not kept in a proper storage area and delivered to the customers in a stale condition.

“Today I ordered chicken to cook from Swiggy’s Instamart. When I opened it, a rotten smell came rushing out, which did not go away even after cooking. I think the storage was not good because it was not frozen,” said a user on Reddit.

While there are several other posts, highlighting the disparity between the required and real conditions of these warehouses and dark stores, the apps continue to expand without adequate clearances.

As per the law, the authorities issue an “improvement letter” to the dark store in case of minor violation.

“Any contravention, minor or major, we issue the notice.We try to improve them, first of all. And also, under Section 32, the improvement notice shall be given for the improvement,” a government official told Inc42 on the condition of anonymity.

“If, suppose, it complies within the stipulated time, then there will be no action. But if it fails to comply, then action will be taken, like license suspension or license cancellation,” the official added.

The Dark Store Race: What About Food Safety?

Eternal’s Blinkit is leading the dark store race with more than 1300 dark stores across India, followed by Instamart with more than 1200 and Zepto with nearly 1140 dark stores. Notably, while Blinkit and Instamart are aggressively expanding the number of dark stores, Zepto is said to be moderating the count amid its IPO uncertainties.

Usually quick commerce platforms operate on three models – “Company Owned, Company Operated (COCO)”, “Company Owned, Franchise Operated (COFO)” and “Franchise Owned, Franchise Operated (FOFO)”.

As the name suggests, the roles are divided on the basis of ownership and operations.

Under franchise-owned or operated models, quick commerce brands provide a standard operating procedure or SOP to store operators. But for customers, it does not matter who is actually managing the store, but the entity they bought food from. Naturally the blame falls on the likes of Blinkit or Zepto, no matter who manages the store.

To stock up the inventory, quick commerce companies often keep products in bulk, which may or may not meet the demand anticipation. However, the inventory stock up of a product depends on its shelf life.

The dark stores owned by these quick commerce platforms deal with products from multiple categories. Each product has its own shelf life and storage requirement.

In conversation with Inc42, founder of a cold storage solution company, which works closely with quick commerce platforms, said dark stores have nearly 90% dry products and 10% colds products. This drastic gap opens up loopholes in the SOPs, resulting in vague regulations and lack of training for staff in cold storage management.

“There are three categories — expired, near expiry, and long shelf. A long shelf has a lot of time left, near expiry is anything between 2 to 4 months, and expired is something that is already expired,” the founder added.

Depending on their shelf life, products are transported to the dark stores. The near expiry products are also sent due to the normal selling cycle of 24 to 48 hours in the quick commerce industry.

Talking about the perishable products, every dark store should have an IoT device to monitor the temperature of the cold storage devices. Besides, fresh fruits and vegetables should also be kept at 4 to 6 degrees.

Taking some extra minutes to deliver and checking the temperature of perishable products before dispatching is a good preventive measure to avoid sending stale products to the customers.

“I think that’s where the companies are lacking. They are ensuring 10 minute delivery but not taking enough time to check the temperature of a product before dispatching and that’s where their claims are actually turning out to be harmful for consumers in the end.”

As the quick commerce ecosystem matures, platforms like Zepto and Blinkit have to take the lead in ensuring that quick cafe and 10-minute delivery operations do not end up with a reputation problem. In fact, the publicity about these gaps in their dark store models gives more than enough insight to the competition to know what areas to address to grab market share.

For incumbents in the quick commerce game, the focus needs to shift from assortment and expansion to responsible models — ensuring that consumer health is not compromised just to meet the 10-minute promise.

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Sunday Roundup: Startup Funding, Deals & More

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• Groww’s Pre-IPO Round: IPO-bound wealthtech startup Groww has closed its Series F funding round of $202.3 Mn (around INR 1,735 Cr) from GIC and ICONIQ Capital at a valuation of $7 Bn, sources close to the matter told Inc42
• Goa Gone For Ola, Uber: After some speculation over the re-entry of Ola and Uber into Goa, chief minister Pramod Sawant has reportedly assured taxi operators that the ride-hailing apps will not be permitted in the state
• Fire Sale At BYJU’S: BYJU’S-owned Tynker, which was acquired for $200 Mn, has been acquired by CodeHS for $2.2 Mn, while Epic! has been bought over by TAL Education Group at a steep discount of 81% for $95 Mn