Kolkata-based Souma Sen’s morning routine has changed in the last couple of years. Earlier, in the morning, after his workout, and before leaving for office, he would go to the local market to get fruits and vegetables, as he preferred to have them fresh. Once in a while, he had to make an emergency trip to the nearby market when his cook ran out of chillies or mustard oil.
Not anymore. All items of daily need are delivered to his house in seven minutes flat, and even when there is the need for anything at the last moment, his wife does not bother him but orders it through a quick commerce app instead. Of course, he ends up spending a bit more, but since both he and his wife are working, and ordering through an app saves them time, he does not mind. He still goes out twice a week to get fish, but that is about it.
What is happening here was unthinkable even a decade ago. And more interestingly, nobody perhaps even felt the need for it then. Today, we cannot imagine a life without these quick commerce (Q-commerce) apps.
A Battle of Epic Proportions
The Q-commerce battle for supremacy is undoubtedly one of the hottest in the Indian business landscape now. According to Redseer Strategy Consultants, as of March 2024, the Indian Q-commerce market was worth $2.8 billion. A report by Deloitte estimates that the Q-commerce market will be worth a whopping $40 billion by 2030 and naturally nobody wants to miss the bus.
Currently, the Indian Q-commerce market is dominated by Blinkit (owned by Zomato), Swiggy Instamart, Zepto and BBNow. However, there is frenzied activity going on in this space and while incumbents like Amazon and Flipkart are here to stay, newer players are focusing their sights on the Q-commerce prize. In fact, Zomato's Blinkit acquisition, once seen as a risky gamble, has turned into a potential goldmine, with Blinkit's valuation now exceeding that of Zomato's primary food delivery business, according to analysts at Goldman Sachs.
In fact, the numbers that these ecommerce rock stars are doing are quite remarkable. Blinkit’s gross order value (GOV) increased 2.3 times, reaching Rs 4,923 crore in Q1 FY25, compared to Rs 2,140 crore in Q1 FY24. By July 2024, Zepto’s revenue for the financial year 2024 (FY24) surpassed Rs 10,000 crore, more than five times its FY23 revenue of around Rs 2,000 crore. And when it comes Swiggy, both their food delivery and Q-commerce business recorded Rs 7,474 crore in revenue in the first half of fiscal 2024, according to one of their investors.
Reports indicate that Tata-owned Bigbasket is shifting its focus to a quick commerce business model. Although it already operates a Q-commerce service, BB Now, which accounts for over 50 per cent of its total sales, the company now plans to phase out its two-hour to next-day delivery services in favour of 10-30 minute deliveries, according to investment banking firm JM Financial.
Flipkart too recently launched its QC offering ‘Minutes’ in select pin codes of Bengaluru, New Delhi and Mumbai. A recent news report says that a Bengaluru man ordered a MacBook to a Starbucks through Flipkart Minutes and it got delivered in 13 minutes. Another report by financial services firm UBS says that Flipkart Minutes is offering products at a 10 per cent discount as compared to Blinkit. Being the new kid on the block, they are definitely making the right noises. However, they are still in the early stages and the company is not talking to the media on their quick commerce initiative yet.
Meanwhile, Ola Electric and Ola Cabs founder Bhavish Aggarwal said that they are working towards building portable warehouses which will serve as dark stores in a bid to enter the quick commerce market.
“While we believe the Q-commerce competitive environment could eventually narrow to three to four relevant players, in the near term we could see six to seven serious contenders,” says an analyst at JM Financial.
The Mind Game
When you look at successful Q-commerce businesses, one thing they got right is understanding what the customer wants and then giving them that. Some businesses, in fact, thrive by making habit forming products. Usual suspects include social media apps, including Facebook, Instagram, and Snapchat, that have become essential parts of our daily lives. These apps have become ingrained in our routines, often serving as our go-to sources of entertainment and connection.
The Q-commerce market leaders, in a similar way, have capitalised on a strong habit formation that has happened in the metro cities among the young working or young student crowds and young millennials. "Quick commerce has created a strong habit formation among users, who now go to their preferred platform and expect essentials (and few non essentials) to be delivered within 10-15 minutes (or even lesser in some cases). The user cohorts typically comprise Gen-Zs and young millenials, who do not plan their grocery purchase in-advance and rely on these instant delivery services. Further, while there are multiple platforms in the market, users tend to stick to their preferred platform (unless something desired isn't available) and look for immediate access, instead of comparing prices across platforms." says Kushal Bhatnagar, Associate Partner, Redseer Strategy Consultants.
