Quick Commerce Part 1: Decoding the 10-min Grocery delivery scene in India
Link to the original twitter thread — here.
Grofers rebrands itself to Blinkit
Zepto is on its way to becoming a Unicorn
Swiggy to invest $700 Mn in Instamart
The Hyperlocal Grocery segment, which was written off 2–3 years has made a stellar comeback.
Fascinating, Isn’t it?
With so much buzz around Quick-Commerce, Here’s my take on the How’s & Why’s of the 10-min grocery delivery scene in India.
Why Quick-Commerce?
Food & Grocery takes a massive 68% share in India’s rapidly growing $890 Bn Retail Market.
Retail E-commerce is a ~$40 Bn market, of which just $3 Bn is E-Grocery.
With so much potential, E-Grocery will play a critical role in propelling E-commerce forward in India. (Est $120+ Bn by 2025)
Now within Grocery, FMCG is ~$105 Bn.
Here, General Trade (Kiranas) takes up a massive ~85% share, followed by Modern Trade (Supermarkets) with a ~10–11%, and E-Grocery with a ~3–4% share. Urban India contributes a little more than 60% to this.
Even a small shift from Urban Kiranas will result in a massive GMV upside.
But, Why Now?
The pandemic has changed things dramatically.
Habit creation is particularly difficult in Grocery, but the pandemic has made doorstep delivery the new norm.
Yes, you’re right — Strike while the Iron is Hot.
Why the 10-min delivery model?
E-Grocery has multiple segments:
1. Full Basket: Bigbasket, Binkit(?), Flipkart Grocery, JioMart, Amazon
2. Daily Needs: Milkbasket, BB Daily, Suprdaily, Country Delight
3. Hyperlocal/Quick: Swiggy Instamart, Zepto, Blinkit, Flipkart Quick, Ola
Quick/Hyperlocal is best suited for replacing Kiranas for daily ad-hoc purchases.
Kiranas sell most products at MRP, but Customers finish their purchase within 10–15 minutes.
Quick Commerce is latching onto the same model. The value proposition in Quick is convenience and not pricing as with full basket e-grocery.
Now, How do you deliver products so fast?
Answer: Dark Stores or Mini-warehouses across the city where stock is replenished from central warehouses. These dark stores are either standalone stores owned or leased by these Platforms or tie-ups with vendors who have this capability.
Dark stores are strategically set up to serve a certain radius in a jiffy. They manage inbound and outbound, and forecasting systems take care of replenishment.
Limited selection & highly optimized set-ups allow these dark stores to pick & pack orders fairly quickly. Finally, the order is fulfilled by the delivery partners who take care of the last mile delivery.
This is a shift from sourcing from local stores where multiple factors beyond control could hamper the experience.
Additionally, companies such as Shadowfax provide plug & play hyperlocal delivery solutions, which help in faster expansion and dynamic management of last-mile delivery.
What does the future look like?
The delivery times may increase slightly as it scales up further, but Quick-Commerce is here to stay. We might soon become heavily dependent on Quick-Commerce, just as we are on Ola and Uber for cabs.
Is this Even Sustainable?
The current unit economics may look absurd, but optimized supply networks, lower costs due to scale, and the introduction of margin accretive initiatives such as Private Labels & innovative subscription models may change the picture.
So, What do you think? I’d love to know your thoughts.
You can read the Part 2 here.
