While the competition in quick commerce is likely to remain high in near term, Morgan Stanley has said in a report that there is a room for three players to co-exist in the Indian market.
It said the leading quick commerce players are 2-3 years ahead of the rivals in this space and thus have a better ability to predict stock keeping unit (SKU) demand.
“In our base case, we hence assume the current top 3 players continue to take a lion’s share of the market and co-exist,” it said.
Notably, the top three q-comm firms by market share are Blinkit, Zepto and Instamart.
Morgan Stanley also said that over the next three to five years, all the quick commerce players in the country are likely to grow materially despite high competition as more use cases evolve.
The quick commerce space has evolved rapidly from use cases of SKUs that have high purchase frequency and must be delivered in under 15 minutes, to those where urgent delivery can be made within 30 minutes like toys, beauty and healthcare.
“QC (quick commerce) is hence addressing a large total addressable market and penetration of quick commerce within the retail market, or even the e-commerce market, is nascent,” it said.
“Thus, despite high competition, we see scope for each player to grow materially over the next 3-5 years,” it added.
It also increased its prediction on the expected size of quick commerce total adressable market (TAM) in the country to $57 billion by 2030, as compared to the previous estimate of $42 billion. Currently, the market size is likely to be around $8 billion.
It also said that Swiggy‘s steady-state margins in quick commerce business are likely to be 2.6% by FY31 as compared to Blinkit’s 4.7%.