Agrees Kruti Shah, Counselling Psychologist and Psychotherapist, “As a psychologist, I see the rise of quick commerce as a reflection of our fast-paced lives, where time is often seen as more valuable than money. Many customers are drawn to these services not just for instant gratification, but because they believe that outsourcing tasks like shopping or errands frees them up to focus on more important things. The mindset is - if I do it myself, I lose time that could be better spent elsewhere, so I don't mind paying more for the convenience."
The growth of quick commerce is thus closely tied to changing consumer behaviour, especially among younger demographics. “Millennials and Gen Z, who are digital natives and value convenience highly, are the primary drivers of this trend in India. Their preference for on-demand services is shaping the future of ecommerce and pushing brands to innovate in terms of delivery speed and efficiency,” says Abhiroop Medhekar, Co-founder and CEO, Velocity, a cash-flow based financing platform.
Also, according to Bhatnagar, the argument is that with Walmart-like players successfully offering high-quality experience and a wide range of products in its stores, there was less of a pressing need for such a service in the US market. In India, however, generations have relied on smaller kirana shops, which often lack the variety, selection, and availability of newer brands. This has created a gap in the market with modern consumers, especially younger generations.
Further, dark store models, which involve warehouses without customer-facing storefronts, are typically less efficient in areas with low population density. However, they can be successful in high-density Indian cities like Delhi, Bangalore, and Mumbai.
The Big Question
When we look at the Q-commerce landscape and look at the winners and losers, one question definitely comes to our minds. Why have the established ecommerce players like Amazon and Flipkart not been able to lead the race? After all, they have the required resources at their disposal and you would think that they can hire the best talent. In fact, India’s richest man Mukesh Ambani, known to disrupt consumer space with cut-throat strategies, has also not been able to crack the Q-commerce market.
One needs to remember that Flipkart had made earlier attempts at quick grocery deliveries which did not meet with much success. In 2015, they had launched an app called Nearby to deliver fruit, vegetable, soap, and other everyday items from supermarkets to customers within an hour of receiving the order, which shut down five months within launch because of insufficient consumer demand and thin margins. In fact, in 2020, Fliplart made another attempt at quick commerce, with Flipkart Quick which promised to deliver products from local Flipkart hubs in just 90 minutes, which was later scaled down as it did not find too many takers.
When it comes to JioMart, they quietly shut down their 90-minute quick commerce grocery delivery service, JioMart Express in 2023, after launching in 2021. As recently as June 2024, it has again entered the Q-commerce space, attempting to narrow its delivery time to 30 minutes. After having piloted in Navi Mumbai, it plans to expand to seven to eight cities and has plans to expand its service to over 1,000 cities. Orders will be serviced from its vast network of stores.
Meanwhile Amazon continues to focus on doing what it does best, delivering a seamless customer experience and offering a wide selection at great value with fast and reliable delivery.
Disruptive Innovation
This can be explained, in part, by American academic and business consultant Clayton Magleby Christensen's Disruptive Innovation Theory that suggests that new, often smaller companies can introduce products or services that initially seem inferior but eventually outperform established offerings. Established companies may find it difficult to adapt to these changes due to their reliance on existing business models and processes.
“New players in the quick commerce space have gained a major competitive edge over larger incumbents due to several key factors. One of the primary reasons is their agility and ability to think on their feet and come up with new innovations rapidly. Without the constraints that often come with being a large, established company, these new entrants can quickly come up with relevant ideas for changing market conditions and consumer preferences,” says Ankur Mittal, Co-founder, Inflection Point Ventures, an early-stage angel investing platform.
Many of them also focus on specific niches or underserved or lesser-known demographics, helping them build a loyal customer base by catering to targeted needs. “Furthermore, these emerging players are often at the forefront of making the best possible use of advanced technology, such as AI-driven demand forecasting and real-time inventory management, to enhance their operational efficiency. This tech-driven approach can help offset the resource advantage that larger incumbents typically have,” says Mittal.
