Logistics and shipping software startups such as Ecom Express, Shadowfax, Shiprocket, Loadshare, Porter, Borzo, and Zypp Electric, are looking at broadening their partnerships with quick commerce firms. While this will help the logistics players increase their revenues, for q-commerce players the benefit will be in terms of making even faster deliveries, and getting back-end support for lot ancillary and technology support.
The services provided by these third-party startups include last-mile fleets, on-demand gig delivery, cold-chain capabilities, optimisation of delivery routes, advanced route optimisation, IoT-based real-time tracking and an automated communications suite.
Some have also started offering dark store operations, fulfilment centre operations, inventory management, order batching etc. Besides catering to 10-15 minute deliveries for quick commerce players such as Zepto, Blinkit and BBNow, they are also using their capabilities to cater to 30-60-minute deliveries for various brands.
These B2B (business-to-business) startups are constantly innovating and fine-tuning their offerings for swift deliveries. For instance, Flipkart-backed Shadowfax offers an on-demand gig delivery network for quick commerce firms, where it offers workforce deployment on an hourly and per-order basis. While the hourly basis model is tailored to match fluctuating demand by placing people at dark stores in as low as 4-9 hour shifts as needed, per-order basis allows clients to manage sudden volume surges. It enables access to over 500,000 active gig workers and provides coverage across 100+ cities, particularly in regions where staffing is typically challenging.
Additionally, the startup provides EV as a service at lower delivery costs and an on-demand fleet to help brands mobilise additional resources during peak periods without overextending capacity in quieter times. “We have been serving the segment for over five years, starting right from the initial phases of experimentation. We work with every major quick commerce brand in India, including the ones launched recently,” Praharsh Chandra, CBO and co-founder, Shadowfax told Fe.
Quick commerce firm, Zepto is outdoing anything that anyone had ever thought of, and its execution capability continues to be outstanding, Rahul Taneja, partner, Lightspeed India told Fe, as the main reasons why the venture capital firm continues to invest in the firm.
He said that Lightspeed used multiple vectors to determine the company’s growth, including the number of dark stores, consumer retention, unit economics at the store level and the speed at which stores were breaking even. “Over a period of time, their execution basically told us that there is a very large and a new model of commerce that was emerging in India,” Taneja said.
Zepto recently raised $340 million in a follow-on funding round at a valuation of $5 billion, led by General Catalyst, Dragon Fund and Epiq Capital. The round saw participation by existing investors such as Lightspeed along with StepStone, DST, and Contrary. A little before this, it had raised $665 million, which also saw participation by Lightspeed.
On why the company is valued at $5 billion, which is more than double its valuation of $1.4 billion in August last year, Taneja said, “Even if we assume that this is a top 20-50 city business, the opportunity is huge. Grocery consumption in these markets alone is between $200-$300 billion. So, we are scratching the surface here. I believe a bigger business can be built just by going deeper and tapping into more consumers and more frequency of consumption”. Taneja said that if quick commerce companies only choose to be in the top 50 cities tomorrow, there is still a very large business to be built.
Lightspeed started investing in India in 2007 and has so far invested $2.1 billion across stages. The firm is currently deploying its $500 million fourth fund, raised in 2022. Through this fund, it writes up to $25 million cheques across seed to Series B rounds. Additionally, being a global venture firm, it also has a large global pool of capital, of about $5 billion, through which the India team invests anything upwards of $20 million. Zepto investment also came through this global growth fund.
Besides Zepto, Lightspeed counts Pocket FM, Udaan, Sharechat, Innovaccer, Apna, Zetwerk in its portfolio. The firm’s core focus areas include consumer, enterprise SaaS, commerce and fintech. Some other emerging areas it is bullish about are generative AI, climate, electric vehicles, agritech, B2B supply chain, deeptech such as space, semiconductors and digital assets.
Cross-border commerce is also another area the firm is closely watching. The firm has made around five investments in the space.