Despite having cheapest prices on its platform, Flipkart Minutes has failed to make a material impact on the q-commerce landscape given its poor assortment, analysts said.
The latest entrant to the q-comm scene, Flipkart Minutes was launched in August and was the most expensive among its peers in September, Axis Capital noted in a report. Three months on, it now has the cheapest pricing, but continues to be the weakest q-commerce platform.
“Though the gap versus its peers is minor at ~1-2%, it continues to lag on competitive assortment, which we believe is more important in competing to gain users due to its late entry,” analysts from Axis Capital said.
The report also noted that the price difference among the q-commerce players has reduced from 5% (between the highest and the lowest prices) to 1% on an average.
Assortment is the key to growing the business in q-commerce as is seen by Blinkit’s leadership position, Axis Capital said. Assortment refers to the number of unique products (SKUs or stock keeping units) a platform has to offer. Blinkit’s assortment is broadly similar to slotted commerce and has maintained lead on this metric over the past three months, according to the report.
“We do not believe the players will compete aggressively on pricing, as the users of q-comm/slotted-comm are not as price-sensitive. Thus, platforms are unlikely to gain users at the cost of profitability. We continue to believe that assortment takes precedence over pricing in online formats,” analysts added.
Slotted commerce, dominated by BigBasket and JioMart, is the grocery delivery module where users select predefined time slots to take the delivery.
BigBasket is working on its pricing and assortment metrics as it transitions from slotted commerce to q-comm. Its discount to kirana stores has increased to 13% in November against 10% in September.
“BigBasket seems to have improved its assortment from September. This, we believe, is to become competitive while it transitions from slotted to q-comm. Assortment is largely on a par with Blinkit’s and ahead of other q-comm players,” Axis Capital observed in its latest report.
“Overall, we believe that Flipkart Minutes’ lower pricing is unlikely to yield results, while BigBasket’s assortment improvement should help it make inroads into q-comm,” the brokerage added.
The price gap between q-comm platforms and kirana stores has also increased to up to 8% in November from 2-6% in September.
Another report by JP Morgan suggests that both Blinkit and Zepto have ramped up dark store addition in the October-December quarter with 30-50% increase at the end of November compared to early September.
Expansion was concentrated in the top three metros — Greater Bengaluru, Delhi NCR and Mumbai Metropolitan Area — where 60% of the additions were concentrated. “These cities are still >50% of DS count and likely >70% of GOV given higher AOV, store maturity and frequency,” the brokerage said in its report.