Inventory shrinkage of 1.8% of net order value, amounting to Rs 308 crore—that is the real cost Blinkit, an Indian quick commerce platform, incurred in Q1 FY27. In the same quarter, its adjusted EBITDA was a positive Rs 102 crore. In other words, if the shrinkage rate could be cut below 1%, profits would nearly double.
For the textile industry, the lesson here is not about quick commerce but about the silent killer of inventory loss. Fabrics, yarns, and trims also have expiration issues—color fastness degradation, batch-to-batch shade variation, and style obsolescence are all forms of textile 'expiry.'
Inventory Shrinkage: The Chronic Bleeding of Textiles
Blinkit's inventory loss comes from four sources: expiry, damage, movement loss, and theft. The textile industry faces a more complex set. Yarn and grey fabric can mildew or discolor in storage due to improper temperature and humidity. Finished fabrics sitting too long may show visible differences between the shade card and the actual roll. Most critically, textile 'expiry' is often not a hard date but a hidden depreciation triggered by shifting market preferences.
Public data from the China National Textile and Apparel Council shows that in 2024, the average finished goods inventory turnover days for large-scale textile enterprises was 21.5 days. However, for small and medium-sized firms, the actual figure can exceed 40 days. Every extra day increases the probability of inventory depreciation. This is especially true for polyester, nylon, and other man-made fibers, whose raw material prices fluctuate sharply—the longer the inventory sits, the higher the markdown risk.
What Blinkit's 1.8% Means for Textiles
Take a fabric trader with annual revenue of Rs 100 crore (approx. INR 1 billion). If the inventory shrinkage rate reaches 1.8%, that means Rs 1.8 crore worth of goods become waste or must be sold at a discount each year. That amount is roughly equivalent to one quarter's net profit for the company.
- Quick commerce platforms use algorithms to dynamically adjust inventory, yet still see 1.8% shrinkage
- The textile supply chain is longer and has more nodes, so the shrinkage rate could be even higher
- From spinning mills to weaving factories, then dyeing and garment making, every stage can accumulate stagnant inventory
The key issue is that textile companies often bury inventory loss under 'production cost' or 'selling expense' rather than tracking it separately. Business owners see only declining gross margins, unaware how much profit is being eaten by inventory.
Three Levers to Reduce Shrinkage
The first lever is granularity of demand forecasting. Blinkit works with minute-level order data, while textile firms typically forecast by week or month. If forecasting cycles could be shortened to days, with rolling predictions for different SKUs, the risk of overstocking and expiry would drop significantly.
The second lever is inventory visibility. Many textile warehouse management systems only record quantities, not batch numbers or production dates. When a batch of fabric sits for more than six months, the system gives no warning. Introducing batch tracking and shelf-life alerts can effectively cut 'forgotten' losses.
The third lever is supply chain collaboration. Quick commerce platforms share real-time sales data with suppliers. In textiles, fabric purchasing often relies on gut feeling. If brand owners could share sales forecasts 4-6 weeks in advance with fabric mills, those mills could better control their raw material inventory.