Think back about a decade and a half ago. If you needed groceries, you could just walk to the convenience store at the end of the road and be home in about 10 minutes. Then, with the advent of supermarkets, grocery shopping became a weekly affair as people made larger purchases. Once ecommerce came into play, it became more convenient to order online than visit the store – even if you had to wait a little longer to get it delivered.
In the early days, an ecommerce delivery service would take about 2-3 days to fulfill an order. Cut to today when same day grocery deliveries have become the new normal. But if you thought that’s fast enough, you’re mistaken. The Indian startup ecosystem is now switching to the next gear with 10-minute deliveries, except this time the convenience store comes home to you.
How much potential does it really have?
Usually, retail commerce is shaped by consumer behaviors. But in the case of ultra-fast deliveries, quick commerce is actually changing purchase behaviors of consumers and transforming the retail market from the inside out. And this change is happening fast. According to a report by Indo-Asian News Service (IANS), the quick commerce market in India will grow 15x in the next three years, with a market size of $5.5 billion. In the past two years alone, it has seen a rise in major cities across the country, especially Bengaluru, New Delhi, and Chennai.
A community-based online platform LocalCircles surveyed 30,000 people across 272 districts in the country and revealed that 25% of households bought their groceries online, specifically through a quick ecommerce delivery service. 71% of participants also admitted to using these ecommerce shipping solutions for last-minute purchases of essentials and impulse buys.
RedSeer, a market research firm based in Bengaluru, also shared some significant findings. The quick commerce segment in India was valued at $300 million in 2021 and, even with the most conservative estimate, is expected to jump to $3.1 billion by 2025. As of today, quick commerce’s total addressable market (TAM) in India is estimated to be $45 billion.
Unsurprisingly, startups of all sizes are jumping onto this bandwagon, as are investors. Perhaps the most noteworthy example is that of Zepto – a relatively quiet name that suddenly took the quick commerce world by storm and secured a $60 million funding for its 10-minute ecommerce delivery service. Soon, bigger names announced similar services – including Blinkit (formerly Grofers), Swiggy Instamart, Dunzo (backed by Reliance), Ola Dash, and BigBasket BB Now. It’s no wonder that Amazon Prime’s next-day delivery pales in comparison.
So, how does it work?
To ensure ecommerce shipping and delivery in 10 minutes, wide scale distributed inventory is essential. That’s why quick ecommerce startups are setting up smaller warehouses – known as dark stores – closer to customers’ homes. But dark stores aren’t the only way quick commerce companies are achieving efficiency. Using technology, these startups are considering various other factors such as TAM (i.e., the number of households in the area), road and traffic conditions, location accessibility, local weather patterns, etc.
What’s more, these dark stores are also focused on keeping smaller stock keeping units (SKUs) of <2,000, compared to over 1 lakh units usually kept in larger warehouses. To optimize the inventory and shipping cost, these SKUs are decided based on order patterns of nearby customers. Each dark store only serves a radius of 2-3 km and stocks high-frequency items pertaining to its service region. In contrast to traditional supermarket models, quick commerce relies on fewer options in order to optimize speed of ordering and delivery. For example, offering customers a smaller range of day-to-day products such as bread, eggs, tea, etc., can simplify inventory and reduce the time taken to make a choice and place the order.
Aadit Palicha, Zepto’s CEO and Cofounder in conversation with The Indian Express, revealed that with this accelerated ecommerce shipping model, the process of packaging to dispatch takes less than a minute on average. Blinkit’s CEO Albinder Dhindsa said that all their partner stores are placed within 2 km of their customers. He also claimed that the density of their dark stores makes it possible for their delivery executives to meet 90% of their orders within 15 minutes even if they’re riding at just 10 kmph. In the past six months, more than 1,000 dark stores have popped up around the country.
How can your startup gain an edge?
Despite being fairly new, the number of players in the quick commerce segment is growing aggressively. For a smaller startup to go up against industry giants can be a challenge. But there are a few steps you can take to improve your chances of carving a niche.
- Focus on scale: An experimental ecommerce model in its nascent stages isn’t going to be the most profitable at this time. Your best bet to enter and sustain yourself in this market is to play the long game – scale up and capture market share.
- Push for subscription models: If your 10-minute ecommerce delivery service deals with everyday groceries or another segment with high-frequency ordering, introducing a subscription model can help you further streamline your processes and boost revenues.
- Invest in technology: Be it warehouse and inventory management, supply chain logistics, metric tracking, real-time analytics, or regional utilization, let technology do the work for you.
- Bring in the experts: A dedicated team of ecommerce experts can help you better strategize your communications and cut the clutter in an increasingly crowded space. It is ideal to find an experienced ecommerce partner who can provide comprehensive services in analytics, marketing, marketplace support, and more.
Some believe the 10-minute delivery model is the future, some think of it as a passing fad, while others believe it will simply become another option in the growing gamut of ecommerce services. Regardless of how it plays out, it is definitely a path worth exploring.