The successful players are thus leveraging advanced technology to optimise dark store and delivery operations. To deliver high-speed quick commerce, technology must continuously eliminate bottlenecks in warehouse pick-pack processes and last-mile delivery. “This requires parallel processing, assisted operations, and minimising human decision-making time. For example, fully integrated tech could initiate order picking based on predictive models even before the customer confirms the order, assign a rider during the picking process, evaluate batching opportunities in real-time, and continuously optimise delivery sequences based on the shortest routes,” says Sachin Mane, Vice President-Technology, ElasticRun, a B2B ecommerce platform for rural India.
It could also be a clear case of first-movers’ advantage. “The Blinkits and Zeptos of India forecasted and predicted the opportunity quite well, and were hence “quick” to get into our phones and tablets,” says Nilaya Varma, Co-founder and CEO, Primus Partners, a business and management consulting firm.
Secondly, it has also to do with how the ecommerce giants function. Ecommerce platforms operate as marketplaces by providing a virtual storefront, facilitating search and discovery, handling payments, managing logistics, building trust, and offering customer support. This creates a convenient and efficient platform for buyers and sellers to connect. However, Q-commerce players operate in a different manner.
“Q-commerce is playing out more as retail stores, with inventory (also being now referred to as ‘dark stores’) in accessible geographical locations, and the application only as a source of buying and selling of the managed stocks. This naturally has led to an aggressively and disruptively shorter delivery time, thus making consumers more tempted to choose Q-commerce,” says Varma. So it could be that the ecommerce giants have found it difficult to crack Q-commerce simply because that is not what they are good at doing. What has worked for them will not work with Q-commerce as it is a different ball game altogether.
“In fact, it is not just the Q-commerce companies, but new age brands often excel in quick commerce as they have a better pulse on consumer pain points as well as a better understanding of hacks consumers use to get the most out of their purchased products. Their product strategies are finely tuned to these insights, allowing them to create brand identities that resonate better with their users,” says Kruti Berawala, Co-founder, Stratedgy, a branding, packaging and communication design agency.
The Amazon Way
Interestingly, while everyone is trying to jump on the bandwagon, Amazon, the other ecommerce behemoth, has decided to sit back instead and focus on an USP of its own. Which is interesting since it is making a conscious decision of not following the herd.
“Let me start by explaining the value proposition of Amazon Fresh. What we offer to customers is the widest range of products, competitive pricing and savings and convenience of a two-hour delivery slot,” says Harsh Goyal, Director, Grocery, Amazon India.
So Amazon Fresh offers you between 5,000 to 6,000 items in a two-hour slot, and another 50,000 items the next day. You can create a single cart across all those items.
Goyal emphasizes that Amazon Fresh offers competitive prices without hidden charges like handling fees or rain pricing. Customers also enjoy basket-level discounts and additional discounts with the Amazon ICICI Pay Credit card . It prioritises product quality, conducting third-party surveys to ensure their produce is superior to competitors.
The service offers the convenience of two-hour delivery slots, allowing customers to choose a time that suits their schedule.
Not surprisingly, though they may not be a lead player in the Q-commerce space, Amazon Fresh has its set of dedicated users.
“I use Amazon fresh for 90 per cent of my grocery shopping. I have tried almost every other option for groceries, and found that nothing can compare to Amazon's customer service and quality,” says Sneha Bajpe, a Pune-based entrepreneur.
She says that Amazon's price is almost always the lowest, and the quality is unmatched. “And above all, what I like about Amazon Fresh is that their potatoes, tomatoes and most vegetables except for green ones, come in threaded bags which I feel are better as they do not contaminate the food,” says Bajpe.
Different Strokes, Different Folks
In fact, while Q-commerce is the buzzword, a one-size-fits-all approach may not always work for everyone. Says Noida-based entrepreneur Ashwini Sharma, “I've been using MilkBasket daily for over four years now for all my everyday needs, from groceries to fruits and vegetables, stationery, and sometimes even toys. I started using it when I moved to Noida during the first phase of Covid-19.” Incidentally, MilkBasket which delivers to more than 20 cities in India, calls itself ‘India's trusted 7 am daily essentials, grocery and milk delivery service.’
Sharma says that the best part is the timely delivery. Whatever you order by midnight gets delivered early in the morning between 5 a.m. and 7 a.m., which is very convenient.
“Another great feature of the app is the subscription service, allowing me to opt for products on a daily, alternate day, or weekly basis. This way, items like milk, bread, fruits, and salads are delivered automatically as per my schedule without needing to reorder each time. They even offer a small subscription cashback that increases with the number of subscriptions,” says Sharma.
In fact, there are still gaps in consumer needs that these Q-commerce brands need to address. Aarti Dethe, a 37-year-old mother of a two-year-old baby, who works from home, uses multiple Q-commerce apps for ‘urgent groceries’ like eggs, potatoes, milk, curds and more.
“I always end up forgetting a thing or two right before cooking, or for urgent guests or child’s demands – to use Blinkit or Zepto,” she admits candidly. But she only orders ‘just what she needs right then’ from these apps.
“I haven’t stopped going to the kirana store which is just five minutes away,” she says.
So, it would be wrong to think that Q-commerce is the only option that appeals to customers, the needs may differ and lots of brands can survive in the space as long as they create a niche for themselves.
The Turf Wars
Interestingly, Q-commerce players are expanding their product range to include products which are not groceries. “Categories which were traditionally part of weekly / monthly shopping missions are being made available at any time conveniently. Success of the model in grocery has led to quick commerce platforms expanding to other retail categories. The model has been able to take considerable share from the regular ecommerce platforms,” says Nishant Shekhar, Managing Director and Partner, Boston Consulting Group.
In fact, if you go to any Q-commerce platform, you can buy everything from home and kitchen appliances, chargers, power banks, stationary, games and so on. Earlier, you would have ordered from Amazon and Flipkart and waited a day or two, now you can get these items in less than 10 minutes. Whether you need them as fast is not the question, but the convenience and speed of delivery makes it an attractive proposition.
“Quick commerce may have started with groceries but is moving quite rapidly into other categories which were earlier dominated by Amazon and Flipkart. It will become a multiple horse race and there will be some interesting battles ahead. I believe the consumers in India will continue to benefit from this and it may take a few years before winners will emerge,” says Sameer Gandotra, Founder and CEO, Frendy, a retail-tech mini marts and micro kiranas for smaller towns and rural India.
The Sustainability Question
Quick commerce in India thrives on the unique combination of affordable labour and strong investor backing, allowing lightning-fast deliveries. But is it sustainable? It's like running a marathon at sprint speed—exciting but exhausting. “As markets mature, pressures to turn profits, rising wages, and shifting investor expectations could force a potential slowdown, or at least, stagnation. Just as in Singapore, where convenience comes at a different pace, India might eventually find that balancing speed with sustainability is the key to long-term success in quick commerce,” says Primus Partners’ Varma.
The sustainability of quick commerce in India hinges on more than just cheap labour and investor backing; it also depends on infrastructure, regulatory shifts, and socio-economic dynamics.
As urban congestion, rising labour costs, and potential gig economy regulations come into play, maintaining rapid delivery may become costlier.
“Environmental concerns could drive stricter policies, increasing operational expenses, while technology investments in automation and AI are crucial but require significant capital. Increase in platform fee is not always going to be a solution,” he adds.
Nitin Lodha, Principal Advisor, chitrangana.com, an ecommerce consultancy, is sceptical about the future of Q-commerce. “Honestly, the current quick commerce model in India isn’t going to last forever. The idea of cheap labour is more of a temporary advantage. We're expecting wages to rise significantly in the near future as the market settles down and businesses adapt," he says.
According to him, what we’re seeing now with these lightning-fast deliveries will probably shift to a more realistic half-day or next-day model. The buzz around quick commerce is great for now, but as costs go up and things evolve, a more sustainable approach will definitely take over.
However, Praveen Govindu, Partner, Deloitte India, strikes an optimistic note. “Q-commerce is a business model innovation in India that is addressing some very specific customer needs and use cases. Given the strong customer pull, the model is here to stay. While investments in infrastructure (dark stores), inventory and delivery are high, it is possible to break even at scale. Further, unlike other channels, Q-commerce platforms are able to leverage the data they collect on consumer buying behaviour to optimise costs on all the aforementioned fronts.”
Only time will tell whether Q-commerce will sustain its momentum and what more customers can expect going ahead, since shorter delivery times are not a possibility. While many brands focus on speed, innovation is key to standing out. Some may explore hyperlocal partnerships, AI-powered inventory management, or unique product offerings to create a niche and capture market share. But whatever the outcome, customers stand to win and that is not a bad thing.
_20241101093753_original_image_24.webp)